UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2016
| |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Commission File Number: 001-32715
INTERLEUKIN GENETICS, INC.
(Name of Registrant in its Charter)
Delaware (State or other jurisdiction of incorporation or organization) |
94-3123681 (I.R.S. Employer Identification No.) |
135 Beaver Street, Waltham, MA (Address of principal executive offices) |
02452 (Zip Code) |
Registrant’s Telephone Number: (781) 398-0700 | |
Securities registered pursuant to Section 12(b) of the Act: | |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o NO x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. YES o NO x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company x | Emerging growth company o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO x
The aggregate market value of the registrant’s voting and non-voting common stock held by non-affiliates of the registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second quarter was $5,284,540.
As of April 13, 2017, there were 229,471,392 shares of the registrant’s Common Stock issued and outstanding.
Documents Incorporated By Reference
Portions of the registrant’s Definitive Proxy Statement for the 2017 Annual Meeting of Shareholders are incorporated by reference in Part III hereof.
EXPLANATORY NOTE
The sole purpose of this Amendment No. 1 to the Annual Report on Form 10-K of Interleukin Genetics, Inc. (the “Company”) for the year ended December 31, 2016, filed with the Securities and Exchange Commission on April 17, 2017 (the “Form 10-K”), is to submit the Interactive Data Files on Exhibit 101.
No other changes have been made to the Form 10-K, and this Amendment has not been updated to reflect events occurring subsequent to the filing of the Form 10-K.
Item 15. Exhibits
Item 15(a). | The following documents are filed as part of this Annual Report on Form 10-K: | |
Item 15(a)(1) and (2). | See “Index to Financial Statements” at Item 8 to this Annual Report on Form 10-K. Other financial statement schedules have not been included because they are not applicable or the information is included in the financial statements or notes thereto. | |
Item 15(a)(3) | Exhibits: |
The exhibits listed below are filed as part of or incorporated by reference into this Annual Report. Where certain exhibits are incorporated by reference from a previous filing, the exhibit numbers and previous filings are identified in parentheses. The SEC file number for each Form 10-K, Form 10-Q and Form 8-K identified below is File No. 001-32715.
Exhibit No. |
Identification of Exhibit | |
3.1.1 | Restated Certificate of Incorporation of the Company, as filed with the Delaware Secretary of State on October 23, 2013 (incorporated herein by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed November 14, 2013) | |
3.1.2 | Certificate of Amendment of Restated Certificate of Incorporation of the Company, as filed with the Delaware Secretary of State on July 21, 2015 (incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed July 23, 2015) | |
3.2 | Amended and Restated Bylaws of the Company dated July 24, 2008 (incorporated by reference to the Current Report on Form 8-K filed on July 28, 2008) | |
4.1 | Form of Stock Certificate representing Common Stock, $0.001 par value, of the Company (incorporated herein by reference to Exhibit 4.1 of the Company’s Quarterly Report on Form 10-Q filed August 14, 2000) | |
4.2 | Form of Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on March 5, 2010) | |
4.3 | Form of Warrant issued to Investors in the May 2013 Private Placement (incorporated herein by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on May 20, 2013) | |
4.4 | Form of Warrant issued to the Placement Agent in the May 2013 Private Placement (incorporated herein by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on May 20, 2013) | |
4.5 | Form of Warrant issued to the Investors and the Placement Agent in the December 2014 Private Placement (incorporated herein by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on December 23, 2014) | |
4.6 | Form of Warrant issued to Horizon Technology Finance Corporation and its affiliates in the December 2014 Debt Transaction (incorporated herein by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on December 23, 2014) | |
4.7 |
Common Stock Purchase Warrant, dated September 8, 2014, issued to Danforth Advisors, LLC (incorporated herein by reference to Exhibit 4.5 of the Company’s Registration Statement on Form S-1 filed on February 6, 2015 (File No.: 333-201908)) | |
4.8 | Form of Warrant issued to Investors in the 2016 Private Placement (incorporated herein by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on August 1, 2016) | |
4.9 | Form of Warrant issued to Horizon Technology Finance Corporation and its affiliates in the 2016 Debt Restructuring (incorporated herein by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on August 26, 2016) | |
4.10* | Form of Warrant issued to Horizon Technology Finance Corporation and its affiliates in the April 2017 Debt Restructuring | |
4.11* | Form of Warrant issued to Investors in the April 2017 Bridge Financing | |
4.12* | Form of Subordinated Convertible Promissory Note issued to Investors in April 2017 Bridge Financing | |
Leases | ||
10.1.1 | Commercial Lease Agreement between the Company and Clematis LLC dated February 13, 2004 (incorporated herein by reference to Exhibit 10.44 of the Company’s Annual Report on Form 10-K filed on March 29, 2004) | |
10.1.2 | Second Amendment to Commercial Lease, dated as of February 7, 2014, by and between the Company and Clematis, LLC (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on February 12, 2014) | |
10.1.3 |
Third Amendment to Commercial Lease, dated as of September 27, 2016, by and between the Company and Clematis, LLC (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on September 30, 2016) |
Exhibit No. |
Identification of Exhibit | |
Equity Compensation Plans | ||
10.2.1@ | 2000 Employee Stock Compensation Plan for the Company (incorporated herein by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed August 14, 2000) | |
