Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 11-May-15 | |
Document Information [Line Items] | ||
Entity Registrant Name | RESPONSE GENETICS INC | |
Entity Central Index Key | 1124608 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | RGDX | |
Entity Common Stock, Shares Outstanding | 38,795,396 | |
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $1,734,661 | $2,222,491 |
Accounts receivable, net of allowance for doubtful accounts of $2,071,706 and $2,226,890 at December 31, 2014 and March 31, 2015, respectively | 6,059,111 | 7,810,417 |
Prepaid expenses and other current assets | 962,059 | 1,182,748 |
Total current assets | 8,755,831 | 11,215,656 |
Property and equipment, net | 1,265,351 | 1,406,405 |
Intangible assets, net | 582,441 | 631,149 |
Other assets | 174,606 | 191,874 |
Total assets | 10,778,229 | 13,445,084 |
Current liabilities | ||
Accounts payable | 1,707,332 | 1,609,741 |
Accrued expenses | 418,255 | 671,906 |
Accrued interest | 157,500 | 149,813 |
Accrued royalties | 963,676 | 967,785 |
Accrued payroll and related liabilities | 1,525,356 | 1,547,673 |
Capital lease obligation, current portion | 104,984 | 100,951 |
Total current liabilities | 4,877,103 | 5,047,869 |
Capital lease obligation, net of current portion | 76,084 | 103,472 |
Line of credit, non-current | 1,465,662 | 1,500,000 |
Loan, net of debt discount of $536,150 and $703,507 at December 31, 2014 and March 31, 2015, respectively | 9,296,493 | 7,963,850 |
Total liabilities | 15,715,342 | 14,615,191 |
Commitments, contingencies and subsequent events (Notes 5 and 11) | ||
Stockholders’ deficit: | ||
Common stock, $0.01 par value; 70,000,000 shares authorized; 38,795,396 shares issued and outstanding | 388,010 | 388,010 |
Additional paid-in capital | 77,977,698 | 77,698,416 |
Accumulated deficit | -83,014,921 | -78,996,541 |
Accumulated other comprehensive loss | -287,900 | -259,992 |
Total stockholders’ deficit | -4,937,113 | -1,170,107 |
Total liabilities and stockholders’ deficit | $10,778,229 | $13,445,084 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Allowance for doubtful accounts | $2,226,890 | $2,071,706 |
Term loan net of debt discount | $703,507 | $536,150 |
Common stock, par value per share | $0.01 | $0.01 |
Common stock, shares authorized | 70,000,000 | 70,000,000 |
Common stock, shares issued | 38,795,396 | 38,795,396 |
Common stock, shares outstanding | 38,795,396 | 38,795,396 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Net revenue | $3,790,604 | $3,894,934 |
Cost of revenue | 2,314,649 | 2,438,376 |
Gross profit | 1,475,955 | 1,456,558 |
Operating expenses: | ||
Selling and marketing | 949,726 | 1,452,905 |
General and administrative | 3,898,931 | 3,013,898 |
Research and development | 268,200 | 467,567 |
Total operating expenses | 5,116,857 | 4,934,370 |
Operating loss | -3,640,902 | -3,477,812 |
Other income (expense): | ||
Interest expense | -377,479 | -24,221 |
Other | 1 | -2,406 |
Net loss | -4,018,380 | -3,504,439 |
Unrealized loss on foreign currency translation | -27,908 | -22,229 |
Comprehensive loss | ($4,046,288) | ($3,526,668) |
Net loss per share — basic and diluted (in dollars per share) | ($0.10) | ($0.09) |
Weighted-average shares — basic and diluted (in shares) | 38,795,396 | 38,718,336 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | ($4,018,380) | ($3,504,439) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 192,172 | 206,884 |
Amortization of loan costs and debt discounts | 31,429 | 0 |
Share-based compensation | 107,250 | 184,769 |
Bad debt expense | 1,902,144 | 1,293,850 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -150,838 | -596,437 |
Prepaid expenses and other current assets | 230,690 | -351,868 |
Accounts payable | 97,590 | -310,414 |
Accrued expenses and interest | -245,963 | -149,384 |
Accrued royalties | -4,109 | 55,334 |
Accrued payroll and related liabilities | -22,317 | 76,693 |
Net cash used in operating activities | -1,880,332 | -3,095,012 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -2,411 | -30,040 |
Purchases of software | 0 | -14,519 |
Net cash used in investing activities | -2,411 | -44,559 |
Cash flows from financing activities: | ||
Net proceeds from issuance of debt | 1,480,514 | 0 |
Payment on line of credit | -34,338 | 0 |
Capital lease payments | -23,355 | -48,044 |
Proceeds from exercise of stock options | 0 | 17,748 |
Net cash (used in) provided by financing activities | 1,422,821 | -30,296 |
Effect of foreign exchange rates on cash and cash equivalents | -27,908 | -22,229 |
Net decrease in cash and cash equivalents | -487,830 | -3,192,096 |
Cash and cash equivalents: | ||
Beginning of period | 2,222,491 | 8,148,599 |
End of period | 1,734,661 | 4,956,503 |
Cash paid during the period for: | ||
Interest | 377,479 | 24,221 |
Supplemental disclosure of non-cash financing activities: | ||
Equipment and software acquired under capital leases | 2,411 | 0 |
Revaluation of 2014 warrants issued with term debt | 23,144 | 0 |
Warrants issued with new term debt | $148,887 | $0 |
Organization_Operations_and_Ba
Organization, Operations and Basis of Accounting | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Operations and Basis of Accounting | 1. Organization, Operations and Basis of Accounting |
Response Genetics, Inc. (the “Company”) was incorporated in the State of Delaware on September 23, 1999 as Bio Type, Inc. for the purpose of providing molecular profiling services of tumor tissue that has been formalin-fixed and embedded in paraffin. In August 2000, the Company changed its name to Response Genetics, Inc. | |
The Company is a life science company engaged in the research, development, marketing and sale of pharmacogenomics-clinical diagnostic tests for cancer. Pharmacogenomics is the science of how an individual’s genetic makeup relates to drug response. Diagnostic tests based on pharmacogenomics facilitate the prediction of a response to drug therapy or survival following surgery based on an individual’s genetic makeup. In order to generate pharmacogenomic information from patient specimens for these tests, the Company uses its proprietary technologies that enable the Company to reliably and consistently extract ribonucleic acid (“RNA”) and deoxyribonucleic acid (“DNA”) from tumor specimens that are stored as formalin-fixed and paraffin-embedded (“FFPE”) specimens and, thereby to analyze genetic information contained in these tissues for each patient. The Company’s platforms include analysis of single biomarkers using the polymerase chain reaction method as well as global gene interrogation using microarray methods and fluorescence in situ hybridization (“FISH”) from paraffin or frozen tissue specimens. The Company primarily derives its revenue from the sale of its ResponseDX® diagnostic testing products and by providing pharmacogenomic clinical trial testing services to pharmaceutical companies in the United States, Asia and Europe. | |
The Company’s goal is to provide cancer patients and their physicians with a means to make informed, individualized treatment decisions based on genetic analysis of tumor tissues. The Company’s pharmacogenomic analysis of clinical trial specimens for the pharmaceutical industry may provide data that will lead to a better understanding of the molecular basis for response to specific drugs and, therefore lead to individualized treatment. | |
Liquidity and Management’s Plans | |
Since its inception, the Company has devoted substantial effort in developing its products and has incurred losses and negative cash flows from operations. At March 31, 2015, the Company had an accumulated deficit of $83,014,921. The Company anticipates continued losses and negative cash flows as it funds its selling and marketing activities and research and development programs. | |
The Company’s current operating plan includes various assumptions concerning the level and timing of cash receipts from sales and cash outlays for operating expenses and capital expenditures. The Company’s ability to successfully carry out its business plan is primarily dependent upon its ability to (1) obtain sufficient additional capital at acceptable costs, (2) attract and retain knowledgeable employees and (3) generate significant additional revenues. At this time, the Company expects to satisfy its future cash needs primarily through additional financing and/or strategic alternatives. The Company is currently seeking such additional financing and/or strategic alternatives; however, there can be no assurance that any additional financing or strategic alternatives will be available on acceptable terms, if at all. If the Company is unable to timely and successfully raise additional capital, implement strategic alternatives and/or achieve profitability, it will not have sufficient capital resources to implement its business plan or continue its operations, and the Company will most likely be required to reduce certain spending and/or curtail operations, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives. These matters raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the accompanying unaudited condensed consolidated financial statements to reflect any of the matters discussed above. | |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year. The balances as of December 31, 2014 were derived from our audited financial statements as of December 31, 2014. The financial statements should be read in conjunction with the Company’s audited December 31, 2014 and 2013 consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K previously filed with the SEC on March 31, 2015. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies | ||||||||||||||||
Basis of Consolidation | |||||||||||||||||
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Response Genetics, Ltd., a Scottish corporation (the “Subsidiary”), which was incorporated in November 2006. The Subsidiary had no employees or active operations in 2014 or to date in 2015. All significant intercompany transactions and balances have been eliminated in consolidation. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all highly liquid investments with a maturity date of three months or less from the date of purchase to be cash equivalents. The carrying value of cash equivalents approximates fair value due to the short-term nature and liquidity of these instruments. The Company’s cash equivalents are comprised of cash on hand, deposits in banks and money market investments. | |||||||||||||||||
Accounts Receivable | |||||||||||||||||
Pharmaceutical Accounts Receivable | |||||||||||||||||
The Company invoices its clients as specimens are processed and any other contractual obligations are met. The Company’s contracts with clients typically require payment within 45 days of the date of invoice. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its clients to make required payments. The Company specifically analyzes accounts receivable and historical bad debts, client credit, current economic trends and changes in client payment trends when evaluating the adequacy of the allowance for doubtful accounts. Account balances are charged-off against the allowance when it is probable the receivable will not be recovered. To date, the Company’s pharmaceutical customers have primarily been large pharmaceutical companies. As a result, bad debts from pharmaceutical accounts receivable to date have been minimal. Pharmaceutical company accounts receivable as of December 31, 2014 and March 31, 2015 were $1,037,834 and $454,773, respectively. There were no allowances for doubtful accounts recorded against these pharmaceutical accounts receivable at December 31, 2014 and March 31, 2015. | |||||||||||||||||
ResponseDX® Accounts Receivable | |||||||||||||||||
ResponseDX® accounts receivable are recorded from two primary payors: (1) Medicare and (2) third party payors such as commercial insurance and private payors or self-paying payors (“Private Payors”). ResponseDX® accounts receivable are recorded at established billing rates less an estimated billing adjustment, based on reporting models utilizing historical cash collection percentages and updated for current effective reimbursement factors. Management performs ongoing valuations of accounts receivable balances based on management’s evaluation of historical collection experience and industry trends. Based on the historical experience for our accounts, management has determined, based on a detailed analysis, that accounts receivable associated with certain billings are unlikely to be collected. Therefore, the Company has recorded an allowance for doubtful accounts of $2,071,706 and $2,226,890 as of December 31, 2014 and March 31, 2015, respectively. The Company’s bad debt expense for the three months ended March 31, 2014 and 2015 was $1,293,850 and $1,902,144, respectively. | |||||||||||||||||
ResponseDX® accounts receivable as of December 31, 2014 and March 31, 2015, consisted of the following: | |||||||||||||||||
December 31, | March 31, | ||||||||||||||||
2014 | 2015 | ||||||||||||||||
Net Medicare receivable | $ | 2,814,989 | $ | 2,191,781 | |||||||||||||
Net Private Payor receivable | 6,029,300 | 5,639,447 | |||||||||||||||
8,844,289 | 7,831,228 | ||||||||||||||||
Allowance for doubtful accounts | (2,071,706 | ) | (2,226,890 | ) | |||||||||||||
Total | $ | 6,772,583 | $ | 5,604,338 | |||||||||||||
At December 31, 2014 and March 31, 2015, all Medicare accounts receivable outstanding for a period of greater than one year have been reserved 100%. | |||||||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line methods over the estimated useful lives of the assets. The Company has determined the estimated useful lives of its property and equipment, as follows: | |||||||||||||||||
Laboratory equipment | 5 to 7 years | ||||||||||||||||
Furniture and equipment | 3 to 7 years | ||||||||||||||||
Purchased and internally-developed software | 3 to 5 years | ||||||||||||||||
Leasehold improvements | Shorter of the useful life (5 to 7 years) or the lease term | ||||||||||||||||
Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the related accounts and the resulting gain or loss is reflected in the statements of operations. The Company has capitalized costs related to the development of database software (see Note 3). The portion of this database placed into service is amortized in accordance with ASC 350-40, Internal-Use Software. The amortization period is five years using the straight-line method. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
Pharmaceutical Revenue | |||||||||||||||||
Revenues that are derived from testing services provided to pharmaceutical companies are recognized on a contract specific basis pursuant to the terms of the related agreements. Revenue is recognized in accordance with ASC 605, Revenue Recognition, which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. | |||||||||||||||||
Revenues are recorded on an accrual basis as the contractual obligations are completed and as a set of assays is processed through the Company’s laboratory under a specified contractual protocol and are recorded on the date the tests are completed. Certain contracts have minimum assay requirements that, if not met, result in payments that are due upon the completion of the designated period. In these cases, revenues are recognized when the end of the specified contract period is reached. | |||||||||||||||||
On occasion, the Company may enter into a contract that requires the client to provide an advance payment for specimens that will be processed at a later date. In these cases, the Company records this advance as deferred revenue and recognizes the revenue as the specimens are processed or at the end of the contract period, as appropriate. There was no deferred revenue at December 31, 2014 or March 31, 2015. | |||||||||||||||||
The Company recorded revenue from pharmaceutical clients for the three months ended March 31, 2014 and 2015 of $577,381 and $462,093, respectively. | |||||||||||||||||
ResponseDX® Revenue | |||||||||||||||||
The Company recognizes revenues when (a) the price is fixed or determinable, (b) persuasive evidence of an arrangement exists, (c) the service is performed and (d) collectability of the resulting receivable is reasonably assured. The Company’s specialized diagnostic services are performed based on a written test requisition form or electronic equivalent and revenues are recognized once the diagnostic services have been performed, and the results have been delivered to the ordering physician. | |||||||||||||||||
Services are provided to certain patients covered by various third-party payer programs including various managed care organizations, commercial insurance plans and Medicare programs. Billings for services under third-party payer programs are included in revenue net of allowances for contractual discounts and allowances for differences between the amounts billed and estimated payment amounts. Significant judgment is inherent in the selection of assumptions and the interpretation of historical experience as well as the identification of external and internal factors affecting the determination of these reserves for Medicare, private health insurance companies, healthcare institutions, and patients. | |||||||||||||||||
The Company reports revenues from contracted payers, including Medicare, certain insurance companies and certain healthcare institutions, based on the contractual rate, or in the case of Medicare, published fee schedules. The Company reports revenues from non-contracted payers, including certain insurance companies and individuals, based on the amount expected to be collected. The difference between the amount billed and the amount estimated to be collected from non-contracted payers is recorded as a contractual allowance to arrive at the reported net revenues. The expected revenues from non-contracted payers are based on the historical collection experience of each payer or payer group, as appropriate. The assumptions used to determine these contractual allowances are reasonable considering known facts and circumstances. If actual future payments are less than the estimates the Company made at the time of recognizing revenue, the consolidated financial position, results of operations and cash flows may be negatively impacted. If actual future payments are materially different from the contracted amounts or estimates, the difference is accounted for as a change in estimate in the period in which they become known. Adjustments to the estimated payment amounts based on final settlement are recorded upon settlement as an adjustment to revenue. | |||||||||||||||||
