Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2014 |
Accounting Policies [Abstract] | ' |
Revenue Recognition, Deferred Revenue [Policy Text Block] | ' |
Revenue Recognition |
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We follow the provisions of FASB ASC 605, “Revenue Recognition”. We recognize revenue of products when persuasive evidence of a sale arrangement exists, the price to the buyer is fixed or determinable, delivery has occurred /title has passed, and collectability of the sales price is reasonably assured. The Company recognizes revenue from the sale of its ProteaPlot™ software when bundled with the LAESI platform, which facilitates operating the instrument and storage and display of datasets. The Company also recognizes revenue of standalone sales of ProteaPlot™, which generally consists of additional user licenses. |
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We account for shipping and handling costs in accordance with the provisions of FASB ASC 605-45-45, “Revenue Recognition – Principal Agent Considerations”, which requires all amounts charged to customers for shipping and handling to be classified as revenues. Shipping and handling costs charged to customers are recorded in the period the related product sales revenue is recognized. |
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Regarding short-term service contracts, the majority of these service contracts involve the processing of imaging and bioanalytical samples for pharmaceutical and academic/clinical research laboratories. These contracts generally provide for a fixed fee for each method developed or sample processed and revenue is recognized when the analysis is complete and a report is delivered. |
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For longer-term contracts involving multiple elements, the items included in the arrangement (deliverables) are evaluated to determine whether they represent separate units of accounting. We perform this evaluation at the inception of an arrangement and as each item in the arrangement is delivered. Generally, we account for a deliverable (or a group of deliverables) separately if: (i) the delivered item(s) have standalone value to the customer, and the delivery or performance of the service(s) is probable and substantially in our control. Revenue on multiple revenue arrangements is recognized using a proportional method for each separately identified element. All revenue from contracts determined not to have separate units of accounting is recognized based on consideration of the most substantive delivery factor of all the elements in the contract or, if there is no predominant deliverable, upon delivery of the final element of the arrangement. |
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Revenues from grants are based upon internal costs that are specifically covered by the grants, and where applicable, an additional facilities and administrative rate that provides funding for overhead expenses. These revenues are recognized when expenses have been incurred by the Company that is related to the grants. |
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The Company has revenue from four major components: molecular information services, LAESI instrument platform, research products, and grants and other collaboration revenues. Revenue by component was as follows: |
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| | Three Months Ended | | | | | |
| | March 31, 2014 | | March 31, 2013 | | | | | |
Molecular Information Services | | $ | 170,570 | | $ | 70,730 | | | | | |
LAESI Instrument Platform | | | 178,000 | | | 296,694 | | | | | |
Research Products | | | 95,342 | | | 114,191 | | | | | |
Grants and Other Collaborations | | | 24,188 | | | - | | | | | |
Gross Revenue | | $ | 468,100 | | $ | 481,615 | | | | | |
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Receivables, Policy [Policy Text Block] | ' |
Other Receivables |
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Other receivables, which reflect amounts due from non-trade activity, consist of the following at: |
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| | March 31, 2014 | | December 31, 2013 | | | | | |
French government R&D credit | | $ | 399,971 | | $ | 400,379 | | | | | |
French payroll taxes receivable | | | 36,900 | | | 34,899 | | | | | |
Other receivables – current | | $ | 436,871 | | $ | 435,278 | | | | | |
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Deposits | | $ | 23,231 | | $ | 23,249 | | | | | |
Other receivables – noncurrent | | $ | 23,231 | | $ | 23,249 | | | | | |
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Other Payables and Accrued Expenses [Policy Text Block] | ' |
Other Payables and Accrued Expenses |
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Other payables and accrued expenses, which reflect amounts due from non-trade activity, consist of the following at: |
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| | March 31, 2014 | | December 31, 2013 | | | | | |
Accrued expenses | | $ | 411,688 | | $ | 653,047 | | | | | |
Accrued interest | | | 75,738 | | | 39,911 | | | | | |
Accrued warranties | | | 97,500 | | | 81,250 | | | | | |
Accrued payroll and benefits | | | 275,374 | | | 286,979 | | | | | |
Unearned revenue | | | 2,200 | | | 7,980 | | | | | |
Other payables and accrued expenses | | $ | 862,500 | | $ | 1,069,167 | | | | | |
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Derivatives, Embedded Derivatives [Policy Text Block] | ' |
Derivative Liabilities |
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The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks; however, the Company has certain financial instruments that are embedded derivatives associated with capital raises and common stock purchase warrants. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with FASB ASC 810-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either income or expense. Upon conversion or exercise, the derivative liability is marked to fair value at the conversion date and then the related fair value is reclassified to equity. |
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Fair Value Measurement, Policy [Policy Text Block] | ' |
Fair value of financial assets and liabilities – Derivative Instruments |
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We measure the fair value of financial assets and liabilities in accordance with GAAP, which defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. |
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GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. |
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The three levels of inputs used to measure fair value: |
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Level 1 – quoted prices in active markets for identical assets or liabilities. |
Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable. |
Level 3 – inputs that are unobservable (for example, the probability of a capital raise in a “binomial” methodology for valuation of a derivative liability directly related to the issuance of common stock warrants). |