10.2.2@ | Form of Nonqualified Stock Option Agreement under the 2000 Employee Stock Compensation Plan (incorporated herein by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q filed August 14, 2000) | |
10.2.3@ | Form of Incentive Stock Option Agreement under the 2000 Employee Stock Compensation Plan (incorporated herein by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q filed August 14, 2000) | |
10.3.1@ | Interleukin Genetics, Inc. 2004 Employee, Director and Consultant Stock Plan (incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement filed on April 29, 2011) | |
10.3.2@ | Form of Nonqualified Stock Option Agreement under the 2004 Employee, Director and Consultant Stock Plan (incorporated by reference to Exhibit 10.5.1 of the Company’s Annual Report on Form 10-K filed March 25, 2010) | |
10.3.3@
|
Form of Incentive Stock Option Agreement under the 2004 Employee, Director and Consultant Stock Plan (incorporated by reference to Exhibit 10.5.2 of the Company’s Annual Report on Form 10-K filed March 25, 2010) | |
10.4.1@ | 2013 Employee, Director and Consultant Equity Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 23, 2015) | |
10.4.2@ |
Form of Nonqualified Stock Option Agreement under the 2013 Employee, Director and Consultant Equity Incentive Plan (incorporated by reference to Exhibit 10.6.2 of the Company’s Annual Report on Form 10-K filed on March 20, 2014) | |
10.4.3@ |
Form of Incentive Stock Option Agreement under the 2013 Employee, Director and Consultant Equity Incentive Plan (incorporated by reference to Exhibit 10.6.3 of the Company’s Annual Report on Form 10-K filed on March 20, 2014) | |
Agreements with Executive Officers and Directors | ||
10.5@ | Employment Letter Agreement, dated December 14, 2015, by and between Interleukin Genetics, Inc. and Kenneth S. Kornman (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on December 15, 2015) | |
10.6.1@
10.6.2 |
Executive Employment Agreement, dated April 6, 2015, between Interleukin Genetics, Inc. and Mark B. Carbeau (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on April 9, 2015 (File No. 001-32715)). Non-Qualified Stock Option Agreement, dated April 6, 2015, by and between Interleukin Genetics, Inc. and Mark Carbeau (incorporated herein by reference to Exhibit 99.2 of the Company’s Registration Statement on Form S-8 (File No. 333-208094) filed on November 18, 2015. | |
10.7@ | Form of Director Indemnity Agreement dated March 5, 2003 (incorporated herein by reference to Exhibit 10.13 of the Company’s Current Report on Form 8-K filed on March 5, 2003) | |
10.8@ | Director Compensation Policy dated April 29, 2010 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed August 12, 2010) | |
10.9@ | Employment Agreement, dated May 19, 2016 and effective as of August 15, 2016, by and between Interleukin and Stephan Toutain (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q filed on November 14, 2016) | |
10.10@ |
Offer Letter, dated March 31, 2014, between Interleukin Genetics, Inc. and James M. Weaver (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed March 31, 2014) | |
10.11@ | Consulting Agreement, dated September 8, 2014, by and between Interleukin Genetics, Inc. and Danforth Advisors, LLC. (incorporated herein by reference to Exhibit 10.13 of the Company’s Registration Statement on Form S-1 filed on February 6, 2015) | |
Exhibit No. |
Identification of Exhibit | |
Financing Agreements | ||
10.12.1 | Stock Purchase Agreement between the Company and Pyxis Innovations Inc. dated March 5, 2003 (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 5, 2003) | |
10.12.2 | Amendment No. 1 to Stock Purchase Agreement between the Company and Pyxis Innovations Inc. dated May 20, 2003 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 30, 2003) | |
10.12.3 | Second Amendment to Stock Purchase Agreement between the Company and Pyxis Innovations Inc. dated February 28, 2005 (incorporated by reference to Exhibit 10.41 of the Company’s Annual Report on Form 10-K filed on April 26, 2005) | |
10.12.4 | Third Amendment, dated June 29, 2012, to the Stock Purchase Agreement, dated March 3, 2003, between Interleukin and Pyxis Innovations Inc. (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed on July 2, 2012) | |
10.13 | Stock Purchase Agreement Between the Company and Pyxis Innovations Inc. dated August 17, 2006 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K/A filed on October 31, 2006) | |
10.14.1 | Common Stock Purchase Agreement, dated May 17, 2013, by and among Interleukin and the Investors in the May 2013 Private Placement (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 20, 2013) | |
10.14.2 |
First Amendment, dated March 31, 2014, to Common Stock Purchase Agreement, dated May 17, 2013 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed March 31, 2014) | |
10.14.3 |
Second Amendment, dated May 30, 2014, to Common Stock Purchase Agreement, dated May 17, 2013 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed June 2, 2014) | |
10.14.4 |
Third Amendment, dated April 9, 2015, to Common Stock Purchase Agreement, dated May 17, 2013 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed April 9, 2015) | |
10.15 | Registration Rights Agreement, dated May 17, 2013, by and among Interleukin and the Investors in the May 2013 Private Placement, Pyxis Innovations Inc., Delta Dental Plan of Michigan, Inc. and BTIG, LLC (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on May 20, 2013) | |
10.16.1 |
Securities Purchase Agreement, dated December 23, 2014, by and among Interleukin and the Investors in the December 2014 Private Placement (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on December 23, 2014) | |
10.16.2 | First Amendment, dated April 6, 2015, to Securities Purchase Agreement dated December 23, 2014, by and among Interleukin and the Investors in the December Private Placement (incorporated herein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on April 9, 2015) | |
10.17 |