For the three months ended March 31, 2014 and 2015, approximately 39% and 42%, respectively, of the Company's ResponseDX® revenues were derived directly from the Medicare program. The Company’s Medicare provider number allows it to invoice and collect from Medicare. The Company’s invoicing to Medicare is primarily based on amounts allowed by Medicare for the service provided as defined by Common Procedural Terminology (“CPT”). Laws and regulations governing the Medicare program and healthcare generally are complex and subject to interpretation. | |||||||||||||||||
The following details ResponseDX® revenue for the periods indicated: | |||||||||||||||||
Three Months | |||||||||||||||||
Ended March 31, | |||||||||||||||||
2014 | 2015 | ||||||||||||||||
Net Medicare revenue | $ | 1,308,422 | $ | 1,408,241 | |||||||||||||
Net Private Payor revenue | 2,009,131 | 1,920,270 | |||||||||||||||
Net ResponseDX® revenue | $ | 3,317,553 | $ | 3,328,511 | |||||||||||||
The Company recognizes revenue for services covered by Medicare based on the Medicare fee schedule. For 2014, the Company’s Medicare fees were based on the Centers for Medicare and Medicaid Services (“CMS”) proposed “Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to Part B for CY 2014” released in July 2013. For the three months ended March 31, 2015, the Company’s fees were based on the Centers for Medicare and Medicaid Services (“CMS”) fee schedules released in December 2014. | |||||||||||||||||
The Company updates its estimates of Medicare fees based on current information from CMS. The nature of the testing services the Company provides, the evidence the Company gathers to establish the creditworthiness of its payors and the delivery method of its services have not changed from prior periods, and therefore these assumption remain appropriate. | |||||||||||||||||
Cost of Revenue | |||||||||||||||||
Cost of revenue represents the cost of materials, direct labor, royalties, costs associated with processing tissue specimens including pathological review, staining, microdissection, paraffin extraction, reverse transcription polymerase chain reaction (“PCR”), fluorescence in situ hybridization (“FISH”), quality control analyses, license fees and delivery charges necessary to render an individualized test result. Costs associated with performing tests are recorded as the tests are processed. | |||||||||||||||||
License Fees | |||||||||||||||||
The Company has licensed technology for the extraction of ribonucleic acid (“RNA”) from formalin-fixed, paraffin-embedded tumor specimens from the University of Southern California (“USC”). Under the terms of the license agreement, the Company is required to pay royalties to USC calculated as a fixed percentage of the net sales price as defined in the agreement that the Company generates by using this technology. Total license fees expensed in cost of revenue under the license agreement with USC were $10,961 and $5,508 for the three months ended March 31, 2014 and 2015, respectively. The Company also maintains a non-exclusive license to use certain patents related to the PCR of Roche Molecular Systems, Inc. (“Roche”). The Company pays Roche a royalty fee based on revenue that the Company generates through use of this technology. The Company accrues for such royalties at the time revenue is recognized. Royalties expensed in cost of revenue under the Roche agreement totaled $44,373 and $16,265 for the three months ended March 31, 2014 and 2015, respectively. Such royalties are included in cost of revenues in the accompanying statements of operations. | |||||||||||||||||
The Company is subject to potentially significant variations in royalties recorded in any period. While the amount paid is based on a fixed percentage of net sales price as defined in the agreement of specific tests pursuant to terms set forth in the agreements with USC and Roche, the amount due is calculated based on the revenue we recognize using the respective licensed technology. As discussed above, this revenue can vary from period to period as it is dependent on the timing of the specimens submitted by our clients for testing. | |||||||||||||||||
Additionally, the Company periodically analyzes the technical procedures performed in its test offerings to assess which activities utilize licensed technologies and to calculate royalties for use of the licensed technology. The most recent analyses indicate that the Company could owe less than the amounts that have been accrued for royalties payable. Roche is still reviewing the Company’s updated royalty calculations. It is possible that based on Roche’s review and the Company’s discussions with Roche, the Company may further adjust its Roche royalty accrual. | |||||||||||||||||
Research and Development | |||||||||||||||||
The Company expenses costs associated with research and development activities as incurred. Research and development costs are expensed as incurred and classified as research and development costs. Research and development costs include employee costs (salaries, payroll taxes, benefits, and travel), equipment depreciation and maintenance, laboratory supplies, primers and probes, reagents, patent costs and occupancy costs. | |||||||||||||||||
Line of Credit | |||||||||||||||||
On July 14, 2011, the Company entered into a line of credit agreement with Silicon Valley Bank (the “Bank”), which agreement has been amended most recently on July 30, 2014. The line of credit is collateralized by all of the Company’s assets including its pharmaceutical, Private Payor and Medicare receivables. The maximum amount that can be borrowed from the line of credit is $2,000,000, subject to certain conditions. As of December 31, 2014 and March 31, 2015, the Company had drawn $1,500,000 and $1,465,662, respectively, against the line of credit. As of December 31, 2014 and March 31, 2015, the available amount the Company can draw from the line of credit was $500,000 and $463,677, respectively, calculated as the lesser of (i) the Company’s calculated borrowing base, which was 80% of certain of the Company’s accounts receivable, or (ii) the amount available under the line of credit. During the first half of 2014, the interest rate charged to the Company on the line of credit was 5%, calculated by reference to the prime rate plus 1.75%. For the latter half of 2014 and the three months ended March 31, 2015, the rate charged to the Company was 5.5%, calculated by reference to the prime rate plus 2.25%. The line of credit’s maturity date is July 25, 2016. | |||||||||||||||||
The line of credit is subject to various covenants, including financial covenants that require the Company to maintain (i) an adjusted quick ratio of at least 1.25 to 1.00; (ii) quarterly rolling twelve-month net revenue balances beginning December 31, 2014; and (iii) quarterly minimum liquidity of $1,000,000. The Company’s revenue covenant and liquidity covenant under the line of credit agreement conform with, and are cross-defaulted with equivalent covenants under the SWK Credit Agreement (as described below.) At December 31, 2014 and March 31, 2015, the Company was in compliance with its covenants under the line of credit agreement. Historically, however, the Company has been out of compliance with certain covenants from time to time, and the Company has received waivers and forbearance agreements from the Bank. | |||||||||||||||||
From time to time, the Company’s calculated borrowing base under its Bank line of credit may decrease to a level where the Company is in an over-advance position in which case the Company will be required to repay any outstanding amounts greater than the calculated borrowing base for such covered period back to the Bank immediately. The Company will be able to draw down on the credit line again with respect to such paid-back amount once the Company is in compliance with the borrowing base requirement. | |||||||||||||||||
As of December 31, 2014 and March 31, 2015, the line of credit under the credit agreement was classified as a non-current liability of the Company on the accompanying condensed consolidated balance sheet as the line of credit had a maturity date of greater than one year from the date of the balance sheet. | |||||||||||||||||
SWK Term Loan | |||||||||||||||||
On July 30, 2014 (the “Closing Date”), the Company entered into a credit agreement (the “SWK Credit Agreement”) with SWK Funding LLC, as the administrative agent (the “Agent” or “SWK”), and the lenders (including SWK) party thereto from time to time (the “Lenders”). The SWK Credit Agreement provides for a multi-draw term loan to the Company (the “Loan”) up to a maximum principal amount of $12,000,000 (the “Loan Commitment Amount”). On the Closing Date, the Lenders advanced the Company an amount equal to $8,500,000 which is due and payable on July 30, 2020 (the “Term Loan Maturity Date”) or such earlier date on which the Loan Commitment Amount is terminated pursuant to the terms of the SWK Credit Agreement. On February 3, 2015 (the “Amendment Closing Date”), the Company and SWK entered into a first amendment (the “Amendment”) to the SWK Credit Agreement. Pursuant to the Amendment, the Company drew an additional $1,500,000 of the Loan Commitment Amount thereby increasing the total amount advanced to the Company under the SWK Credit Agreement to $10,000,000. | |||||||||||||||||
The Loan bears interest at a rate equal to the LIBOR Rate (as defined in the SWK Credit Agreement) plus an applicable margin of 12.5% per annum, subject to a one percent (1.0%) LIBOR floor. Interest on the Loan is due and payable in arrears (i) on the forty-fifth (45th) day following the last calendar day of each of the months of September, December, March, and June, commencing on November 15, 2014, (ii) upon a prepayment of the Loan and (iii) on the Term Loan Maturity Date. At December 31, 2014 and March 31, 2015, the interest rate charged to the Company was 13.5%. Upon the earlier of (a) the Term Loan Maturity Date or (b) full repayment of the Loan, the Company is also required to pay an exit fee. On September 9, 2014, SWK, in its capacity as the initial Lender, assigned part of its interests under the SWK Credit Agreement to SG-Financial, LLC (“SG”). Pursuant to the assignment, SG was assigned $2,500,000 of the $8,500,000 Closing Date initial advance to the Company and $1,029,412 of the subsequent term loan commitment. On January 30, 2015, SG assigned all of its interests under the SWK Credit Agreement back to SWK. | |||||||||||||||||
On the Closing Date, the Company issued to the Agent a warrant (the “Initial Warrant”) to purchase up to 681,090 shares of the Company's common stock. The Initial Warrant was exercisable, in whole or in part, from the date of issuance until and including July 30, 2020 at an exercise price of $0.936 per share, subject to adjustment. The Initial Warrant was valued at $414,239, or approximately $0.61 per covered share, using a Black-Scholes pricing model with the following assumptions: 2.01% risk free rate, 0% dividend, 101.5% volatility, and six-year expected life. The value of the warrant was recorded on the balance sheet included in additional paid-in capital. On September 9, 2014, the Agent assigned a portion of the Initial Warrant consisting of the right to purchase 200,321 shares of common stock to SG (the “SG Initial Warrant”). On January 30, 2015, SG assigned the SG Initial Warrant back to the Agent and on the Amendment Closing Date, the Company replaced the Initial Warrant to purchase the total 681,090 shares of the Company’s common stock with a new warrant with an adjusted exercise price (the “Replacement Warrant”). The Replacement Warrant is exercisable up to and including July 30, 2020 at an exercise price of $0.39 per share. The Agent may exercise the Replacement Warrant on a cashless basis at any time. In the event the Agent exercises the Replacement Warrant on a cashless basis, the Company will not receive any proceeds. The exercise price of the Replacement Warrant is subject to customary adjustments for stock splits, stock dividends, recapitalizations and the like. | |||||||||||||||||
For accounting purposes, the proceeds received in the July 2014 transaction were allocated to the liability for debt, a debt issuance discount and additional paid-in capital for the warrant based upon the relative fair value of the loan and the warrant. The amounts recorded in the financial statements were $8,500,000 for loan liability, $576,161 for debt issuance discount and $377,140 to additional paid-in capital for the warrant. Additionally, the Company recorded deferred loan issuance costs of $187,092 for investment banker fees and legal fees incurred to enter into the SWK Credit Agreement. The debt issuance discount and the deferred issuance costs are being amortized to interest expense over the six-year term of the loan. Upon the re-issuance of the Replacement Warrant on February 3, 2015 at a reduced exercise price of $0.39, the debt issuance discount was re-valued at $599,305 and a $23,144 increase in the warrant value was recorded as an increase to debt discount and additional paid-in capital. The Replacement Warrant transaction was determined to be a debt modification. | |||||||||||||||||
In addition, on the Amendment Closing Date, the Company issued the Agent a new warrant (the “First Amendment Warrant”) to purchase 576,923 shares of Common Stock. The First Amendment Warrant is exercisable up to and including February 3, 2021 at an exercise price of $0.39 per share, subject to adjustment. The First Amendment Warrant was valued at $167,712, or approximately $0.29 per covered share, using a Black-Scholes pricing model with the following assumptions: 1.39% risk free rate, 0% dividend, 90.9% volatility and six-year expected life. The value of the warrant was recorded on the balance sheet included in additional paid-in capital. The Agent may exercise the First Amendment Warrant on a cashless basis at any time. In the event the Agent exercises the First Amendment Warrant on a cashless basis, the Company will not receive any proceeds. The exercise price of the First Amendment Warrant is subject to customary adjustments for stock splits, stock dividends, recapitalizations and the like. | |||||||||||||||||
Additionally, for accounting purposes, the proceeds received in the February 2015 transaction were allocated to the liability for debt, a debt issuance discount and additional paid-in capital for the warrant based upon the relative fair value of the loan and the warrant. The amounts recorded in the financial statements were $1,500,000 for loan liability, $168,372 for debt issuance discount and $148,887 to additional paid-in capital for the warrant. Additionally, the Company recorded deferred loan issuance costs of $19,485 for investment banker fees and legal fees incurred to enter into the Amendment. The debt issuance discount and the deferred issuance costs are being amortized to interest expense over the six-year term of the loan. | |||||||||||||||||
The Company may prepay the Loan, in whole or in part, upon five business days’ written notice provided that a prepayment premium is paid to the Lenders as set forth in the SWK Credit Agreement. The Company is required to prepay the Loan with any net cash proceeds received from certain types of dispositions of assets described in the SWK Credit Agreement. The Company is also required to make certain revenue-based payments on the Company’s quarterly revenues, applied in the following priority: (i) first, to the payment of all fees, costs, expenses and indemnities due and owing to the Agent under the SWK Credit Agreement, (ii) second, to the payment of all fees, costs, expenses and indemnities due and owing to the Lenders under the SWK Credit Agreement, (iii) third, to the payment of all accrued but unpaid interest until paid in full, (iv) fourth, for each revenue-based payment date after August 2016, to the payment of all principal of the Loan up to an aggregate amount of $750,000 on any such payment date and (v) fifth, all remaining amounts to the Company. | |||||||||||||||||
As of December 31, 2014 and March 31, 2015, the term debt under SWK Credit Agreement was classified as a non-current liability of the Company on the accompanying balance sheet as the repayment terms are based on future revenues that cannot be reasonably estimated and therefore all outstanding amounts are classified as non-current. | |||||||||||||||||
The SWK Credit Agreement contains customary affirmative and negative covenants for credit facilities of its type, including covenants that limit the Company’s ability to pay dividends or redeem outstanding equity interests, incur additional indebtedness, grant additional liens, engage in any other type of business, make investments, merge, consolidate or sell all or substantially all of its assets and enter into transactions with related parties. The SWK Credit Agreement also contains certain financial covenants, including certain minimum aggregate revenue requirements. The Company was in compliance with these covenants at December 31, 2014 and March 31, 2015. | |||||||||||||||||
The SWK Credit Agreement includes customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, default under certain other indebtedness, certain insolvency or bankruptcy events, the occurrence of certain material judgments, the institution of any proceeding by a government agency or a change of control of the Company that is not otherwise permitted under the SWK Credit Agreement. | |||||||||||||||||
Refer to Note 11 to these unaudited condensed consolidated financial statements for a description of the second amendment to the SWK Credit Agreement, dated April 3, 2015, pursuant to which the Company drew the remaining $2,000,000 of the Loan Commitment Amount and issued certain of the Lenders warrants to purchase an aggregate 2,702,702 shares of Common Stock. | |||||||||||||||||