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The Company has entered into certain financial instruments and contracts such as, equity financing arrangements for the issuance of common stock, which include anti-dilution arrangements and detachable stock warrants that are i) not afforded equity classification, ii) embody risks not clearly and closely related to host contracts, or iii) may be net-cash settled by the counterparty. These instruments are recorded as derivative liabilities, at fair value at the issuance date. Subsequent changes in fair value are recorded through the statement of operations. |
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The Company’s derivative liabilities are related to common stock issuances, detachable common stock purchase warrants (“warrants”) issued in conjunction with debt and common stock, or warrants issued to placement agents for financial instrument issuances. We estimate fair values of the warrants that contain anti-dilution or “Down Round Protections” utilizing valuation models and techniques that have been developed and are widely accepted that take into account the additional value inherent in “Down Round Protection.” These widely accepted techniques include “Modified Binomial”, “Monte Carlo Simulation” and the “Lattice Model.” The “core” assumptions and inputs to the “Binomial” model are the same as for “Black-Scholes”, such as trading volatility, remaining term to maturity, market price, strike price, and risk free rates; all Level 2 inputs. Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable. However, a key input to a “Binomial” model (in our case, the “Monte Carlo Simulation”, for which we engaged an independent valuation firm to perform) is the probability of a future capital raise. By definition, this input assumption does not meet the requirements for Level 1 or Level 2 outlined above; therefore, the entire fair value calculation is deemed to be Level 3 under accounting requirements due to this single Level 3 assumption. This input to the Monte Carlo Simulation model was developed with significant input from management based on its knowledge of the business, current financial position and the strategic business plan with its best efforts. |
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As discussed above, financial liabilities are considered Level 3 when their fair values are determined using pricing models or similar techniques and at least one significant model assumption or input is unobservable. For the Company, the Level 3 financial liability is the derivative liability related to the common stock and warrants that include “Down Round Protection” and they were valued using the “Monte Carlo Simulation” technique. This technique, while the majority of inputs are Level 2, necessarily incorporates a Capital Raise Assumption which is unobservable and, therefore, a Level 3 input. A range of key quantitative assumptions related to the common stock and warrants that include “Down Round Protection” are as follows: |
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| | March 31, 2014 | | | |
| | Expected Life | | Risk Free | | | | Probability of a Capital | | | |
(Years) | Rate | Volatility | Raise | | |
Derivative liabilities | | <1 – 4.75 | | 0.93 | % | 80.23 | % | 100 | % | | |
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Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis |
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The Company’s derivative liabilities are related to common stock issuances, detachable warrants issued in conjunction with debt and common stock, or warrants issued to the placement agents for financial instrument issuances. The derivative liabilities measured at fair value on a recurring basis are summarized below: |
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| | Fair Value Measurements at March 31, 2014 | |
| | Carrying Value | | Level 1 | | Level 2 | | Level 3 | |
Derivative liabilities – common stock | | $ | 464,506 | | - | | - | | $ | 464,506 | |
Derivative liabilities – warrants | | | 93,159 | | - | | - | | | 93,159 | |
Total | | $ | 557,665 | | - | | - | | $ | 557,665 | |
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| | Fair Value Measurements at December 31, 2013 | |
| | Carrying Value | | Level 1 | | Level 2 | | Level 3 | |
Derivative liabilities – common stock | | $ | 558,799 | | - | | - | | $ | 558,799 | |
Derivative liabilities – warrants | | | 64,788 | | - | | - | | | 64,788 | |
Total | | $ | 623,587 | | - | | - | | $ | 623,587 | |
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The table below provides a summary of the changes in fair value of the derivative liabilities measured at fair value on a recurring basis: |
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| | Three Months Ended March 31, 2014 | | |
| | | | | | Total Fair Value | | |
Derivative | Derivative | Measurements | |
Liabilities - | Liabilities - | Using Level 3 | |
Common Stock | Warrants | Inputs | |
Balance at January 1, 2014 | | $ | 558,799 | | $ | 64,788 | | $ | 623,587 | | |
Issuance of warrants | | | - | | | - | | | - | | |
Unrealized (gain) loss on derivative liabilities | | | -94,293 | | | 28,371 | | | -65,922 | | |
Recognition of derivative liabilities | | | - | | | - | | | - | | |
Balance at March 31, 2014 | | $ | 464,506 | | $ | 93,159 | | $ | 557,665 | | |
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| | Year Ended December 31, 2013 | | |
| | | | | | Total Fair Value | | |
Derivative | Derivative | Measurements | |
Liabilities - | Liabilities - | Using Level 3 | |
Common Stock | Warrants | Inputs | |
Beginning balance at January 1, 2013 | | $ | - | | $ | - | | $ | - | | |
Issuance of warrants | | | - | | | 45,685 | | | 45,685 | | |
Unrealized (gain) loss on derivative liabilities | | | -257,846 | | | -122,140 | | | -379,986 | | |
Recognition of derivative liabilities | | | 816,645 | | | 141,243 | | | 957,888 | | |
Balance at December 31, 2013 | | $ | 558,799 | | $ | 64,788 | | $ | 623,587 | | |
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Earnings Per Share, Policy [Policy Text Block] | ' |
Net Loss per Share |
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Basic and diluted loss per common share is computed based on the weighted average number of common shares outstanding. Common share equivalents (which may consist of options, warrants and convertible debt) are excluded from the computation of diluted loss per share since the effect would be anti-dilutive. Common share equivalents which could potentially dilute basic earnings per share in the future, and which were excluded from the computation of diluted loss per share, totaled approximately 60,826,000 and 56,711,000 at March 31, 2014 and December 31, 2013, respectively. |
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New Accounting Pronouncements, Policy [Policy Text Block] | ' |
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS: |
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None |
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