Registration Rights Agreement, dated December 23, 2014, by and among Interleukin and the Investors in the December 2014 Private Placement and BTIG, LLC (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on December 23, 2014) | |
10.18.1 |
Venture Loan and Security Agreement, dated December 23, 2014, by and between Interleukin and Horizon Technology Finance Corporation (incorporated herein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on December 23, 2014) | |
10.18.2 | First Amendment of Venture Loan and Security Agreement, dated August 25, 2016, by and among Interleukin Genetics, Inc. and Horizon Credit II LLC, as assignee of Horizon Technology Finance Corporation (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on August 26, 2016) | |
10.18.3* | Second Amendment of Venture Loan and Security Agreement, dated April 17, 2017, by and among Interleukin Genetics, Inc. and Horizon Credit II LLC, as assignee of Horizon Technology Finance Corporation | |
10.19 |
Securities Purchase Agreement, dated July 29, 2016, by and among Interleukin and the Investors in the 2016 Private Placement (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on August 1, 2016) | |
10.20 | Registration Rights Agreement, dated July 29, 2016, by and among Interleukin and the Investors in the 2016 Private Placement (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on August 1, 2017) | |
10.21* |
Subscription Agreement, dated April 17, 2017 by and among Interleukin and the Investors in the April 2017 Bridge Financing
|
Exhibit No. |
Identification of Exhibit | |
Agreements with respect to Collaborations, Licenses and Research and Development | ||
10.22.1 | Exclusive License Agreement between the Company and Access Business Group dated March 5, 2003 (incorporated herein by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed on March 5, 2003) | |
10.22.2 | First Amendment to License Agreement by and between the Company and Access Business Group International, LLC, dated September 1, 2008 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed on November 13, 2008) | |
10.23 | Merchant Network and Channel Partner Agreement dated October 26, 2009 by and between the Company and Amway Corp. (incorporated by reference to Exhibit 10.23 of the Company’s Annual Report on Form 10-K filed on March 25, 2010) | |
10.24+ | License Agreement, dated September 21, 2012, between Access Business Group International LLC and Interleukin Genetics, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 14, 2012) | |
10.25 | Professional Services Agreement, dated September 21, 2012, between Access Business Group International LLC and Interleukin Genetics, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 14, 2012) | |
10.26+ | Services Agreement, effective as of February 1, 2016, by and between Interleukin Genetics, Inc. and Metagenics, Inc. (incorporated by reference to Exhibit 10.23 of the Company’s Annual Report on Form 10-K filed on March 16, 2016) | |
10.27+ | Services Agreement, dated July 1, 2016, by and between Interleukin Genetics, Inc. and Alticor Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 14, 2016) | |
Consents, Certifications and Other Exhibits | ||
23.1* | Consent of Grant Thornton LLP | |
31.1* | Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 | |
31.1.2** | Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 | |
31.2* | Certification of Principal Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 | |
31.2.2** | Certification of Principal Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 | |
32.1* | Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002 | |
101** | The following materials from Interleukin Genetics Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Stockholders’ Deficit, (iv) the Statements of Cash Flows, and (v) Notes to Financial Statements. |
* | Filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on April 17, 2017. |
** | Filed herewith. |
+ | The Securities and Exchange Commission with respect to certain portions of this exhibit has previously granted confidential treatment. Omitted portions have been filed separately with the Securities and Exchange Commission. |
++ | Confidential treatment with respect to certain portions of this exhibit has been requested from the Securities and Exchange Commission. Omitted portions have been filed separately with the Securities and Exchange Commission. |
@ | Management contract or compensatory plan, contract or arrangement. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INTERLEUKIN GENETICS, INC. | ||
By: | /s/ Mark B. Carbeau | |
Mark B. Carbeau Chief Executive Officer |
Date: April 18, 2017
EXHIBIT 31.1.2
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF
SARBANES-OXLEY ACT OF 2002
I, certify that:
1. | I have reviewed this Amendment No. 1 to Annual Report on Form 10-K/A of Interleukin Genetics, Inc.; and |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
Date: April 18, 2017 | /s/ Mark B. Carbeau |
Mark B. Carbeau Chief Executive Officer |
EXHIBIT 31.2.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF
SARBANES-OXLEY ACT OF 2002
I, certify that:
1. | I have reviewed this Amendment No. 1 to Annual Report on Form 10-K/A of Interleukin Genetics, Inc.; and |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
Date: April 18, 2017 | /s/ Stephen J. DiPalma |
Stephen J. DiPalma Principal Financial and Accounting Officer |
Document And Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Apr. 13, 2017 |
Jun. 30, 2016 |
|
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | INTERLEUKIN GENETICS INC | ||
Entity Central Index Key | 0001037649 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 5,284,540 | ||
Trading Symbol | ILIU | ||
Entity Common Stock, Shares Outstanding | 229,471,392 |
BALANCE SHEETS [Parenthetical] - $ / shares |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 6,000,000 | 6,000,000 |
Convertible preferred stock, shares issued | 0 | 0 |
Convertible preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 450,000,000 | 300,000,000 |
Common stock, shares issued | 229,381,059 | 172,887,221 |