Income Taxes | |||||||||||||||||
Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. | |||||||||||||||||
ASC 740, Income Taxes, clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of December 31, 2014 and March 31, 2015, the Company does not have a liability for unrecognized tax benefits. The Company recognizes interest and penalties associated with tax matters as part of the income tax provision, and includes accrued interest and penalties with the related tax liability in the balance sheet. For the periods ended March 31, 2014 and 2015, there were no interest and penalties recorded in the Condensed Consolidated Statement of Operations. | |||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
The Company accounts for stock-based compensation in accordance with ASC 718, Stock Compensation, Share-Based Payment. Stock-based compensation expense for all stock-based compensation awards granted is based on the grant-date fair value estimated in accordance with the provisions of ASC 718. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option vesting period. As further described in Note 7, certain awards granted to Thomas A. Bologna, the Company’s Chairman and Chief Executive Officer, were recognized based on an accelerated vesting basis triggered by market conditions rather than a straight-line basis. | |||||||||||||||||
The Company accounts for equity instruments issued to non-employees in accordance with ASC 505, Equity. Under ASC 505, stock option awards issued to non-employees are measured at fair value using the Black-Scholes option-pricing model and recognized pursuant to a performance model. | |||||||||||||||||
Management Estimates | |||||||||||||||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. Significant estimates in these condensed consolidated financial statements have been made for revenue, allowances for doubtful accounts, impairment of long-lived assets, depreciation of property and equipment and stock-based compensation. Actual results could differ materially from those estimates. | |||||||||||||||||
Long-lived Assets | |||||||||||||||||
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates potential impairment by comparing the carrying amount of the asset with the estimated undiscounted future cash flows associated with the use of the asset and its eventual disposition. Should the review indicate that the assets cost is not recoverable, the carrying value of the asset would be reduced to its fair value, which is measured by future discounted cash flows. | |||||||||||||||||
Foreign Currency Translation | |||||||||||||||||
The financial position and results of operations of the Company’s foreign subsidiary are determined using local currency as the functional currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each period-end. Statement of Operations amounts are translated at the average rate of exchange prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss in stockholders’ deficit. | |||||||||||||||||
Comprehensive Loss | |||||||||||||||||
The components of comprehensive loss are accumulated net loss and foreign currency translation adjustments for the three months ended March 31, 2014 and 2015. | |||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
Cash and cash equivalents are stated at cost, which approximates fair market value. Cash equivalents consist of money market accounts, with fair values estimated based on quoted market prices. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies. | |||||||||||||||||
Advertising Costs | |||||||||||||||||
The Company markets its services through its advertising activities in trade publications and on the internet. Advertising costs are included in selling and marketing expenses on the statements of operations and are expensed as incurred. Advertising costs for the three months ended March 31, 2014 and 2015 were $6,422 and $17,124, respectively. | |||||||||||||||||
Concentration of Credit Risk and Clients and Limited Suppliers | |||||||||||||||||
Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. At March 31, 2015, the Company had $1,476,222 in cash and cash equivalents that exceeded federally insured limits. At March 31, 2015, $7,803 of cash was held outside of the United States. | |||||||||||||||||
Revenue sources that account for greater than 10 percent of total revenue are provided below. | |||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
2014 | 2015 | ||||||||||||||||
Revenue | Percent | Revenue | Percent | ||||||||||||||
of Total | of Total | ||||||||||||||||
Revenue | Revenue | ||||||||||||||||
Medicare, net of contractual allowances | $ | 1,308,422 | 34 | % | $ | 1,408,241 | 37 | % | |||||||||
Customers that account for greater than 10 percent of gross accounts receivable are provided below. | |||||||||||||||||
As of December 31, 2014 | As of March 31, 2015 | ||||||||||||||||
Receivable | Percent of | Receivable | Percent of | ||||||||||||||
Balance | Gross | Balance | Gross | ||||||||||||||
Receivables | Receivables | ||||||||||||||||
Medicare, net of contractual allowances | $ | 2,814,989 | 29 | % | $ | 2,191,781 | 26 | % | |||||||||
Many of the supplies and reagents used in the Company’s testing process are procured from a limited number of suppliers. Any supply interruption or an increase in demand beyond the suppliers’ capabilities could have an adverse impact on the Company’s business. Management believes it can identify alternative sources, if necessary, but it is possible such sources may not be identified in sufficient time to avoid an adverse impact on its business. The Company purchases certain laboratory supplies and reagents primarily from a limited number of suppliers. The Company made approximately 73% of its reagent purchases from four suppliers during the year ended December 31, 2014 and made approximately 70% of its reagent purchases from three suppliers during the three months ended March 31, 2015. | |||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
In April 2015, the FASB issued ASU 2015-03 “Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires an entity to present debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendment will be effective for the Company’s annual and interim reporting periods beginning January 1, 2016 and should applied on a retrospective basis. The adoption of ASU 2015-03 will not have any impact on the Company’s results of operations, but will result in debt issuance costs being presented as a direct reduction from the carrying amount of debt liabilities. This standard will not have a material impact on the Company’s consolidated financial statements. | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which modifies how all entities recognize revenue, and consolidates into one Accounting Standards Codification ("ASC") Topic (ASC Topic 606, Revenue from Contracts with Customers) the current guidance found in ASC Topic 605, Revenue Recognition, and various other revenue accounting standards for specialized transactions and industries. The core principle of the guidance is that “an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In achieving this objective, an entity must perform five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations of the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 also clarifies how an entity should account for costs of obtaining or fulfilling a contract in a new ASC Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers. | |||||||||||||||||
ASU 2014-09 is effective for public companies for annual periods beginning after December 15, 2016 and interim periods within those annual periods, and early adoption is not permitted. ASU 2014-09 may be applied using either a full retrospective approach, in which all years included in the financial statements are presented under the revised guidance, or a modified retrospective approach. Under the modified retrospective cumulative catch-up approach, financial statements will be prepared using the new standard for the year of adoption, but not for prior years. Under this method, entities will recognize a cumulative catch-up adjustment to the opening balance of retained earnings at the effective date for contracts that still require performance by the Company and disclose all line items in the year of adoption as if they were prepared under the old revenue guidance. The Company is currently evaluating the impact of ASC 606, but at the current time does not know what impact the new standard will have on revenue recognized and other accounting decisions in future periods, if any, nor what method of adoption will be selected if the impact is material. | |||||||||||||||||
In August 2014, the Financial Accounting Standards Board issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-09”). ASU 2014-15 provides guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter; earlier adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial condition, results of operations or cash flows. | |||||||||||||||||
Property_and_Equipment_and_Int
Property and Equipment and Intangible Assets | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property and Equipment and Intangible Assets | 3. Property and Equipment and Intangible Assets | |||||||
Property and equipment and intangible assets consist of the following: | ||||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Laboratory equipment | $ | 4,543,019 | $ | 4,543,019 | ||||
Furniture and equipment | 762,466 | 764,876 | ||||||
Leasehold improvements | 496,523 | 496,523 | ||||||
5,802,008 | 5,804,418 | |||||||
Less: Accumulated depreciation | -4,395,603 | -4,539,067 | ||||||
Total property and equipment, net | $ | 1,406,405 | $ | 1,265,351 | ||||
Purchased software | $ | 803,719 | $ | 803,719 | ||||
Internally developed software | 213,361 | 213,361 | ||||||
Trademarks | 33,000 | 33,000 | ||||||
1,050,080 | 1,050,080 | |||||||
Less: Accumulated amortization | -418,931 | -467,639 | ||||||
Total intangible assets, net | $ | 631,149 | $ | 582,441 | ||||
Depreciation and amortization expense, included in cost of revenue, general and administrative expenses, and research and development expenses for the three months ended March 31, 2014 and 2015 was $206,884 and $192,172, respectively. | ||||||||
Capital Leases | ||||||||
The Company leases certain equipment that is recorded as capital leases. This equipment is included in property and equipment on the accompanying consolidated balance sheet as of March 31, 2015 as follows: | ||||||||
Equipment purchased under capital leases | $ | 310,467 | ||||||
Less: Accumulated amortization | -151,785 | |||||||
Equipment purchased under capital leases, net | $ | 158,682 | ||||||
Future minimum lease payments under capital leases as of March 31, 2015 are as follows: | ||||||||
Years ending December 31, | ||||||||
2015 | $ | 92,437 | ||||||
2016 | 68,327 | |||||||
2017 | 16,364 | |||||||
2018 | 16,364 | |||||||
Thereafter | 9,546 | |||||||
Total minimum lease payments | 203,038 | |||||||
Less amount represented by interest | -21,970 | |||||||
Less current portion | -104,984 | |||||||
Capital lease obligation, net of current portion | $ | 76,084 | ||||||
Loss_Per_Share
Loss Per Share | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Loss Per Share | 4. Loss Per Share | |||||||
The Company calculates net loss per share in accordance with ASC 260, Earnings Per Share. Under the provisions of ASC 260, basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive common stock equivalents then outstanding. Common stock equivalents consist of shares of common stock issuable upon the exercise of stock options and warrants. | ||||||||
The following table sets forth the computation for basic and diluted loss per share: | ||||||||
Three Months | ||||||||
Ended March 31, | ||||||||
2014 | 2015 | |||||||
Numerator: | ||||||||
Net loss | $ | -3,504,439 | $ | -4,018,380 | ||||
Numerator for basic and diluted earnings per share | $ | -3,504,439 | $ | -4,018,380 | ||||
Denominator: | ||||||||
Denominator for basic and diluted earnings per share — weighted-average shares | 38,718,336 | 38,795,396 | ||||||
Basic and diluted loss per share | $ | -0.09 | $ | -0.1 | ||||
Outstanding stock options to purchase 2,217,134 and 2,461,078 shares of common stock of the Company for the periods ended March 31, 2014 and 2015, respectively, were excluded from the calculation of diluted loss per share as their effect would have been antidilutive. Also excluded from the calculation were 270,000 unvested shares of restricted common stock for both of the periods ended March 31, 2014 and 2015. Outstanding warrants to purchase 1,258,013 shares of common stock of the Company for the period ended March 31, 2015 were also excluded in the calculation of diluted loss per share. | ||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Commitments and Contingencies | 5. Commitments and Contingencies | ||||
Operating Leases | |||||
The Company leases 27,446 square feet of office and laboratory space in Los Angeles, California, under a non-cancelable operating lease that was amended and extended on February 3, 2014 and will expire on June 30, 2016. | |||||
Rent expense, which is classified in cost of revenue, general and administrative, and research and development expenses was $212,181 and $212,181 for the three months ended March 31, 2014 and 2015, respectively. | |||||
Future minimum lease payments by year and in the aggregate, due under non-cancelable operating leases for facilities, equipment and software as a service, consisted of the following at March 31, 2015: | |||||
Years Ending December 31, | |||||
2015 | $ | 769,660 | |||
2016 | 460,169 | ||||
Total | $ | 1,229,829 | |||
Guarantees | |||||
The Company enters into indemnification provisions under its agreements with other counterparties in its ordinary course of business, typically with business partners, clients and landlords. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company's activities. These indemnification provisions generally survive termination of the underlying agreement. The Company reviews its exposure under these agreements no less than annually, or more frequently when events require. The Company believes the estimated fair value of these agreements is minimal as, historically, no payments have been made by the Company under these indemnification obligations. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2014 and March 31, 2015. | |||||
Legal Matters | |||||
The Company is, from time to time, involved in legal proceedings, regulatory actions, claims and litigation arising in the ordinary course of business. Reserves are established for specific liabilities in connection with legal actions when they can be deemed probable and estimable. These matters are not expected to have a material adverse effect upon the Company’s financial condition. | |||||
Employment Agreements | |||||
The Company has employment contracts with several individuals, which provide for annual base salaries and potential bonuses. These contracts contain certain change of control, termination and severance clauses that require the Company to make payments to certain of these employees if certain events occur as defined in their respective contracts. | |||||
License_and_Collaborative_Agre
License and Collaborative Agreements | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
License and Collaborative Agreements | 6. License and Collaborative Agreements |
License Agreement with the University of Southern California (“USC”) | |
In April 2000, as amended in June 2002 and April 2005, the Company entered into a license agreement with USC. Under this agreement, USC granted the Company a worldwide, exclusive license with the right to sublicense, the patents for nucleic acid extraction methodologies (“RGI-1”) and related technology, for use in human and veterinary diagnostic laboratory services, the sale of clinical diagnostic products, and the sale of research products to the research community. USC retains the right under the agreement to use the technology for research and educational purposes. | |
In consideration for this license, the Company agreed to pay USC royalties based on a percentage of net sales of products or services that make use of RGI-1 and related technology and to meet a certain minimum in royalty payments. Royalty expense relating to this agreement amounted to $10,961 and $5,508 for the three months ended March 31, 2014 and 2015, respectively. Changes to estimates of factors impacting the accrued royalty liability could result in adjustments in future periods. Such expense is included in cost of revenue in the accompanying unaudited consolidated statements of operations. | |
License Agreement with Roche Molecular Systems (“Roche”) | |
In November 2004, the Company entered into a non-exclusive license to use Roche’s technology including specified nucleic acid amplification processes (“PCR Processes”) to perform certain human invitro clinical laboratory services. In consideration for this license, the Company is obligated to pay royalties to Roche, based on a percentage of net sales of products or services that make use of the PCR Processes. Royalty expense included in cost of revenue relating to this agreement amounted to $44,373 and $16,265 for the three months ended March 31, 2014 and 2015, respectively. | |
In November 2004, the Company also entered into an agreement with Roche, pursuant to which the Company is collaborating with Roche to produce commercially viable assays used in the validation of genetic markers for pharmaceutical companies. Specifically, the Company has licensed the rights to Roche to use the pre-diagnostic assays the Company develops in the course of using its RNA-extraction technologies to provide testing services to pharmaceutical companies and to produce diagnostic kits that then can be sold commercially to those pharmaceutical companies. Roche is required to pay the Company royalties of a certain percentage of net sales of such diagnostic kits sold to pharmaceutical companies. Through March 31, 2015, Roche has not been required to pay any royalties to the Company pursuant to this agreement. | |