Common stock, shares outstanding | 229,381,059 | 172,887,221 |
STATEMENTS OF OPERATIONS - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Genetic testing | $ 1,032,317 | $ 1,155,980 |
Other | 1,481,139 | 284,930 |
Total revenue | 2,513,456 | 1,440,910 |
Cost of revenue | 1,601,958 | 1,414,113 |
Gross profit | 911,498 | 26,797 |
Operating expenses: | ||
Research and development | 1,480,882 | 1,299,542 |
Selling, general and administrative | 6,070,746 | 5,878,940 |
Amortization of intangibles | 33,450 | 136,886 |
Total operating expenses | 7,585,078 | 7,315,368 |
Loss from operations | (6,673,580) | (7,288,571) |
Other income (expense): | ||
Interest income | 0 | 222 |
Interest expense | (740,519) | (609,664) |
Total other expense | (740,519) | (609,442) |
Loss before income taxes | (7,414,099) | (7,898,013) |
Net loss | $ (7,414,099) | $ (7,898,013) |
Basic and diluted net loss per common share (in dollars per share) | $ (0.04) | $ (0.05) |
Weighted average common shares outstanding, basic and diluted (in shares) | 197,089,020 | 172,813,224 |
STATEMENTS OF STOCKHOLDERS' DEFICIT - 12 months ended Dec. 31, 2016 - USD ($) |
Total |
Convertible Preferred Stock [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Accumulated Deficit [Member] |
---|---|---|---|---|---|
Balance at Dec. 31, 2015 | $ (2,461,400) | $ 0 | $ 172,889 | $ 126,354,036 | $ (128,988,325) |
Balance (in shares) at Dec. 31, 2015 | 0 | 172,887,221 | |||
Net loss | (7,414,099) | $ 0 | $ 0 | 0 | (7,414,099) |
Private placement of common stock, net of offering costs of $62,849 | 5,529,651 | $ 0 | $ 56,263 | 5,473,388 | 0 |
Private placement of common stock, net of offering costs of $62,849 (in shares) | 0 | 56,262,571 | |||
Horizon warrant | 503,667 | $ 0 | $ 0 | 503,667 | 0 |
Danforth warrant | 8,885 | 0 | 0 | 8,885 | 0 |
Exercise of employee stock options | $ 0 | $ 1 | $ 0 | 67 | 0 |
Exercise of employee stock options (in shares) | 1,316 | 1,316 | 66 | ||
Employee stock purchase plan | $ 15,991 | $ 0 | $ 230 | 15,761 | 0 |
Employee stock purchase plan (in shares) | 0 | 229,951 | |||
Stock-based compensation expense | 971,688 | $ 0 | $ 0 | 971,688 | 0 |
Balance at Dec. 31, 2016 | $ (2,845,550) | $ 0 | $ 229,383 | $ 133,327,491 | $ (136,402,424) |
Balance (in shares) at Dec. 31, 2016 | 0 | 229,381,059 |
STATEMENTS OF STOCKHOLDERS’ DEFICIT [Parenthetical] |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Payments of Stock Issuance Costs | $ 62,849 |
Common Stock [Member] | |
Payments of Stock Issuance Costs | $ 62,849 |
Company Overview |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 | ||
Organization, Consolidation and Presentation Of Financial Statements [Abstract] | ||
Basis of Presentation | Note 1Company Overview Interleukin Genetics, Inc. (“the Company”) develops genetic tests for sale into the emerging personalized health market and performs testing services that can help individuals improve and maintain their health through preventive or therapeutic measures. The Company’s principal operations and markets are located in the United States. Through 2016, the Company’s focus was on commercializing its ILUSTRA Inflammation Management Program (the “ILUSTRA Program”) and its Inherent Health® brand of genetic tests. The Company is continuing to support the ILUSTRA Program deployments with customers and will advance new customer relationships that expand the evidence base of this program’s effectiveness. The Company will continue to refine its strategy for the ILUSTRA Program based on the Company’s financial resources and its commercial success. During late 2016 and early 2017, the Company redefined its strategy to add emphasis on a cardiovascular disease (CVD) program. |
Operating Matters and Liquidity |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 | ||
Going Concern [Abstract] | ||
Operating Matters and Liquidity | Note 2Operating Matters and Liquidity The Company has experienced net operating losses since its inception through December 31, 2016. The Company had net losses of $7.4 million and $7.9 million for the years ended December 31, 2016 and 2015, respectively, contributing to an accumulated deficit of $136.4 million as of December 31, 2016. In addition, the Company’s current liabilities exceed its current assets as of December 31, 2016 and the Company has primarily relied on external financing to fund its operations. As of March 31, 2017, the Company has cash of approximately $791,000, and has no access to credit. The Company has accounts payable and accrued expenses of $1.1 million, and owes $3.6 million in principal payments to Horizon. The Company estimates that $5.5 million in additional capital would be required to maintain the Company’s operations for one year from March 31, 2017. As further discussed in Note 15 “Subsequent Events”, the Company issued and sold $1,000,000 in aggregate principal Subordinated Convertible Promissory Notes, amended the Venture Loan and Security Agreement to defer principal amounts due in 2017, and implemented a work force reduction. The Company expects that, taking into account these transactions, current financial resources will be adequate to maintain the current and planned operations through the second quarter of 2017. The Company believes its success depends on its ability to consummate a material collaboration related to its CVD test and to generate significant revenues for the ILUSTRA Program through potential partners. The timing of any revenues that the Company may receive from either the CVD asset or the ILUSTRA Program is uncertain at this time, and is contingent upon a number of factors, including the Company’s ability to consummate arrangements with other partners for the CVD asset or to promote the ILUSTRA Program, the Company’s partners’ ability to develop reimbursed insurance plans and to develop a viable market for such plans, and the timing of utilization of the ILUSTRA Program pursuant to insured plans, or other possible arrangements. The Company does not expect to receive any material revenues from either the CVD asset or the ILUSTRA Program until mid to late 2017, at the earliest, and the timing of any such revenues may be substantially later. The Company may never receive significant revenues. These conditions, among others, considered in the aggregate raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company’s financial statements have been prepared assuming that it will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertain realization. The amount of cash the Company generates from operations is currently not sufficient to continue to fund operations and grow the business. Until such time, if ever, that the Company generates revenues sufficient to fund operations, the Company may fund its operations by issuing common stock, debt or other securities in one or more public or private offerings, as market conditions permit, or through the incurrence of debt from commercial lenders. Debt financing, if available, may involve agreements that include covenants limiting or restricting the Company’s ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends. There can be no assurance that additional funds will be available when the Company needs them on terms that are acceptable to the Company, or at all. If adequate funds are not available to the Company on a timely basis, the Company may be required to delay, limit, reduce or cease activities or operations or enter into licenses or other arrangements with third parties on terms that may be unfavorable to the Company or sell, license or relinquish rights to develop or commercialize its products, technologies or intellectual property. However, no assurance can be given at this time as to whether the Company will be able to achieve these objectives. The ability of the Company to realize the carrying value of its fixed assets and intangible assets is especially dependent on management’s ability to successfully execute on its plan. The Company needs to generate additional funds in order to meet its financial obligations. If it is unsuccessful in doing so, the Company may not be able to realize the carrying value of its fixed assets and intangible assets. The Company continues to take steps to reduce genetic test processing costs. Cost savings are primarily achieved through test process improvements. Management believes that the current laboratory space is adequate to process high volumes of genetic tests. On December 23, 2014, the Company entered into a Securities Purchase Agreement (the “2014 Purchase Agreement”) with various accredited investors (the “2014 Investors”), pursuant to which the Company sold to the 2014 Investors in a private placement transaction (the “December 2014 Private Placement”) an aggregate of 50,099,700 shares of common stock at a price of $0.1003 per share for gross proceeds of approximately $5.025 million. The 2014 Investors also received warrants (the “2014 Warrants”) to purchase up to an aggregate of 50,099,700 shares of common stock at an exercise price of $0.1003 per share. The 2014 Warrants vested immediately, are all currently exercisable and have a term of seven years. On December 23, 2014, the Company entered into a Venture Loan and Security Agreement (the “Loan Agreement”) with Horizon Technology Finance Corporation (the “Lender”) under which the Company borrowed $5.0 million. The loan originally bore interest at a floating rate equal to the One Month LIBOR Rate (with a floor of 0.50%) plus 8.50%. The loan was to be repaid in forty-five (45) monthly payments consisting of fifteen (15) monthly payments of only interest followed by thirty (30) equal monthly payments of principal and interest. In addition, at the end of the repayment term (or at early termination of the loan) a final payment equal to 4.5% of the loan would have been due and payable. The Company’s obligations under the Loan Agreement were secured by a first priority security interest in substantially all of its assets other than its intellectual property. The Company had also agreed not to pledge or otherwise encumber its intellectual property assets, subject to certain exceptions. In connection with the Loan Agreement, the Company issued to the Lender and its affiliates warrants to purchase a total of 2,492,523 shares of common stock at an exercise price of $0.1003 per share, which the Company refers to herein as the 2014 Lender Warrants. The 2014 Lender Warrants vested immediately, are all currently exercisable and have a term of ten (10) years. On August 25, 2016, the Company and the Lender entered into the First Amendment of Venture Loan and Security Agreement and an Amended and Restated Secured Promissory Note (collectively referred to herein as the “2016 Debt Restructuring”), which was effective as of August 1, 2016, pursuant to which the principal payments due from August 2016 through December 2016 were reduced to 33% of the principal payments due for these periods under the Loan Agreement. Principal payments were also subject to reduction in future periods upon the achievement of certain milestones by the Company. These milestones were not achieved. In consideration of these changes, (i) the Company paid the Lender an amendment fee of $25,000 and reimbursed the Lender’s legal expenses in the amount of $5,000, (ii) the Company granted the Lender a first priority security interest in substantially all of its assets, including its intellectual property, (iii) the interest rate of the loan was increased to 11.00% plus the amount by which the one month LIBOR Rate exceeds 0.50%, and (iv) the final payment was increased from 4.5% of the loan, or $225,000, to 6.5% of the loan, or $325,000. At December 31, 2016, the interest rate was 11.27% per annum. In connection with the 2016 Debt Restructuring, the Company also issued to the Lender an additional warrant to purchase up to 5,169,577 shares of the Company’s common stock at an exercise price of $0.0994 per share (the “2016 Lender Warrant”). The 2016 Lender Warrant vested immediately, is currently exercisable and has a term of ten (10) years. See Note 15 “Subsequent Events” for additional information with respect to an amendment to the Venture Loan and Security Agreement entered into in April 2017. On July 29, 2016, the Company entered into a Securities Purchase Agreement (the “2016 Purchase Agreement”) with various accredited investors (the “2016 Investors”), pursuant to which the Company sold to the 2016 Investors in a private placement transaction (the “2016 Private Placement”) an aggregate of 56,262,571 shares of common stock at a price of $0.0994 per share for gross proceeds of approximately $5.6 million. The 2016 Investors also received warrants to purchase up to an aggregate of 56,262,571 shares of common stock at an exercise price of $0.0994 per share (the “2016 Warrants”). The 2016 Warrants vested immediately, are all currently exercisable and have a term of seven years. |