Services Agreement with GlaxoSmithKline, LLC formerly known as SmithKline Beecham Corporation (d.b.a. GlaxoSmithKline or “GSK”) | |
In January 2006, the Company entered into a master services agreement with GSK, a leading pharmaceutical manufacturer, pursuant to which the Company provides services in connection with profiling the expression of various genes from a range of human cancers. Under the agreement, the Company provides GSK with testing services as described in individual protocols and GSK pays the Company for such services based on the pricing schedule established for each particular protocol. GSK was obligated to make minimum annual payments to the Company under the agreement and also was obligated to make a non-refundable upfront payment to the Company, to be credited against work undertaken pursuant to the agreement. | |
In December 2008, the Company amended and restated its master services agreement with GSK and extended the term of the agreement for a two-year period, with the option for the parties to extend the agreement for additional one-year periods at the end of the term, upon their mutual written agreement. In addition, the Company became a preferred provider to GSK and its affiliates of genetic testing services on a fee-for-service basis and, in anticipation of the services to be provided, GSK agreed to make a non-refundable upfront payment. | |
The Company recognized revenue of $-0- and $2,046 relating to the GSK agreement for the three months ended March 31, 2014 and 2015, respectively. | |
Master Services Agreement with GlaxoSmithKline Biologicals S.A. (“GSK Bio”) | |
On July 26, 2012, the Company entered into a second amended and restated master services agreement with GSK Bio, the vaccine division of GSK. The agreement, which was effective as of May 15, 2012, was amended on December 17, 2014 to extend the term to December 31, 2015. Pursuant to this agreement, as amended, the Company provides testing services for clinical trials and epidemiology studies relating to GSK Bio’s cancer immunotherapies. The Company performs these testing services on a fee-for-service basis as embodied in written task orders. GSK Bio retains the intellectual property rights to inventions, improvements and data resulting from the services performed under the agreement. The Company retains all intellectual property rights to its testing services and proprietary processes. All intellectual property owned by either party on the date of the agreement remains the exclusive property of the owning party. | |
The agreement will provides that any outstanding task orders at the time of termination will not thereby terminate (unless otherwise agreed in writing by the parties), and any such task orders will continue for the respective terms specified in such task orders (and the parties shall continue to perform their obligations thereunder). GSK Bio may terminate the agreement, without cause, upon 90 days’ written notice to the Company. The Company may terminate the agreement, without cause, upon one year’s written notice to GSK Bio. The agreement may also be terminated early if either party enters bankruptcy or similar proceedings or in the event of a material breach. GSK Bio may terminate the agreement immediately if the Company experiences a “change of control,” as defined in the agreement. | |
The agreement also provides for mutual indemnification by the parties and contains customary representations, warranties and covenants, including covenants governing the parties’ use of confidential information and representations regarding adequate insurance coverage or self-insurance. | |
The Company recognized revenue of $328,281 and $341,462 relating to the services performed for GSK Bio for the three months ended March 31, 2014 and 2015, respectively. | |
Stock_Options_Restricted_Stock
Stock Options, Restricted Stock and Warrants | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||
Stock Options, Restricted Stock and Warrants | 7. Stock Options, Restricted Stock and Warrants | |||||||||||||||
In March 2000, the Company adopted a Stock Option Plan (the “2000 Stock Plan”) as approved by its Board of Directors. Under the 2000 Stock Plan, the Company granted options to acquire up to 1,600,000 shares of common stock. In connection with the adoption of the 2006 Employee, Director and Consultant Stock Plan, as further discussed below, the Company is to grant no additional options under the 2000 Stock Plan. Under the 2000 Stock Plan, there were no options to purchase shares of the Company’s common stock that remained outstanding as of December 31, 2013. Prior to March 2007, the Company also granted options to purchase 16,000 shares of common stock to two consultants which were granted under separate agreements outside of the 2000 Stock Plan. | ||||||||||||||||
On October 26, 2006, the Board of Directors of the Company approved, and on May 1, 2007, reapproved the adoption of the 2006 Employee, Director and Consultant Stock Plan (the “2006 Stock Plan”). The stockholders approved the 2006 Stock Plan on June 1, 2007. The initial number of shares which may be issued from time to time pursuant to the 2006 Stock Plan was 2,160,000 shares of common stock. Also, the 2006 Stock Plan includes the number of shares subject to purchase under options issued under the 2000 Stock Plan, where the options expired on or after October 18, 2006, subject to a maximum of 210,000 additional options. In addition, on the first day of each fiscal year of the Company during the period beginning in fiscal year 2008 and ending on the second day of fiscal year 2017, the number of shares that may be issued from time to time pursuant to the 2006 Stock Plan is increased by the lesser of (i) 200,000 shares or equivalent, after determination of the effect of any stock split, stock dividend, combination or similar transactions as set forth in the 2006 Stock Plan, (ii) 5% of the number of outstanding shares of common stock of the Company on such date or (iii) an amount determined by the Board of Directors of the Company. The initial number of shares available for issuance of 2,160,000 increased by 210,000 for options issued under the 2000 Stock Plan expiring after October 2006 and by 200,000 in 2008 through 2015, resulting in the total number of shares that may be issued as of January 1, 2015 to be 3,970,000. As of March 31, 2015, there were 1,508,922 options available for grant under the 2006 Stock Plan. | ||||||||||||||||
Employee options vest according to the terms of the specific grant and expire 10 years from the date of grant. Non-employee option grants to date typically vest over a two- to three-year period. The Company had 2,461,078 options outstanding at a weighted average exercise price of $1.59 at March 31, 2015. There were 1,027,992 non-vested stock options outstanding with a weighted average exercise price of $1.07 at March 31, 2015. As of March 31, 2015, there was $637,950 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2006 Stock Plan. That cost is expected to be recognized over a weighted-average period of 2.4 years. | ||||||||||||||||
Except for certain grants of restricted common stock and common stock options containing market conditions as described below, the Company estimated share-based compensation expense for the three months ended March 31, 2015* using the Black-Scholes model with the following weighted average assumptions: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, 2015 | ||||||||||||||||
Risk free interest rate | 1.68 | % | ||||||||||||||
Expected dividend yield | — | % | ||||||||||||||
Expected volatility | 99.2 | % | ||||||||||||||
Expected term **(in years) | 6.25 | |||||||||||||||
Forfeiture rate *** | 7 | % | ||||||||||||||
* There were no stock options issued for the three months ended March 31, 2014. | ||||||||||||||||
** Expected term is calculated using SAB 107, Simplified Formula. Management has concluded that the use of the simplified method for calculating the expected term of its common stock option grants is appropriate given the lack of historical exercises and the standard terms of the employee option grants, including, options are granted at-the-money, exercise is conditional only on performing service through the vesting dates, termination of service causes forfeiture of options, employees have a limited number of days to exercise options after termination of service, and options are non-transferable. | ||||||||||||||||
*** Forfeiture range represents 0% for directors and 21% for employees. | ||||||||||||||||
The following table summarizes the stock option activity for the 2006 Plan for the three months ended March 31, 2015: | ||||||||||||||||
Number of | Weighted | Remaining | Aggregate | |||||||||||||
Shares | Average | Contractual | Intrinsic | |||||||||||||
Exercise | Life (Years) | Value | ||||||||||||||
Price | ||||||||||||||||
Outstanding, December 31, 2014 | 2,833,604 | $ | 1.62 | 7.9 | $ | - | ||||||||||
Granted (Unaudited) | 15,000 | $ | 0.43 | 10 | $ | 150 | ||||||||||
Exercised (Unaudited) | - | $ | - | - | - | |||||||||||
Expired (Unaudited) | -177,566 | 2.86 | 4.9 | — | ||||||||||||
Forfeited (Unaudited) | -209,960 | $ | 1.22 | — | — | |||||||||||
Outstanding, March 31, 2015 (Unaudited) | 2,461,078 | $ | 1.56 | 7.8 | $ | 150 | ||||||||||
Exercisable, March 31, 2015 (Unaudited) | 1,433,086 | $ | 1.91 | 7 | $ | — | ||||||||||
The weighted-average grant-date fair value of options granted during the year ended December 31, 2014 was $0.70. The weighted-average grant-date fair value of options granted during the three months ended March 31, 2015 was $0.43. The aggregate intrinsic value of outstanding options at December 31, 2014 and the options exercised during 2014 were $-0- and $7,605, respectively, which represents options whose exercise price was less than the closing fair market value of the Company’s common stock on December 31, 2014 of $0.32. No options were exercised during the three months ended March 31, 2015. | ||||||||||||||||
The following table provides additional information regarding options outstanding under the 2006 Plan as of March 31, 2015 (unaudited): | ||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||
Exercise Price | Number of | WA | Number of | WA | ||||||||||||
Options | Remaining | Options | Remaining | |||||||||||||
Contractual | Contractual | |||||||||||||||
Term | Term | |||||||||||||||
$0.43 to 0.99 | 655,890 | 9.3 | 111,050 | 9.3 | ||||||||||||
1.00 to 1.99 | 1,441,980 | 7.9 | 956,536 | 7.7 | ||||||||||||
2.00 to 2.99 | 201,708 | 6.4 | 204,000 | 6.4 | ||||||||||||
3.00 to 3.99 | 51,500 | 3.3 | 51,500 | 3.3 | ||||||||||||
7 | 110,000 | 2.2 | 110,000 | 2.2 | ||||||||||||
2,461,078 | 7.8 | 1,433,086 | 7 | |||||||||||||
Stock-based compensation expense – employees, was classified as follows in the results of operation: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2015 | |||||||||||||||
Cost of revenue | $ | 11,256 | $ | 9,327 | ||||||||||||
Research and development | 13,197 | 11,546 | ||||||||||||||
Sales and marketing | 15,749 | 10,544 | ||||||||||||||
General and administrative | 144,567 | 75,833 | ||||||||||||||
Totals | $ | 184,769 | $ | 107,250 | ||||||||||||
Thomas Bologna was appointed Chief Executive Officer of the Company on December 21, 2011 and in connection with his appointment, Mr. Bologna was awarded stock options outside of the 2006 Stock Plan. Pursuant to the employment agreement between the Company and Mr. Bologna, dated December 21, 2011, as amended, and in reliance on NASDAQ Listing Rule 5636(c), the Company granted Mr. Bologna (i) a stock option to purchase 600,000 shares of the Company’s common stock, which vests monthly over 36 months from the date of grant, subject to his continued employment with the Company, (ii) a stock option to purchase 300,000 shares of the Company’s common stock, which vested in 2012, and (iii) 270,000 shares of restricted common stock of the Company, which vest on the date on which the 30-day trailing average closing price of the Company’s common stock equals or exceeds $2.40. The exercise price of the stock options is $1.20 per share, the closing price of the Company’s common stock on the day prior to the date of grant. The expense recognized in connection with these grants was $44,531 and $-0- for the three months ended March 31, 2014 and 2015, respectively, and is included in the above table. | ||||||||||||||||
The following table summarizes these awards to Mr. Bologna: | ||||||||||||||||
Type | Grant Date | Number of Awards | Intrinsic | Exercise Price | Options | Remaining | ||||||||||
Value as of | Exercisable | Contractual | ||||||||||||||
March 31, | Term | |||||||||||||||
2015 | ||||||||||||||||
Restricted Shares | 12/21/11 | 270,000 | $ | — | $ | 1.2 | — | 6.75 | ||||||||
of Common Stock | ||||||||||||||||
Options | 12/21/11 | 600,000 | $ | — | $ | 1.2 | 600,000 | 6.75 | ||||||||
Options | 12/21/11 | 300,000 | $ | — | $ | 1.2 | 300,000 | 6.75 | ||||||||
Issuance of Warrants in Connection with the SWK Credit Agreement | ||||||||||||||||
Refer to Note 2 to these unaudited condensed consolidated financial statements for a description of the warrants issued in conjunction with the SWK Credit Agreement in July 2014 and the first amendment to the SWK Credit Agreement in February 2015. | ||||||||||||||||
Refer to Note 11 to these unaudited condensed consolidated financial statements for a description of the second amendment to the SWK Credit Agreement, dated April 3, 2015, pursuant to which the Company drew the remaining $2,000,000 of the Loan Commitment Amount and issued certain of the Lenders warrants to purchase an aggregate of 2,702,702 shares of Common Stock. | ||||||||||||||||
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes |
Deferred income taxes result from temporary differences between income tax and financial reporting computed at the effective income tax rate. The Company has established a valuation allowance against its net deferred tax asset due to the uncertainty surrounding the realization of such asset. Management periodically evaluates the recoverability of the deferred tax assets. At such time it is determined that it is more likely than not that deferred tax assets are realizable, the valuation allowance will be reduced. | |
The Company files U.S. federal, U.S. state, and foreign tax returns. The Company’s major tax jurisdictions are U.S. federal and the State of California. The Company is subject to tax examinations for the open years from 2004 through 2014. | |
Segment_Information
Segment Information | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Segment Information | 9. Segment Information | |||||||
The Company operates in a single reporting segment, with an operating facility in the United States. | ||||||||
The following enterprise wide disclosure was prepared on a basis consistent with the preparation of the condensed consolidated financial statements. | ||||||||
The following tables contain certain financial information by geographic area: | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2015 | |||||||
Net revenue: (Customer geographic location) | ||||||||
United States | $ | 3,546,903 | $ | 3,397,667 | ||||
Europe | 342,601 | 352,377 | ||||||
Other International | 5,430 | 40,560 | ||||||
$ | 3,894,934 | $ | 3,790,604 | |||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Long-lived assets: | ||||||||
United States | $ | 2,037,554 | $ | 1,847,792 | ||||
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 10. Fair Value Measurements |
ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. ASC 820 establishes a three-level valuation hierarchy of valuation techniques that is based on observable and unobservable inputs. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The first two inputs are considered observable and the last unobservable, that may be used to measure fair value and include the following: | |
Level 1 - Quoted prices in active markets for identical assets or liabilities. | |
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, 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. | |
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |
As of December 31, 2014 and March 31, 2015, the Company did not hold any assets that are required to be measured at fair value on a recurring basis. | |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events |
Second Amendment to the SWK Credit Agreement | |
On April 3, 2015 (the “Second Amendment Closing Date”), the Company entered into a second amendment (the “Second Amendment”) to the SWK Credit Agreement. Pursuant to the Second Amendment, the Company drew the remaining $2,000,000 of the Loan Commitment Amount, thereby increasing the total amount advanced to the Company under the SWK Credit Agreement to $12,000,000. The maturity date for the term loan under the SWK Credit Agreement remains July 30, 2020, or such earlier date on which the Loan Commitment Amount is terminated, pursuant to the terms of the SWK Credit Agreement. | |
In addition, on the Second Amendment Closing Date, the Company issued warrants to purchase an aggregate of 2,702,702 shares of Common Stock (the “Second Amendment Warrants”) to the Lenders advancing the term loan to the Company on the Second Amendment Closing Date. The Second Amendment Warrants are exercisable up to and including April 3, 2021 at an exercise price of $0.37 per share, subject to adjustment. A Lender may exercise its Second Amendment Warrant on a cashless basis at any time. In the event a Lender exercises its Second Amendment Warrants on a cashless basis, the Company will not receive any proceeds. The exercise price of the Second Amendment Warrants is subject to customary adjustments for stock splits, stock dividends, recapitalizations and the like. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Basis of Consolidation | Basis of Consolidation | ||||||||||||||||
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Response Genetics, Ltd., a Scottish corporation (the “Subsidiary”), which was incorporated in November 2006. The Subsidiary had no employees or active operations in 2014 or to date in 2015. All significant intercompany transactions and balances have been eliminated in consolidation. | |||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||||||||||