Summary of Significant Accounting Policies |
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Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 3Summary of Significant Accounting Policies Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates. The Company’s most critical accounting policies are more fully discussed in these notes to the financial statements. Revenue Recognition Revenue from genetic testing services is recognized when there is persuasive evidence of an arrangement, service has been rendered, the sales price is determinable and collectability is reasonably assured. Service is deemed to be rendered when the results have been reported to the individual who ordered the test. To the extent that tests have been prepaid but results have not yet been reported, recognition of all related revenue is deferred. As of December 31, 2016 and December 31, 2015, the Company had deferred genetic test revenue of $2.5 million and $3.2 million, respectively. Included in deferred revenue at December 31, 2016 is $2.4 million for kits that are still outstanding one year or longer after initial kit sale, of which $0.15 million was sold directly to consumers (credit card payments) and $2.3 million was sold to distributors as a promotional bundle. In 2012 and 2013, Access Business Group LLC (“ABG”), an affiliate of Alticor Inc., a related party (“Alticor”), placed purchase orders totaling approximately $3.3 million consisting of Weight Management test kits. The kits were included as part of a promotional bundle of products that ABG sold to their Individual Business Owners (“IBOs”). The Company recognizes breakage revenue related to genetic test kits utilizing the remote method. Under the remote method, breakage revenue should be recognized when the likelihood of the customer exercising rights of redemption becomes remote. The term remote requires statistical analysis of customer redemption patterns for all tests sold and returned. The Company analyzed redemption patterns from 2009 through 2015 and determined the period of time after which the likelihood of test redemption was remote was three years after the sale of a genetic test kit. Included in genetic test revenue in the years ended December 31, 2016 and 2015 is $191,000 and $218,000, respectively, of breakage revenue related to unredeemed genetic test kits sold in 2013 and 2012, respectively. The Company expects to continue to recognize breakage revenue on a quarterly basis based on the historical analysis. Sales Commission On October 26, 2009, the Company entered into a Merchant Network and Channel Partner Agreement with Amway Corp., d/b/a/ Amway Global (“Amway Global”), a subsidiary of Alticor Inc. (“Alticor”). Pursuant to this Agreement, Amway Global sells the Company’s Inherent Health® brand of genetic tests through its e-commerce website via a hyperlink to our e-commerce site. The Company accounts for sales commissions due to Amway Global under the Merchant Network and Channel Partner Agreement in accordance with SEC Staff Accounting Bulletin (“SAB”) 104. Commissions are recorded as an expense at the time they become due which is at the point of sale. The cost of commissions was $225,000 and $302,000 for the years ended December 31, 2016 and 2015, respectively. Accounts Receivable Accounts receivable is stated at estimated net realizable value, which is generally the invoiced amount less any estimated discount related to payment terms. The Company offers its commercial genetic test customers a 2% cash discount if payment is made by bank wire transfer within 10 days of the invoice date. No accounts receivable reserve is required at December 31, 2016 as all accounts receivable are expected to be collected. Inventory Kit inventory is carried at lower of cost (first-in, first-out method) or market and no inventory reserve was deemed necessary for the years ended December 31, 2016 and 2015. As the Company does not manufacture any products, no overhead costs are included in inventory. Inventory is stored at a fulfillment provider. Inventory consisted of the following at December 31, 2016 and 2015:
Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with FASB ASC 718, Compensation Stock Compensation. The standard addresses all forms of share-based payment (SBP) awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. The Company expenses SBP awards within compensation cost for SBP transactions measured at fair value. Compensation cost for the portion of awards for which the requisite service has not been rendered that are outstanding as of the effective date shall be recognized as the requisite service is rendered on or after the effective date. The compensation cost for that portion of awards shall be based on the grant-date fair value of those awards as calculated under the Black-Scholes option pricing model. Common stock purchased pursuant to our employee stock purchase plan will be expensed based upon the fair market value in excess of purchase price. Income Taxes The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns. The measurement of current and deferred tax liabilities and assets is based on provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Significant management judgment is required in determining the Company’s provision (benefit) for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against deferred tax assets. The Company has recorded a full valuation allowance against its deferred tax assets of approximately $36.4 million as of December 31, 2016, due to uncertainties related to its ability to utilize these assets. The valuation allowance is based on management’s estimates of taxable income by jurisdiction in which the Company operates and the period over which the deferred tax assets will be recoverable. In the event that actual results differ from these estimates or management adjusts these estimates in future periods, the Company may need to adjust its valuation allowance, which could materially impact its financial position and results of operations. As a result of the Company’s change in its capital structure during the quarters ended June 30, 2013, December 31, 2014 and September 30, 2016 the Company may have undergone IRC section 382 ownership changes which would limit its ability to realize the benefit of its tax attributes (i.e., federal/state net operating losses and research and development credits) during their respective carry forward periods. The Company has not performed an analysis to determine the extent of such limitations, if any. The Company reviews its recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. The Company reviews all material tax positions for all years open to statute to determine whether it is more likely than not that the positions taken would be sustained based on the technical merits of those positions. The Company did not recognize any adjustments for uncertain tax positions as of and during the year ended December 31, 2016. Research and Development Research and development costs are expensed as incurred. Basic and Diluted Net Loss per Common Share The Company applies the provisions of FASB ASC 260, Earnings per Share, which establishes standards for computing and presenting earnings per share. Basic and diluted net loss per share was determined by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is the same as basic net loss per share for all the periods presented, as the effect of the potential common stock equivalents is anti-dilutive due to the loss in each period. Potential common stock equivalents excluded from the calculation of diluted net loss per share are as follows:
Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. During the years ended December 31, 2016 and 2015, there were no items other than net loss included in the determination of comprehensive loss. Fair Value of Financial Instruments The Company, using available market information, has determined the estimated fair values of financial instruments. The stated values of cash, accounts receivable and accounts payable approximate fair value due to the short term nature of these instruments. The fair value of warrants is calculated using the Black-Scholes pricing model. Cash The Company maintains its cash with a domestic financial institution that the Company believes to be of high credit standing. The Company believes that, as of December 31, 2016, its concentration of credit risk related to cash was not significant. Cash is available on demand and is generally in excess of FDIC insurance limits. Fixed Assets Fixed assets are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over estimated useful lives of three to five years. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the remaining term of the lease. Impairment of Long-Lived Assets The Company evaluates its long-lived assets, including intangible assets, for impairment whenever events or changes in circumstances indicate that carrying amounts of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. Any write-downs, based on fair value, are to be treated as permanent reductions in the carrying amount of the assets. For the year ended December 31, 2015, the Company recorded a write down of $66,000 associated with the patents that no longer were needed to support the Company’s business. The Company determined that no impairment existed related to the Company’s long-lived assets at December 31, 2016. Segment Reporting As of December 31, 2016 and 2015, the Company has one segment, the genetic test business. The Company develops genetic tests for sale into the emerging personalized health market and performs testing services that can help individuals improve and maintain their health through preventive measures. The Company’s principal operations and markets are located in the United States. Recent Accounting Pronouncements FASB ASC 606 ASU 2014-09 - Revenue from contracts with customers. In May 2014, the FASB issued amended guidance on contracts with customers to transfer goods or services or contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). The guidance requires an entity to recognize revenue on contracts with customers 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. The guidance requires that an entity depict the consideration by applying the following five steps:
The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. This amendment is to be either retrospectively adopted to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In April 2015, the FASB voted to defer the required implementation date of ASU 2014-09 to December 2017. Public companies may elect to adopt the standard along the original timeline. Revenue from the Company’s genetic testing services is recognized when there is persuasive evidence of an arrangement, service has been rendered, the sales price is determinable and collectability is reasonably assured. Service is deemed to be rendered when the results have been reported to the individual who ordered the test or the requesting physician. To the extent that tests have been prepaid but results have not yet been reported, recognition of all related revenue is deferred. The Company is not electing to adopt early and is evaluating the impact of ASU 2014-09 on the Company’s financial disclosures. FASB ASU 2016-02 - Leases (Topic 842). In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements. FASB ASU No. 2016-09, - Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. In March 2016, the FASB issued ASU No. 2016-09. The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2016-09 on its consolidated financial statements. |