The Company considers all highly liquid investments with a maturity date of three months or less from the date of purchase to be cash equivalents. The carrying value of cash equivalents approximates fair value due to the short-term nature and liquidity of these instruments. The Company’s cash equivalents are comprised of cash on hand, deposits in banks and money market investments. | |||||||||||||||||
Accounts Receivable | Accounts Receivable | ||||||||||||||||
Pharmaceutical Accounts Receivable | |||||||||||||||||
The Company invoices its clients as specimens are processed and any other contractual obligations are met. The Company’s contracts with clients typically require payment within 45 days of the date of invoice. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its clients to make required payments. The Company specifically analyzes accounts receivable and historical bad debts, client credit, current economic trends and changes in client payment trends when evaluating the adequacy of the allowance for doubtful accounts. Account balances are charged-off against the allowance when it is probable the receivable will not be recovered. To date, the Company’s pharmaceutical customers have primarily been large pharmaceutical companies. As a result, bad debts from pharmaceutical accounts receivable to date have been minimal. Pharmaceutical company accounts receivable as of December 31, 2014 and March 31, 2015 were $1,037,834 and $454,773, respectively. There were no allowances for doubtful accounts recorded against these pharmaceutical accounts receivable at December 31, 2014 and March 31, 2015. | |||||||||||||||||
ResponseDX® Accounts Receivable | |||||||||||||||||
ResponseDX® accounts receivable are recorded from two primary payors: (1) Medicare and (2) third party payors such as commercial insurance and private payors or self-paying payors (“Private Payors”). ResponseDX® accounts receivable are recorded at established billing rates less an estimated billing adjustment, based on reporting models utilizing historical cash collection percentages and updated for current effective reimbursement factors. Management performs ongoing valuations of accounts receivable balances based on management’s evaluation of historical collection experience and industry trends. Based on the historical experience for our accounts, management has determined, based on a detailed analysis, that accounts receivable associated with certain billings are unlikely to be collected. Therefore, the Company has recorded an allowance for doubtful accounts of $2,071,706 and $2,226,890 as of December 31, 2014 and March 31, 2015, respectively. The Company’s bad debt expense for the three months ended March 31, 2014 and 2015 was $1,293,850 and $1,902,144, respectively. | |||||||||||||||||
ResponseDX® accounts receivable as of December 31, 2014 and March 31, 2015, consisted of the following: | |||||||||||||||||
December 31, | March 31, | ||||||||||||||||
2014 | 2015 | ||||||||||||||||
Net Medicare receivable | $ | 2,814,989 | $ | 2,191,781 | |||||||||||||
Net Private Payor receivable | 6,029,300 | 5,639,447 | |||||||||||||||
8,844,289 | 7,831,228 | ||||||||||||||||
Allowance for doubtful accounts | (2,071,706 | ) | (2,226,890 | ) | |||||||||||||
Total | $ | 6,772,583 | $ | 5,604,338 | |||||||||||||
At December 31, 2014 and March 31, 2015, all Medicare accounts receivable outstanding for a period of greater than one year have been reserved 100%. | |||||||||||||||||
Property and Equipment | Property and Equipment | ||||||||||||||||
Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line methods over the estimated useful lives of the assets. The Company has determined the estimated useful lives of its property and equipment, as follows: | |||||||||||||||||
Laboratory equipment | 5 to 7 years | ||||||||||||||||
Furniture and equipment | 3 to 7 years | ||||||||||||||||
Purchased and internally-developed software | 3 to 5 years | ||||||||||||||||
Leasehold improvements | Shorter of the useful life (5 to 7 years) or the lease term | ||||||||||||||||
Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the related accounts and the resulting gain or loss is reflected in the statements of operations. The Company has capitalized costs related to the development of database software (see Note 3). The portion of this database placed into service is amortized in accordance with ASC 350-40, Internal-Use Software. The amortization period is five years using the straight-line method. | |||||||||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||||||||
Pharmaceutical Revenue | |||||||||||||||||
Revenues that are derived from testing services provided to pharmaceutical companies are recognized on a contract specific basis pursuant to the terms of the related agreements. Revenue is recognized in accordance with ASC 605, Revenue Recognition, which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. | |||||||||||||||||
Revenues are recorded on an accrual basis as the contractual obligations are completed and as a set of assays is processed through the Company’s laboratory under a specified contractual protocol and are recorded on the date the tests are completed. Certain contracts have minimum assay requirements that, if not met, result in payments that are due upon the completion of the designated period. In these cases, revenues are recognized when the end of the specified contract period is reached. | |||||||||||||||||
On occasion, the Company may enter into a contract that requires the client to provide an advance payment for specimens that will be processed at a later date. In these cases, the Company records this advance as deferred revenue and recognizes the revenue as the specimens are processed or at the end of the contract period, as appropriate. There was no deferred revenue at December 31, 2014 or March 31, 2015. | |||||||||||||||||
The Company recorded revenue from pharmaceutical clients for the three months ended March 31, 2014 and 2015 of $577,381 and $462,093, respectively. | |||||||||||||||||
ResponseDX® Revenue | |||||||||||||||||
The Company recognizes revenues when (a) the price is fixed or determinable, (b) persuasive evidence of an arrangement exists, (c) the service is performed and (d) collectability of the resulting receivable is reasonably assured. The Company’s specialized diagnostic services are performed based on a written test requisition form or electronic equivalent and revenues are recognized once the diagnostic services have been performed, and the results have been delivered to the ordering physician. | |||||||||||||||||
Services are provided to certain patients covered by various third-party payer programs including various managed care organizations, commercial insurance plans and Medicare programs. Billings for services under third-party payer programs are included in revenue net of allowances for contractual discounts and allowances for differences between the amounts billed and estimated payment amounts. Significant judgment is inherent in the selection of assumptions and the interpretation of historical experience as well as the identification of external and internal factors affecting the determination of these reserves for Medicare, private health insurance companies, healthcare institutions, and patients. | |||||||||||||||||
The Company reports revenues from contracted payers, including Medicare, certain insurance companies and certain healthcare institutions, based on the contractual rate, or in the case of Medicare, published fee schedules. The Company reports revenues from non-contracted payers, including certain insurance companies and individuals, based on the amount expected to be collected. The difference between the amount billed and the amount estimated to be collected from non-contracted payers is recorded as a contractual allowance to arrive at the reported net revenues. The expected revenues from non-contracted payers are based on the historical collection experience of each payer or payer group, as appropriate. The assumptions used to determine these contractual allowances are reasonable considering known facts and circumstances. If actual future payments are less than the estimates the Company made at the time of recognizing revenue, the consolidated financial position, results of operations and cash flows may be negatively impacted. If actual future payments are materially different from the contracted amounts or estimates, the difference is accounted for as a change in estimate in the period in which they become known. Adjustments to the estimated payment amounts based on final settlement are recorded upon settlement as an adjustment to revenue. | |||||||||||||||||
For the three months ended March 31, 2014 and 2015, approximately 39% and 42%, respectively, of the Company's ResponseDX® revenues were derived directly from the Medicare program. The Company’s Medicare provider number allows it to invoice and collect from Medicare. The Company’s invoicing to Medicare is primarily based on amounts allowed by Medicare for the service provided as defined by Common Procedural Terminology (“CPT”). Laws and regulations governing the Medicare program and healthcare generally are complex and subject to interpretation. | |||||||||||||||||
The following details ResponseDX® revenue for the periods indicated: | |||||||||||||||||
Three Months | |||||||||||||||||
Ended March 31, | |||||||||||||||||
2014 | 2015 | ||||||||||||||||
Net Medicare revenue | $ | 1,308,422 | $ | 1,408,241 | |||||||||||||
Net Private Payor revenue | 2,009,131 | 1,920,270 | |||||||||||||||
Net ResponseDX® revenue | $ | 3,317,553 | $ | 3,328,511 | |||||||||||||
The Company recognizes revenue for services covered by Medicare based on the Medicare fee schedule. For 2014, the Company’s Medicare fees were based on the Centers for Medicare and Medicaid Services (“CMS”) proposed “Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to Part B for CY 2014” released in July 2013. For the three months ended March 31, 2015, the Company’s fees were based on the Centers for Medicare and Medicaid Services (“CMS”) fee schedules released in December 2014. | |||||||||||||||||
The Company updates its estimates of Medicare fees based on current information from CMS. The nature of the testing services the Company provides, the evidence the Company gathers to establish the creditworthiness of its payors and the delivery method of its services have not changed from prior periods, and therefore these assumption remain appropriate. | |||||||||||||||||
Cost of Revenue | Cost of Revenue | ||||||||||||||||
Cost of revenue represents the cost of materials, direct labor, royalties, costs associated with processing tissue specimens including pathological review, staining, microdissection, paraffin extraction, reverse transcription polymerase chain reaction (“PCR”), fluorescence in situ hybridization (“FISH”), quality control analyses, license fees and delivery charges necessary to render an individualized test result. Costs associated with performing tests are recorded as the tests are processed. | |||||||||||||||||
License Fees | License Fees | ||||||||||||||||
The Company has licensed technology for the extraction of ribonucleic acid (“RNA”) from formalin-fixed, paraffin-embedded tumor specimens from the University of Southern California (“USC”). Under the terms of the license agreement, the Company is required to pay royalties to USC calculated as a fixed percentage of the net sales price as defined in the agreement that the Company generates by using this technology. Total license fees expensed in cost of revenue under the license agreement with USC were $10,961 and $5,508 for the three months ended March 31, 2014 and 2015, respectively. The Company also maintains a non-exclusive license to use certain patents related to the PCR of Roche Molecular Systems, Inc. (“Roche”). The Company pays Roche a royalty fee based on revenue that the Company generates through use of this technology. The Company accrues for such royalties at the time revenue is recognized. Royalties expensed in cost of revenue under the Roche agreement totaled $44,373 and $16,265 for the three months ended March 31, 2014 and 2015, respectively. Such royalties are included in cost of revenues in the accompanying statements of operations. | |||||||||||||||||
The Company is subject to potentially significant variations in royalties recorded in any period. While the amount paid is based on a fixed percentage of net sales price as defined in the agreement of specific tests pursuant to terms set forth in the agreements with USC and Roche, the amount due is calculated based on the revenue we recognize using the respective licensed technology. As discussed above, this revenue can vary from period to period as it is dependent on the timing of the specimens submitted by our clients for testing. | |||||||||||||||||
Additionally, the Company periodically analyzes the technical procedures performed in its test offerings to assess which activities utilize licensed technologies and to calculate royalties for use of the licensed technology. The most recent analyses indicate that the Company could owe less than the amounts that have been accrued for royalties payable. Roche is still reviewing the Company’s updated royalty calculations. It is possible that based on Roche’s review and the Company’s discussions with Roche, the Company may further adjust its Roche royalty accrual. | |||||||||||||||||
Research and Development | Research and Development | ||||||||||||||||
The Company expenses costs associated with research and development activities as incurred. Research and development costs are expensed as incurred and classified as research and development costs. Research and development costs include employee costs (salaries, payroll taxes, benefits, and travel), equipment depreciation and maintenance, laboratory supplies, primers and probes, reagents, patent costs and occupancy costs. | |||||||||||||||||
Line of Credit | Line of Credit | ||||||||||||||||
On July 14, 2011, the Company entered into a line of credit agreement with Silicon Valley Bank (the “Bank”), which agreement has been amended most recently on July 30, 2014. The line of credit is collateralized by all of the Company’s assets including its pharmaceutical, Private Payor and Medicare receivables. The maximum amount that can be borrowed from the line of credit is $2,000,000, subject to certain conditions. As of December 31, 2014 and March 31, 2015, the Company had drawn $1,500,000 and $1,465,662, respectively, against the line of credit. As of December 31, 2014 and March 31, 2015, the available amount the Company can draw from the line of credit was $500,000 and $463,677, respectively, calculated as the lesser of (i) the Company’s calculated borrowing base, which was 80% of certain of the Company’s accounts receivable, or (ii) the amount available under the line of credit. During the first half of 2014, the interest rate charged to the Company on the line of credit was 5%, calculated by reference to the prime rate plus 1.75%. For the latter half of 2014 and the three months ended March 31, 2015, the rate charged to the Company was 5.5%, calculated by reference to the prime rate plus 2.25%. The line of credit’s maturity date is July 25, 2016. | |||||||||||||||||
The line of credit is subject to various covenants, including financial covenants that require the Company to maintain (i) an adjusted quick ratio of at least 1.25 to 1.00; (ii) quarterly rolling twelve-month net revenue balances beginning December 31, 2014; and (iii) quarterly minimum liquidity of $1,000,000. The Company’s revenue covenant and liquidity covenant under the line of credit agreement conform with, and are cross-defaulted with equivalent covenants under the SWK Credit Agreement (as described below.) At December 31, 2014 and March 31, 2015, the Company was in compliance with its covenants under the line of credit agreement. Historically, however, the Company has been out of compliance with certain covenants from time to time, and the Company has received waivers and forbearance agreements from the Bank. | |||||||||||||||||
From time to time, the Company’s calculated borrowing base under its Bank line of credit may decrease to a level where the Company is in an over-advance position in which case the Company will be required to repay any outstanding amounts greater than the calculated borrowing base for such covered period back to the Bank immediately. The Company will be able to draw down on the credit line again with respect to such paid-back amount once the Company is in compliance with the borrowing base requirement. | |||||||||||||||||
As of December 31, 2014 and March 31, 2015, the line of credit under the credit agreement was classified as a non-current liability of the Company on the accompanying condensed consolidated balance sheet as the line of credit had a maturity date of greater than one year from the date of the balance sheet. | |||||||||||||||||
SWK Term Loan | SWK Term Loan | ||||||||||||||||
On July 30, 2014 (the “Closing Date”), the Company entered into a credit agreement (the “SWK Credit Agreement”) with SWK Funding LLC, as the administrative agent (the “Agent” or “SWK”), and the lenders (including SWK) party thereto from time to time (the “Lenders”). The SWK Credit Agreement provides for a multi-draw term loan to the Company (the “Loan”) up to a maximum principal amount of $12,000,000 (the “Loan Commitment Amount”). On the Closing Date, the Lenders advanced the Company an amount equal to $8,500,000 which is due and payable on July 30, 2020 (the “Term Loan Maturity Date”) or such earlier date on which the Loan Commitment Amount is terminated pursuant to the terms of the SWK Credit Agreement. On February 3, 2015 (the “Amendment Closing Date”), the Company and SWK entered into a first amendment (the “Amendment”) to the SWK Credit Agreement. Pursuant to the Amendment, the Company drew an additional $1,500,000 of the Loan Commitment Amount thereby increasing the total amount advanced to the Company under the SWK Credit Agreement to $10,000,000. | |||||||||||||||||
The Loan bears interest at a rate equal to the LIBOR Rate (as defined in the SWK Credit Agreement) plus an applicable margin of 12.5% per annum, subject to a one percent (1.0%) LIBOR floor. Interest on the Loan is due and payable in arrears (i) on the forty-fifth (45th) day following the last calendar day of each of the months of September, December, March, and June, commencing on November 15, 2014, (ii) upon a prepayment of the Loan and (iii) on the Term Loan Maturity Date. At December 31, 2014 and March 31, 2015, the interest rate charged to the Company was 13.5%. Upon the earlier of (a) the Term Loan Maturity Date or (b) full repayment of the Loan, the Company is also required to pay an exit fee. On September 9, 2014, SWK, in its capacity as the initial Lender, assigned part of its interests under the SWK Credit Agreement to SG-Financial, LLC (“SG”). Pursuant to the assignment, SG was assigned $2,500,000 of the $8,500,000 Closing Date initial advance to the Company and $1,029,412 of the subsequent term loan commitment. On January 30, 2015, SG assigned all of its interests under the SWK Credit Agreement back to SWK. | |||||||||||||||||
On the Closing Date, the Company issued to the Agent a warrant (the “Initial Warrant”) to purchase up to 681,090 shares of the Company's common stock. The Initial Warrant was exercisable, in whole or in part, from the date of issuance until and including July 30, 2020 at an exercise price of $0.936 per share, subject to adjustment. The Initial Warrant was valued at $414,239, or approximately $0.61 per covered share, using a Black-Scholes pricing model with the following assumptions: 2.01% risk free rate, 0% dividend, 101.5% volatility, and six-year expected life. The value of the warrant was recorded on the balance sheet included in additional paid-in capital. On September 9, 2014, the Agent assigned a portion of the Initial Warrant consisting of the right to purchase 200,321 shares of common stock to SG (the “SG Initial Warrant”). On January 30, 2015, SG assigned the SG Initial Warrant back to the Agent and on the Amendment Closing Date, the Company replaced the Initial Warrant to purchase the total 681,090 shares of the Company’s common stock with a new warrant with an adjusted exercise price (the “Replacement Warrant”). The Replacement Warrant is exercisable up to and including July 30, 2020 at an exercise price of $0.39 per share. The Agent may exercise the Replacement Warrant on a cashless basis at any time. In the event the Agent exercises the Replacement Warrant on a cashless basis, the Company will not receive any proceeds. The exercise price of the Replacement Warrant is subject to customary adjustments for stock splits, stock dividends, recapitalizations and the like. | |||||||||||||||||
For accounting purposes, the proceeds received in the July 2014 transaction were allocated to the liability for debt, a debt issuance discount and additional paid-in capital for the warrant based upon the relative fair value of the loan and the warrant. The amounts recorded in the financial statements were $8,500,000 for loan liability, $576,161 for debt issuance discount and $377,140 to additional paid-in capital for the warrant. Additionally, the Company recorded deferred loan issuance costs of $187,092 for investment banker fees and legal fees incurred to enter into the SWK Credit Agreement. The debt issuance discount and the deferred issuance costs are being amortized to interest expense over the six-year term of the loan. Upon the re-issuance of the Replacement Warrant on February 3, 2015 at a reduced exercise price of $0.39, the debt issuance discount was re-valued at $599,305 and a $23,144 increase in the warrant value was recorded as an increase to debt discount and additional paid-in capital. The Replacement Warrant transaction was determined to be a debt modification. | |||||||||||||||||
In addition, on the Amendment Closing Date, the Company issued the Agent a new warrant (the “First Amendment Warrant”) to purchase 576,923 shares of Common Stock. The First Amendment Warrant is exercisable up to and including February 3, 2021 at an exercise price of $0.39 per share, subject to adjustment. The First Amendment Warrant was valued at $167,712, or approximately $0.29 per covered share, using a Black-Scholes pricing model with the following assumptions: 1.39% risk free rate, 0% dividend, 90.9% volatility and six-year expected life. The value of the warrant was recorded on the balance sheet included in additional paid-in capital. The Agent may exercise the First Amendment Warrant on a cashless basis at any time. In the event the Agent exercises the First Amendment Warrant on a cashless basis, the Company will not receive any proceeds. The exercise price of the First Amendment Warrant is subject to customary adjustments for stock splits, stock dividends, recapitalizations and the like. | |||||||||||||||||
Additionally, for accounting purposes, the proceeds received in the February 2015 transaction were allocated to the liability for debt, a debt issuance discount and additional paid-in capital for the warrant based upon the relative fair value of the loan and the warrant. The amounts recorded in the financial statements were $1,500,000 for loan liability, $168,372 for debt issuance discount and $148,887 to additional paid-in capital for the warrant. Additionally, the Company recorded deferred loan issuance costs of $19,485 for investment banker fees and legal fees incurred to enter into the Amendment. The debt issuance discount and the deferred issuance costs are being amortized to interest expense over the six-year term of the loan. | |||||||||||||||||
The Company may prepay the Loan, in whole or in part, upon five business days’ written notice provided that a prepayment premium is paid to the Lenders as set forth in the SWK Credit Agreement. The Company is required to prepay the Loan with any net cash proceeds received from certain types of dispositions of assets described in the SWK Credit Agreement. The Company is also required to make certain revenue-based payments on the Company’s quarterly revenues, applied in the following priority: (i) first, to the payment of all fees, costs, expenses and indemnities due and owing to the Agent under the SWK Credit Agreement, (ii) second, to the payment of all fees, costs, expenses and indemnities due and owing to the Lenders under the SWK Credit Agreement, (iii) third, to the payment of all accrued but unpaid interest until paid in full, (iv) fourth, for each revenue-based payment date after August 2016, to the payment of all principal of the Loan up to an aggregate amount of $750,000 on any such payment date and (v) fifth, all remaining amounts to the Company. | |||||||||||||||||
As of December 31, 2014 and March 31, 2015, the term debt under SWK Credit Agreement was classified as a non-current liability of the Company on the accompanying balance sheet as the repayment terms are based on future revenues that cannot be reasonably estimated and therefore all outstanding amounts are classified as non-current. | |||||||||||||||||
The SWK Credit Agreement contains customary affirmative and negative covenants for credit facilities of its type, including covenants that limit the Company’s ability to pay dividends or redeem outstanding equity interests, incur additional indebtedness, grant additional liens, engage in any other type of business, make investments, merge, consolidate or sell all or substantially all of its assets and enter into transactions with related parties. The SWK Credit Agreement also contains certain financial covenants, including certain minimum aggregate revenue requirements. The Company was in compliance with these covenants at December 31, 2014 and March 31, 2015. | |||||||||||||||||
The SWK Credit Agreement includes customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, default under certain other indebtedness, certain insolvency or bankruptcy events, the occurrence of certain material judgments, the institution of any proceeding by a government agency or a change of control of the Company that is not otherwise permitted under the SWK Credit Agreement. | |||||||||||||||||
Refer to Note 11 to these unaudited condensed consolidated financial statements for a description of the second amendment to the SWK Credit Agreement, dated April 3, 2015, pursuant to which the Company drew the remaining $2,000,000 of the Loan Commitment Amount and issued certain of the Lenders warrants to purchase an aggregate 2,702,702 shares of Common Stock. | |||||||||||||||||
Income Taxes | Income Taxes | ||||||||||||||||
Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. | |||||||||||||||||
ASC 740, Income Taxes, clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of December 31, 2014 and March 31, 2015, the Company does not have a liability for unrecognized tax benefits. The Company recognizes interest and penalties associated with tax matters as part of the income tax provision, and includes accrued interest and penalties with the related tax liability in the balance sheet. For the periods ended March 31, 2014 and 2015, there were no interest and penalties recorded in the Condensed Consolidated Statement of Operations. | |||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation | ||||||||||||||||
The Company accounts for stock-based compensation in accordance with ASC 718, Stock Compensation, Share-Based Payment. Stock-based compensation expense for all stock-based compensation awards granted is based on the grant-date fair value estimated in accordance with the provisions of ASC 718. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option vesting period. As further described in Note 7, certain awards granted to Thomas A. Bologna, the Company’s Chairman and Chief Executive Officer, were recognized based on an accelerated vesting basis triggered by market conditions rather than a straight-line basis. | |||||||||||||||||
The Company accounts for equity instruments issued to non-employees in accordance with ASC 505, Equity. Under ASC 505, stock option awards issued to non-employees are measured at fair value using the Black-Scholes option-pricing model and recognized pursuant to a performance model. | |||||||||||||||||
Management Estimates | Management Estimates | ||||||||||||||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. Significant estimates in these condensed consolidated financial statements have been made for revenue, allowances for doubtful accounts, impairment of long-lived assets, depreciation of property and equipment and stock-based compensation. Actual results could differ materially from those estimates. | |||||||||||||||||
Long-lived Assets | Long-lived Assets | ||||||||||||||||
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates potential impairment by comparing the carrying amount of the asset with the estimated undiscounted future cash flows associated with the use of the asset and its eventual disposition. Should the review indicate that the assets cost is not recoverable, the carrying value of the asset would be reduced to its fair value, which is measured by future discounted cash flows. | |||||||||||||||||
Foreign Currency Translation | Foreign Currency Translation | ||||||||||||||||
The financial position and results of operations of the Company’s foreign subsidiary are determined using local currency as the functional currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each period-end. Statement of Operations amounts are translated at the average rate of exchange prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss in stockholders’ deficit. | |||||||||||||||||
Comprehensive Loss | Comprehensive Loss | ||||||||||||||||
The components of comprehensive loss are accumulated net loss and foreign currency translation adjustments for the three months ended March 31, 2014 and 2015. | |||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||||||||||
Cash and cash equivalents are stated at cost, which approximates fair market value. Cash equivalents consist of money market accounts, with fair values estimated based on quoted market prices. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies. | |||||||||||||||||
Advertising Costs | Advertising Costs | ||||||||||||||||
The Company markets its services through its advertising activities in trade publications and on the internet. Advertising costs are included in selling and marketing expenses on the statements of operations and are expensed as incurred. Advertising costs for the three months ended March 31, 2014 and 2015 were $6,422 and $17,124, respectively. | |||||||||||||||||
Concentration of Credit Risk and Clients and Limited Suppliers | Concentration of Credit Risk and Clients and Limited Suppliers | ||||||||||||||||
Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. At March 31, 2015, the Company had $1,476,222 in cash and cash equivalents that exceeded federally insured limits. At March 31, 2015, $7,803 of cash was held outside of the United States. | |||||||||||||||||
Revenue sources that account for greater than 10 percent of total revenue are provided below. | |||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
2014 | 2015 | ||||||||||||||||
Revenue | Percent | Revenue | Percent | ||||||||||||||
of Total | of Total | ||||||||||||||||
Revenue | Revenue | ||||||||||||||||
Medicare, net of contractual allowances | $ | 1,308,422 | 34 | % | $ | 1,408,241 | 37 | % | |||||||||
Customers that account for greater than 10 percent of gross accounts receivable are provided below. | |||||||||||||||||
As of December 31, 2014 | As of March 31, 2015 | ||||||||||||||||
Receivable | Percent of | Receivable | Percent of | ||||||||||||||
Balance | Gross | Balance | Gross | ||||||||||||||
Receivables | Receivables | ||||||||||||||||
Medicare, net of contractual allowances | $ | 2,814,989 | 29 | % | $ | 2,191,781 | 26 | % | |||||||||
Many of the supplies and reagents used in the Company’s testing process are procured from a limited number of suppliers. Any supply interruption or an increase in demand beyond the suppliers’ capabilities could have an adverse impact on the Company’s business. Management believes it can identify alternative sources, if necessary, but it is possible such sources may not be identified in sufficient time to avoid an adverse impact on its business. The Company purchases certain laboratory supplies and reagents primarily from a limited number of suppliers. The Company made approximately 73% of its reagent purchases from four suppliers during the year ended December 31, 2014 and made approximately 70% of its reagent purchases from three suppliers during the three months ended March 31, 2015. | |||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||||||||||
In April 2015, the FASB issued ASU 2015-03 “Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires an entity to present debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendment will be effective for the Company’s annual and interim reporting periods beginning January 1, 2016 and should applied on a retrospective basis. The adoption of ASU 2015-03 will not have any impact on the Company’s results of operations, but will result in debt issuance costs being presented as a direct reduction from the carrying amount of debt liabilities. This standard will not have a material impact on the Company’s consolidated financial statements. | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which modifies how all entities recognize revenue, and consolidates into one Accounting Standards Codification ("ASC") Topic (ASC Topic 606, Revenue from Contracts with Customers) the current guidance found in ASC Topic 605, Revenue Recognition, and various other revenue accounting standards for specialized transactions and industries. The core principle of the guidance is that “an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In achieving this objective, an entity must perform five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations of the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 also clarifies how an entity should account for costs of obtaining or fulfilling a contract in a new ASC Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers. | |||||||||||||||||
ASU 2014-09 is effective for public companies for annual periods beginning after December 15, 2016 and interim periods within those annual periods, and early adoption is not permitted. ASU 2014-09 may be applied using either a full retrospective approach, in which all years included in the financial statements are presented under the revised guidance, or a modified retrospective approach. Under the modified retrospective cumulative catch-up approach, financial statements will be prepared using the new standard for the year of adoption, but not for prior years. Under this method, entities will recognize a cumulative catch-up adjustment to the opening balance of retained earnings at the effective date for contracts that still require performance by the Company and disclose all line items in the year of adoption as if they were prepared under the old revenue guidance. The Company is currently evaluating the impact of ASC 606, but at the current time does not know what impact the new standard will have on revenue recognized and other accounting decisions in future periods, if any, nor what method of adoption will be selected if the impact is material. | |||||||||||||||||
In August 2014, the Financial Accounting Standards Board issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-09”). ASU 2014-15 provides guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter; earlier adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial condition, results of operations or cash flows. | |||||||||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Schedule of ResponseDX Accounts Receivable | ResponseDX® accounts receivable as of December 31, 2014 and March 31, 2015, consisted of the following: | ||||||||||||||||
December 31, | March 31, | ||||||||||||||||
2014 | 2015 | ||||||||||||||||
Net Medicare receivable | $ | 2,814,989 | $ | 2,191,781 | |||||||||||||
Net Private Payor receivable | 6,029,300 | 5,639,447 | |||||||||||||||
8,844,289 | 7,831,228 | ||||||||||||||||
Allowance for doubtful accounts | (2,071,706 | ) | (2,226,890 | ) | |||||||||||||
Total | $ | 6,772,583 | $ | 5,604,338 | |||||||||||||
Schedule of Estimated Useful Lives of Property and Equipment | The Company has determined the estimated useful lives of its property and equipment, as follows: | ||||||||||||||||
Laboratory equipment | 5 to 7 years | ||||||||||||||||
Furniture and equipment | 3 to 7 years | ||||||||||||||||
Purchased and internally-developed software | 3 to 5 years | ||||||||||||||||
Leasehold improvements | Shorter of the useful life (5 to 7 years) or the lease term | ||||||||||||||||
Schedule of Revenue Sources that Account for Greater than 10 Percent of Total Revenue | Revenue sources that account for greater than 10 percent of total revenue are provided below. | ||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
2014 | 2015 | ||||||||||||||||
Revenue | Percent | Revenue | Percent | ||||||||||||||
of Total | of Total | ||||||||||||||||
Revenue | Revenue | ||||||||||||||||
Medicare, net of contractual allowances | $ | 1,308,422 | 34 | % | $ | 1,408,241 | 37 | % | |||||||||
Sales Revenue, Net [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Schedule of Revenue by Major Customers by Reporting Segments | The following details ResponseDX® revenue for the periods indicated: | ||||||||||||||||
Three Months | |||||||||||||||||
Ended March 31, | |||||||||||||||||
2014 | 2015 | ||||||||||||||||
Net Medicare revenue | $ | 1,308,422 | $ | 1,408,241 | |||||||||||||
Net Private Payor revenue | 2,009,131 | 1,920,270 | |||||||||||||||
Net ResponseDX® revenue | $ | 3,317,553 | $ | 3,328,511 | |||||||||||||
Accounts Receivable [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Schedule of Revenue by Major Customers by Reporting Segments | Customers that account for greater than 10 percent of gross accounts receivable are provided below. | ||||||||||||||||
As of December 31, 2014 | As of March 31, 2015 | ||||||||||||||||
Receivable | Percent of | Receivable | Percent of | ||||||||||||||
Balance | Gross | Balance | Gross | ||||||||||||||
Receivables | Receivables | ||||||||||||||||
Medicare, net of contractual allowances | $ | 2,814,989 | 29 | % | $ | 2,191,781 | 26 | % | |||||||||
Property_and_Equipment_and_Int1
Property and Equipment and Intangible Assets (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Schedule of Property and Equipment | Property and equipment and intangible assets consist of the following: | |||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Laboratory equipment | $ | 4,543,019 | $ | 4,543,019 | ||||
Furniture and equipment | 762,466 | 764,876 | ||||||
Leasehold improvements | 496,523 | 496,523 | ||||||
5,802,008 | 5,804,418 | |||||||
Less: Accumulated depreciation | -4,395,603 | -4,539,067 | ||||||
Total property and equipment, net | $ | 1,406,405 | $ | 1,265,351 | ||||
Purchased software | $ | 803,719 | $ | 803,719 | ||||
Internally developed software | 213,361 | 213,361 | ||||||
Trademarks | 33,000 | 33,000 | ||||||
1,050,080 | 1,050,080 | |||||||
Less: Accumulated amortization | -418,931 | -467,639 | ||||||
Total intangible assets, net | $ | 631,149 | $ | 582,441 | ||||
Schedule of Capital Leased Assets | The Company leases certain equipment that is recorded as capital leases. This equipment is included in property and equipment on the accompanying consolidated balance sheet as of March 31, 2015 as follows: | |||||||
Equipment purchased under capital leases | $ | 310,467 | ||||||
Less: Accumulated amortization | -151,785 | |||||||
Equipment purchased under capital leases, net | $ | 158,682 | ||||||
Schedule of Future Minimum Lease Payments Under Capital Leases | Future minimum lease payments under capital leases as of March 31, 2015 are as follows: | |||||||
Years ending December 31, | ||||||||
2015 | $ | 92,437 | ||||||
2016 | 68,327 | |||||||
2017 | 16,364 | |||||||
2018 | 16,364 | |||||||
Thereafter | 9,546 | |||||||
Total minimum lease payments | 203,038 | |||||||
Less amount represented by interest | -21,970 | |||||||
Less current portion | -104,984 | |||||||
Capital lease obligation, net of current portion | $ | 76,084 | ||||||
Loss_Per_Share_Tables
Loss Per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Computation for Basic and Diluted Loss Per Share | The following table sets forth the computation for basic and diluted loss per share: | |||||||
Three Months | ||||||||
Ended March 31, | ||||||||
2014 | 2015 | |||||||
Numerator: | ||||||||
Net loss | $ | -3,504,439 | $ | -4,018,380 | ||||
Numerator for basic and diluted earnings per share | $ | -3,504,439 | $ | -4,018,380 | ||||
Denominator: | ||||||||
Denominator for basic and diluted earnings per share — weighted-average shares | 38,718,336 | 38,795,396 | ||||||
Basic and diluted loss per share | $ | -0.09 | $ | -0.1 | ||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Schedule of Future Minimum Lease Payments under Noncancelable Operating Leases | Future minimum lease payments by year and in the aggregate, due under non-cancelable operating leases for facilities, equipment and software as a service, consisted of the following at March 31, 2015: | ||||
Years Ending December 31, | |||||
2015 | $ | 769,660 | |||
2016 | 460,169 | ||||
Total | $ | 1,229,829 | |||
Stock_Options_Restricted_Stock1
Stock Options, Restricted Stock and Warrants (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||
Schedule of Assumptions Used to Estimate Share-Based Compensation Expense Using Black-Scholes Model | Except for certain grants of restricted common stock and common stock options containing market conditions as described below, the Company estimated share-based compensation expense for the three months ended March 31, 2015* using the Black-Scholes model with the following weighted average assumptions: | |||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, 2015 | ||||||||||||||||
Risk free interest rate | 1.68 | % | ||||||||||||||
Expected dividend yield | — | % | ||||||||||||||
Expected volatility | 99.2 | % | ||||||||||||||
Expected term **(in years) | 6.25 | |||||||||||||||
Forfeiture rate *** | 7 | % | ||||||||||||||
* There were no stock options issued for the three months ended March 31, 2014. | ||||||||||||||||
** Expected term is calculated using SAB 107, Simplified Formula. Management has concluded that the use of the simplified method for calculating the expected term of its common stock option grants is appropriate given the lack of historical exercises and the standard terms of the employee option grants, including, options are granted at-the-money, exercise is conditional only on performing service through the vesting dates, termination of service causes forfeiture of options, employees have a limited number of days to exercise options after termination of service, and options are non-transferable. | ||||||||||||||||
*** Forfeiture range represents 0% for directors and 21% for employees | ||||||||||||||||
Summary of Stock Option Activity | The following table summarizes the stock option activity for the 2006 Plan for the three months ended March 31, 2015: | |||||||||||||||
Number of | Weighted | Remaining | Aggregate | |||||||||||||
Shares | Average | Contractual | Intrinsic | |||||||||||||
Exercise | Life (Years) | Value | ||||||||||||||
Price | ||||||||||||||||
Outstanding, December 31, 2014 | 2,833,604 | $ | 1.62 | 7.9 | $ | - | ||||||||||
Granted (Unaudited) | 15,000 | $ | 0.43 | 10 | $ | 150 | ||||||||||
Exercised (Unaudited) | - | $ | - | - | - | |||||||||||
Expired (Unaudited) | -177,566 | 2.86 | 4.9 | — | ||||||||||||
Forfeited (Unaudited) | -209,960 | $ | 1.22 | — | — | |||||||||||
Outstanding, March 31, 2015 (Unaudited) | 2,461,078 | $ | 1.56 | 7.8 | $ | 150 | ||||||||||
Exercisable, March 31, 2015 (Unaudited) | 1,433,086 | $ | 1.91 | 7 | $ | — | ||||||||||
Schedule of Options Outstanding | ||||||||||||||||
The following table provides additional information regarding options outstanding under the 2006 Plan as of March 31, 2015 (unaudited): | ||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||
Exercise Price | Number of | WA | Number of | WA | ||||||||||||
Options | Remaining | Options | Remaining | |||||||||||||
Contractual | Contractual | |||||||||||||||
Term | Term | |||||||||||||||
$0.43 to 0.99 | 655,890 | 9.3 | 111,050 | 9.3 | ||||||||||||
1.00 to 1.99 | 1,441,980 | 7.9 | 956,536 | 7.7 | ||||||||||||
2.00 to 2.99 | 201,708 | 6.4 | 204,000 | 6.4 | ||||||||||||
3.00 to 3.99 | 51,500 | 3.3 | 51,500 | 3.3 | ||||||||||||
7 | 110,000 | 2.2 | 110,000 | 2.2 | ||||||||||||
2,461,078 | 7.8 | 1,433,086 | 7 | |||||||||||||
Schedule of Stock Based Compensation Included in Results of Operations | ||||||||||||||||
Stock-based compensation expense – employees, was classified as follows in the results of operation: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2015 | |||||||||||||||
Cost of revenue | $ | 11,256 | $ | 9,327 | ||||||||||||
Research and development | 13,197 | 11,546 | ||||||||||||||
Sales and marketing | 15,749 | 10,544 | ||||||||||||||
General and administrative | 144,567 | 75,833 | ||||||||||||||
Totals | $ | 184,769 | $ | 107,250 | ||||||||||||
Schedule of Awards to Mr. Bologna | The following table summarizes these awards to Mr. Bologna: | |||||||||||||||
Type | Grant Date | Number of Awards | Intrinsic | Exercise Price | Options | Remaining | ||||||||||
Value as of | Exercisable | Contractual | ||||||||||||||
March 31, | Term | |||||||||||||||
2015 | ||||||||||||||||
Restricted Shares | 12/21/11 | 270,000 | $ | — | $ | 1.2 | — | 6.75 | ||||||||
of Common Stock | ||||||||||||||||
Options | 12/21/11 | 600,000 | $ | — | $ | 1.2 | 600,000 | 6.75 | ||||||||
Options | 12/21/11 | 300,000 | $ | — | $ | 1.2 | 300,000 | 6.75 | ||||||||
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Schedule of Financial Information by Geographic Area | The following tables contain certain financial information by geographic area: | |||||||
Three Months Ended March 31, | ||||||||
2014 | 2015 | |||||||
Net revenue: (Customer geographic location) | ||||||||
United States | $ | 3,546,903 | $ | 3,397,667 | ||||
Europe | 342,601 | 352,377 | ||||||
Other International | 5,430 | 40,560 | ||||||
$ | 3,894,934 | $ | 3,790,604 | |||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Long-lived assets: | ||||||||
United States | $ | 2,037,554 | $ | 1,847,792 | ||||
Organization_Operations_and_Ba1
Organization, Operations and Basis of Accounting (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | ||
Accumulated deficit | ($83,014,921) | ($78,996,541) |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 1 Months Ended | 3 Months Ended | 0 Months Ended | 12 Months Ended | ||||
Jul. 30, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 09, 2014 | Apr. 03, 2015 | Feb. 03, 2015 | Dec. 31, 2014 | Jan. 30, 2015 | |
Significant Accounting Policies [Line Items] | ||||||||
Receivable Balance,net allowances for doubtful debts | $6,059,111 | $7,810,417 | ||||||
Allowance for doubtful accounts | 2,226,890 | 2,071,706 | ||||||
Revenue from pharmaceutical clients | 462,093 | 577,381 | ||||||
Line of credit, borrowing base percentage of pharmaceutical accounts receivable | 80.00% | |||||||
Line of credit, interest above prime rate | 2.25% | 1.75% | ||||||
Line of credit, interest charged | 5.50% | 5.00% | ||||||
Line of credit, amount drawn | 1,465,662 | 1,500,000 | ||||||
Advertising costs | 17,124 | 6,422 | ||||||
Payment period from the date of invoice | 45 days | |||||||
Cash and cash equivalents that exceeded federally insured limits | 1,476,222 | |||||||
Bad debt expense | 1,902,144 | 1,293,850 | ||||||
Cash, Uninsured Amount | 7,803 | |||||||
Line of Credit Facility, Maximum Borrowing Capacity | 2,000,000 | 8,500,000 | ||||||
Line of Credit Facility, Commitment Fee Amount | 750,000 | |||||||
Allowance For Doubtful Accounts Percentage Of Accounts Receivable | 100.00% | 100.00% | ||||||
Debt Instrument, Unamortized Discount | 703,507 | 536,150 | ||||||
Stockholders Equity Attributable to Parent, Total | -4,937,113 | -1,170,107 | ||||||
Medicare Program [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Percentage Of Revenue | 42.00% | 39.00% | ||||||
Licensing Agreements [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
License Costs | 5,508 | 10,961 | ||||||
Initial Warrant [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 681,090 | 681,090 | ||||||
Fair value Of Warrants Issued | 414,239 | |||||||
Conversion of Stock Conversion Price Per Share | $0.61 | |||||||
Fair Value Assumptions, Risk Free Interest Rate | 2.01% | |||||||
Fair Value Assumptions, Expected Dividend Rate | 0.00% | |||||||
Fair Value Assumptions, Expected Volatility Rate | 101.50% | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $0.94 | |||||||
First Amendment Warrant [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 576,923 | |||||||
Fair value Of Warrants Issued | 167,712 | |||||||
Conversion of Stock Conversion Price Per Share | $0.29 | |||||||
Fair Value Assumptions, Risk Free Interest Rate | 1.39% | |||||||
Fair Value Assumptions, Expected Dividend Rate | 0.00% | |||||||
Fair Value Assumptions, Expected Volatility Rate | 90.90% | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $0.39 | |||||||
Replacement Warrant [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $0.39 | |||||||
SG Financial LLC [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Line of Credit Facility, Current Borrowing Capacity | 2,500,000 | |||||||
Line of Credit Facility, Commitment Fee Amount | 1,029,412 | |||||||
Loans Payable | 8,500,000 | |||||||
SG Financial LLC [Member] | Initial Warrant [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 200,321 | |||||||
Subsequent Event [Member] | First Amendment Warrant [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Line of Credit Facility,Agreement Date | 3-Apr-15 | |||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,702,702 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $0.37 | |||||||
SWK Credit Agreement [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Long-term Debt, Gross | 12,000,000 | |||||||
Line of Credit Facility, Interest Rate Description | The Loan bears interest at a rate equal to the LIBOR Rate (as defined in the SWK Credit Agreement) plus an applicable margin of 12.5% per annum, subject to a one percent (1.0%) LIBOR floor. Interest on the Loan is due and payable in arrears (i) on the forty-fifth | |||||||
Loans Payable | 8,500,000 | |||||||
Debt Issuance Cost | 576,161 | |||||||
Adjustments to Additional Paid in Capital, Warrant Issued | 377,140 | |||||||
Deferred Finance Costs, Net | 187,092 | |||||||
Line of Credit Facility, Remaining Borrowing Capacity | 10,000,000 | |||||||
Line of Credit Facility, Increase (Decrease), Net | 1,500,000 | |||||||
Debt Instrument, Unamortized Discount | 599,305 | |||||||
Stockholders Equity Attributable to Parent, Total | 23,144 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 13.50% | 13.50% | ||||||
SWK Credit Agreement [Member] | Subsequent Event [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Line of Credit Facility, Commitment Fee Amount | 2,000,000 | |||||||
SWK First Amendment Credit Agreement [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Loans Payable | 1,500,000 | |||||||
Debt Issuance Cost | 168,372 | |||||||
Adjustments to Additional Paid in Capital, Warrant Issued | 148,887 | |||||||
Deferred Finance Costs, Net | 19,485 | |||||||
Cost of Goods, Total [Member] | Supplier Concentration Risk [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Concentration risk percentage | 70.00% | 73.00% | ||||||
Roche Molecular Systems [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Royalty Expense | 16,265 | 44,373 | ||||||
Clinical [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Receivable Balance,net allowances for doubtful debts | 454,773 | 1,037,834 | ||||||
Silicon Valley Bank [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Mortgage Loans on Real Estate, Final Maturity Date | 25-Jul-16 | |||||||
Line of Credit Facility, Maximum Borrowing Capacity | 463,677 | 500,000 | ||||||
Line Of Credit Facility Covenant Compliance Liquidity Amount | $1,000,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Schedule of ResponseDX Accounts Receivable) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Allowance for doubtful accounts | ($2,226,890) | ($2,071,706) |
Total | 6,059,111 | 7,810,417 |
ResponseDX [Member] | ||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Accounts receivable | 7,831,228 | 8,844,289 |
Allowance for doubtful accounts | -2,226,890 | -2,071,706 |
Total | 5,604,338 | 6,772,583 |
ResponseDX [Member] | Medicare [Member] | ||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Accounts receivable | 2,191,781 | 2,814,989 |
Private Payor [Member] | ResponseDX [Member] | ||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Accounts receivable | $5,639,447 | $6,029,300 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Schedule of Estimated Useful Lives) (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Minimum [Member] | Purchased And Internally Developed Software Intangible Asset [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Maximum [Member] | Purchased And Internally Developed Software Intangible Asset [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Laboratory Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Laboratory Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 7 years |
Furniture and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Furniture and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 7 years |
Leasehold Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Leasehold Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 7 years |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Schedule of ResponseDX Revenue) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Net ResponseDX B. revenue | $3,790,604 | $3,894,934 |
ResponseDX [Member] | ||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Net ResponseDX B. revenue | 3,328,511 | 3,317,553 |
Private Payor [Member] | ResponseDX [Member] | ||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Net ResponseDX B. revenue | 1,920,270 | 2,009,131 |
Medicare [Member] | ResponseDX [Member] | ||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Net ResponseDX B. revenue | $1,408,241 | $1,308,422 |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Schedule of Revenue Sources that Account for Greater than 10 Percent of Total Revenue) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Revenue | $3,790,604 | $3,894,934 |
Medicare [Member] | ||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||
Revenue | $1,408,241 | $1,308,422 |
Percent of Total Revenue | 37.00% | 34.00% |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies (Schedule of Customers that Account for Greater than 10 Percent of Accounts Receivable) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | |||
Receivable Balance | 6,059,111 | $7,810,417 | |
Medicare [Member] | |||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | |||
Percent of Total Receivables | 37.00% | 34.00% | |
Medicare [Member] | Accounts Receivable [Member] | |||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | |||
Receivable Balance | 2,191,781 | $2,814,989 | |
Percent of Total Receivables | 26.00% | 29.00% |
Property_and_Equipment_and_Int2
Property and Equipment and Intangible Assets (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Property, Plant and Equipment [Line Items] | ||
Amortization Expenses | $192,172 | $206,884 |
Property_and_Equipment_and_Int3
Property and Equipment and Intangible Assets (Schedule of Property and Equipment and Intangible Assets) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $5,804,418 | $5,802,008 |
Less: Accumulated depreciation | -4,539,067 | -4,395,603 |
Total property and equipment, net | 1,265,351 | 1,406,405 |
Intangible assets | 1,050,080 | 1,050,080 |
Less: Accumulated amortization | -467,639 | -418,931 |
Total intangible assets, net | 582,441 | 631,149 |
Purchased Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets | 803,719 | 803,719 |
Trademarks [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets | 33,000 | 33,000 |
Internally developed software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets | 213,361 | 213,361 |
Laboratory Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4,543,019 | 4,543,019 |
Furniture and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 764,876 | 762,466 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $496,523 | $496,523 |
Property_and_Equipment_and_Int4
Property and Equipment and Intangible Assets (Schedule of Capital Leased Assets) (Details) (USD $) | Mar. 31, 2015 |
Property, Plant and Equipment [Line Items] | |
Equipment purchased under capital leases | $310,467 |
Less: Accumulated amortization | -151,785 |
Equipment purchased under capital leases, net | $158,682 |
Property_and_Equipment_and_Int5
Property and Equipment and Intangible Assets (Schedule of Future Minimum Lease Payments under Capital Leases) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
2015 | $92,437 | |
2016 | 68,327 | |
2017 | 16,364 | |
2018 | 16,364 | |
Thereafter | 9,546 | |
Total minimum lease payments | 203,038 | |
Less amount represented by interest | -21,970 | |
Less current portion | 104,984 | 100,951 |
Capital lease obligation, net of current portion | $76,084 |
Loss_Per_Share_Details
Loss Per Share (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Number of shares excluded from the calculation of diluted loss per share | 2,461,078 | 2,217,134 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 270,000 | 270,000 |
Warrants and Rights Outstanding | $1,258,013 |
Loss_Per_Share_Computation_for
Loss Per Share (Computation for Basic and Diluted Loss Per Share) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Numerator: | ||
Net loss | ($4,018,380) | ($3,504,439) |
Numerator for basic and diluted earnings per share | ($4,018,380) | ($3,504,439) |
Denominator: | ||
Denominator for basic and diluted earnings per share B weighted-average shares | 38,795,396 | 38,718,336 |
Basic and diluted loss per share | ($0.10) | ($0.09) |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Commitments And Contingencies Disclosure [Line Items] | ||
Rent expense | $212,181 | $212,181 |
California State [Member] | ||
Commitments And Contingencies Disclosure [Line Items] | ||
Operating leases, space | 27,446 | |
Operating lease expiration date | 30-Jun-16 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Schedule of Future Minimum Lease Payments under Noncancelable Operating Leases) (Details) (USD $) | Mar. 31, 2015 |
Commitments And Contingencies Disclosure [Line Items] | |
2015 | $769,660 |
2016 | 460,169 |
Total | $1,229,829 |
License_and_Collaborative_Agre1
License and Collaborative Agreements (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Revenue, Net, Total | $3,790,604 | $3,894,934 |
Licensing Agreements [Member] | University of Southern California [Member] | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Royalty expense included in cost of revenue | 5,508 | 10,961 |
Licensing Agreements [Member] | Roche Molecular Systems [Member] | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Royalty expense included in cost of revenue | 16,265 | 44,373 |
Service Agreements [Member] | Glaxo, Smith, Kline [Member] | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Revenue, Net, Total | 2,046 | 0 |
Service Agreements [Member] | GSK Bio [Member] | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Revenue, Net, Total | $341,462 | $328,281 |
Collaborative agreement, optional additional period | 90 days |
Stock_Options_Restricted_Stock2
Stock Options, Restricted Stock and Warrants (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | |||||
Jul. 30, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Sep. 09, 2014 | Apr. 03, 2015 | Mar. 31, 2000 | Dec. 31, 2008 | Jan. 30, 2015 | Oct. 26, 2006 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Options expiration period | 10 years | ||||||||||
Options outstanding, weighted average exercise price | $1.59 | ||||||||||
Non-vested stock options outstanding, Weighted average grant date fair value | $1.07 | ||||||||||
Number of restricted common stock granted | 270,000 | 270,000 | |||||||||
Share-based compensation | $107,250 | $184,769 | |||||||||
Unrecognized compensation cost related to non-vested share-based compensation arrangements granted | 637,950 | ||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 4 months 24 days | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $0.43 | $0.70 | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Average Forfeiture Rate | 7.00% | [1] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 2,461,078 | ||||||||||
Line of Credit Facility, Commitment Fee Amount | 750,000 | ||||||||||
SWK Credit Agreement [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Debt Instrument, Maturity Date | 30-Jul-20 | ||||||||||
Common Stock [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | 0 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | 7,605 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $0.32 | ||||||||||
Initial Warrant [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 681,090 | 681,090 | |||||||||
Fair Value Assumptions, Expected Term | 6 years | ||||||||||
First Amendment Warrant [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 576,923 | ||||||||||
Fair Value Assumptions, Expected Term | 6 years | 6 years | |||||||||
SG Financial LLC [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Line of Credit Facility, Commitment Fee Amount | 1,029,412 | ||||||||||
SG Financial LLC [Member] | Initial Warrant [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 200,321 | ||||||||||
Subsequent Event [Member] | SWK Credit Agreement [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Line of Credit Facility, Commitment Fee Amount | 2,000,000 | ||||||||||
Subsequent Event [Member] | First Amendment Warrant [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,702,702 | ||||||||||
Maximum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Average Forfeiture Rate | 21.00% | ||||||||||
Minimum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Average Forfeiture Rate | 0.00% | ||||||||||
Stock Option Plan 2000 [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of shares authorized | 210,000 | ||||||||||
Stock option granted, number of common stock shares | 1,600,000 | ||||||||||
Other Stock Plans [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock option granted, number of common stock shares | 16,000 | ||||||||||
2006 Stock Plan [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of shares authorized | 3,970,000 | 2,160,000 | |||||||||
Stock option granted, number of common stock shares | 15,000 | ||||||||||
Increase in the number of shares available for issuance | 210,000 | 200,000 | |||||||||
Options outstanding, weighted average exercise price | $1.56 | $1.62 | |||||||||
Stock option granted, exercise price | $0.43 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,508,922 | ||||||||||
Percentage Of Common Stock Outstanding | 5.00% | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 1,027,992 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | 150 | 0 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 2,461,078 | 2,833,604 | |||||||||
Thomos Bologna [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock option granted, number of common stock shares | 600,000 | ||||||||||
Share-based compensation | $0 | $44,531 | |||||||||
Thomos Bologna [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of restricted common stock granted | 270,000 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 300,000 | ||||||||||
Thomos Bologna [Member] | Restricted Stock Units (RSUs) [Member] | Minimum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Common Stock, Average Closing Price | $2.40 | ||||||||||
Thomos Bologna [Member] | Stock Option [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Options vesting period | 36 months | ||||||||||
Thomos Bologna [Member] | Stock Option [Member] | Minimum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of days, for calculating average closing price of common stock | 30 days | ||||||||||
Thomos Bologna [Member] | Stock Option [Member] | Period One [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock option granted, exercise price | $1.20 | ||||||||||
[1] | Forfeiture range represents 0% for directors and 21% for employees. |
Stock_Options_Restricted_Stock3
Stock Options, Restricted Stock and Warrants (Schedule of Assumptions Used to Estimate Share-Based Compensation Expense Using Black-Scholes Model) (Details) | 3 Months Ended | |
Mar. 31, 2015 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk free interest rate | 1.68% | [1] |
Expected dividend yield | 0.00% | [1] |
Expected volatility | 99.20% | |
Expected term (in years) | 6 years 3 months | [2] |
Forfeiture rate | 7.00% | [3] |
[1] | There were no stock options issued for the three months ended March 31, 2014. | |
[2] | Expected term is calculated using SAB 107, Simplified Formula. Management has concluded that the use of the simplified method for calculating the expected term of its common stock option grants is appropriate given the lack of historical exercises and the standard terms of the employee option grants, including, options are granted at-the-money, exercise is conditional only on performing service through the vesting dates, termination of service causes forfeiture of options, employees have a limited number of days to exercise options after termination of service, and options are non-transferable. | |
[3] | Forfeiture range represents 0% for directors and 21% for employees. |
Stock_Options_Restricted_Stock4
Stock Options, Restricted Stock and Warrants (Summary of Stock Option Activity) (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Number of Shares | ||
Outstanding, March 31, 2015 (Unaudited) | 2,461,078 | |
Weighted Average Exercise Price | ||
Outstanding, March 31, 2015 (Unaudited) | $1.59 | |
Stock Plan 2006 [Member] | ||
Number of Shares | ||
Granted (Unaudited) | 15,000 | |
Exercised (Unaudited) | 0 | |
Expired (Unaudited) | -177,566 | |
Forfeited (Unaudited) | -209,960 | |
Outstanding, March 31, 2015 (Unaudited) | 2,461,078 | 2,833,604 |
Exercisable, March 31, 2015 (Unaudited) | 1,433,086 | |
Weighted Average Exercise Price | ||
Granted (Unaudited) | $0.43 | |
Exercised (Unaudited) | $0 | |
Expired (Unaudited) | $2.86 | |
Forfeited (Unaudited) | $1.22 | |
Outstanding, March 31, 2015 (Unaudited) | $1.56 | $1.62 |
Exercisable, March 31, 2015 (Unaudited) | $1.91 | |
Remaining Contractual Life (Years) | ||
Outstanding, December 31, 2014 | 7 years 9 months 18 days | 7 years 10 months 24 days |
Granted (Unaudited) | 10 years | |
Exercised (Unaudited) | 0 years | |
Expired (Unaudited) | 4 years 10 months 24 days | |
Forfeited (Unaudited) | 0 years | |
Exercisable, December 31, 2014 | 7 years | |
Aggregate Intrinsic Value | ||
Granted (Unaudited) | $150 | |
Exercised (Unaudited) | 0 | |
Expired (Unaudited) | 0 | |
Forfeited (Unaudited) | 0 | |
Outstanding, March 31, 2015 (Unaudited) | 150 | 0 |
Exercisable, March 31, 2015 (Unaudited) | $0 |
Stock_Options_Restricted_Stock5
Stock Options, Restricted Stock and Warrants (Schedule of Options Outstanding) (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options Outstanding Number of Options | 2,461,078 |
Options Outstanding Weighted Average Remaining Contractual Term | 7 years 9 months 18 days |
Options Exercisable Number of Options | 1,433,086 |
Options Exercisable Weighted Average Remaining Contractual Term | 7 years |
$0.43 to 0.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options Outstanding Number of Options | 655,890 |
Options Outstanding Weighted Average Remaining Contractual Term | 9 years 3 months 18 days |
Options Exercisable Number of Options | 111,050 |
Options Exercisable Weighted Average Remaining Contractual Term | 9 years 3 months 18 days |
1.00 to 1.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options Outstanding Number of Options | 1,441,980 |
Options Outstanding Weighted Average Remaining Contractual Term | 7 years 10 months 24 days |
Options Exercisable Number of Options | 956,536 |
Options Exercisable Weighted Average Remaining Contractual Term | 7 years 8 months 12 days |
2.00 to 2.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options Outstanding Number of Options | 201,708 |
Options Outstanding Weighted Average Remaining Contractual Term | 6 years 4 months 24 days |
Options Exercisable Number of Options | 204,000 |
Options Exercisable Weighted Average Remaining Contractual Term | 6 years 4 months 24 days |
3.00 to 3.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options Outstanding Number of Options | 51,500 |
Options Outstanding Weighted Average Remaining Contractual Term | 3 years 3 months 18 days |
Options Exercisable Number of Options | 51,500 |
Options Exercisable Weighted Average Remaining Contractual Term | 3 years 3 months 18 days |
7 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options Outstanding Number of Options | 110,000 |
Options Outstanding Weighted Average Remaining Contractual Term | 2 years 2 months 12 days |
Options Exercisable Number of Options | 110,000 |
Options Exercisable Weighted Average Remaining Contractual Term | 2 years 2 months 12 days |
Stock_Options_Restricted_Stock6
Stock Options, Restricted Stock and Warrants (Schedule of Stock-Based Compensation Included in Results of Operations) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation | $107,250 | $184,769 |
Cost of revenue [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation | 9,327 | 11,256 |
Research and development [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation | 11,546 | 13,197 |
Sales and marketing [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation | 10,544 | 15,749 |
General and administrative [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation | $75,833 | $144,567 |
Stock_Options_Restricted_Stock7
Stock Options, Restricted Stock and Warrants (Schedule of Awards to Mr. Bologna) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Awards | 270,000 | 270,000 |
Thomos Bologna [Member] | Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant Date | 21-Dec-11 | |
Number of Awards | 270,000 | |
Intrinsic Value | 0 | |
Exercise Price | 1.2 | |
Options Exercisable | 0 | |
Remaining Contractual Term | 6 years 9 months | |
Employee Stock Option [Member] | Thomos Bologna [Member] | Period One [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant Date | 21-Dec-11 | |
Number of Awards | 600,000 | |
Intrinsic Value | 0 | |
Exercise Price | 1.2 | |
Options Exercisable | 600,000 | |
Remaining Contractual Term | 6 years 9 months | |
Employee Stock Option [Member] | Thomos Bologna [Member] | Period Two [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant Date | 21-Dec-11 | |
Number of Awards | 300,000 | |
Intrinsic Value | 0 | |
Exercise Price | 1.2 | |
Options Exercisable | 300,000 | |
Remaining Contractual Term | 6 years 9 months |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||
Net revenue | $3,790,604 | $3,894,934 | |
United States [Member] | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 3,397,667 | 3,546,903 | |
Long-lived assets | 1,847,792 | 2,037,554 | |
Europe [Member] | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 352,377 | 342,601 | |
Other International [Member] | |||
Segment Reporting Information [Line Items] | |||
Net revenue | $40,560 | $5,430 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 1 Months Ended | 0 Months Ended | |
Jul. 30, 2014 | Apr. 03, 2015 | Mar. 31, 2015 | |
Subsequent Event [Line Items] | |||
Line of Credit Facility, Commitment Fee Amount | $750,000 | ||
First Amendment Warrant [Member] | |||
Subsequent Event [Line Items] | |||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 576,923 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $0.39 | ||
Subsequent Event [Member] | First Amendment Warrant [Member] | |||
Subsequent Event [Line Items] | |||
Class Of Warrant Or Rights Date Upto Which Warrants Or Rights Exercisable | 3-Apr-21 | ||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,702,702 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $0.37 | ||
Subsequent Event [Member] | SWK Credit Agreement [Member] | |||
Subsequent Event [Line Items] | |||
Line of Credit Facility, Commitment Fee Amount | 2,000,000 | ||
Line of Credit Facility, Current Borrowing Capacity | $12,000,000 | ||
Line of Credit Facility, Expiration Date | 30-Jul-20 |