Related Party Transactions |
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Dec. 31, 2016 | ||
Related Party Transactions [Abstract] | ||
Related Party Transactions | Note 4Related Party Transactions Since March 2003, the Company has maintained a broad strategic alliance with several affiliates of the Alticor Inc. family of companies, a related party. The alliance initially included an equity investment, a multi-year research and development agreement, a licensing agreement with royalties on marketed products, the deferment of outstanding loan repayment and the refinancing of bridge financing obligations. On October 26, 2009, the Company entered into a Merchant Network and Channel Partner Agreement with Amway Corp., d/b/a/ Amway Global (“Amway Global”), a subsidiary of Alticor Inc. Pursuant to this Agreement, Amway Global sells the Company’s Inherent Health® brand of genetic tests through its e-commerce website via a hyperlink to our e-commerce site. The Company paid Amway Global $225,000 and $302,000 in commissions for the years ended December 31, 2016 and 2015, respectively, representing a percentage of net sales to their customers. The Company expenses commissions owed to Amway Global at the point of sale with the customer. In 2012 and 2013, Access Business Group LLC (“ABG”), an affiliate of Alticor, placed purchase orders totaling approximately $3.3 million consisting of Weight Management test kits. The kits are included as part of a promotional bundle of products that Amway sold to their Individual Business Owners (IBOs). Of the $3.3 million in orders, $1.5 million was received for the 2013 program and $1.8 million for the 2014 program. As a component of the 2013 promotional program, and not reflective of actual product expiry, the kits were required to be redeemed by December 31, 2013. In February 2014, the Company removed the redemption date requirement for the 2013 promotional program, for which ABG paid the Company $519,000 as a retrospective increase in the product purchase price. All cash received related to the 2013 promotional program, including the $519,000, will be treated as deferred revenue until specific kits are returned for processing or the breakage analysis determines the probability of eventual redemption is remote. In October 2014, the Company received $250,000 as a retrospective increase in the product purchase price for unsold kits as consideration for extending the required redemption date of the 2014 promotional program to December 31, 2017. All cash received for these kits will be treated as deferred revenue until specific kits are returned for processing or on the final allowed redemption date of December 31, 2017. On September 21, 2012, the Company entered into a License Agreement (the “License Agreement”) with Access Business Group International LLC (“ABGI”), an affiliate of Alticor. Pursuant to the License Agreement, the Company has granted ABGI and its affiliates a non-exclusive license to use the technology related to Interleukin’s Weight Management genetic test and to sell the Weight Management test in Europe, Russia and South Africa (the “Territories”). ABGI, or a laboratory designated by ABGI, will be responsible for processing the tests, and the Company will receive a royalty for each test sold, which royalty will increase if certain pending patent applications are issued. The License Agreement has an initial term of five years from the date of first commercial sale of the Weight Management test under the agreement which was June 2013. Thereafter, the term will automatically renew for additional one-year periods unless notice is delivered by either party at least 60 days prior to the anniversary date. During the years ended December 31, 2016 and 2015, $199,000 and $191,000, respectively, of revenue was earned. In connection with the execution of the License Agreement, the Company and ABGI also entered into a Professional Services Agreement (the “PSA”) pursuant to which the Company has agreed to provide services to ABGI in connection with its sale and processing of the tests within the Territories. No fees were earned in the years ended December 31, 2016 and 2015 under the PSA. For years ended December 31, 2016 and 2015, approximately 24% and 45%, respectively, of our revenue came from sales through our Merchant Network and Channel Partner Agreement with Amway Global, a subsidiary of Alticor, and 4% and 13%, respectively, of our revenue came from sales through ABG’s promotional product bundle program. On February 25, 2013, the Company entered into a Preferred Participation Agreement with Renaissance Health Services Corporation (“RHSC”), for itself and on behalf of certain of its affiliates and subsidiaries. This agreement was amended and restated on November 1, 2013. RHSC is a related party through its affiliation with Delta Dental of Michigan, Inc. (“DDMI”), a stockholder of the Company. Pursuant to this agreement, as amended, affiliates of RHSC agreed to reimburse the Company a fixed price for each ILUSTRA Test that the Company processed. This amended agreement had a term of three years beginning February 25, 2013 and terminated on February 25, 2016. A revised agreement with substantially similar terms was executed in April 2016. |
Debt Instruments |
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Debt Disclosure [Abstract] | ||
Debt Instruments | Note 5Debt Instruments Venture Loan and Security Agreement On December 23, 2014, the Company entered into a Venture Loan and Security Agreement (the “Loan Agreement”) with Horizon Technology Finance Corporation (the “Lender”) under which the Company borrowed $5.0 million. The loan bore interest at a floating rate equal to the One Month LIBOR Rate (with a floor of 0.50%) plus 8.50%. In the event that the One Month LIBOR Rate, as reported in the Wall Street Journal, exceeded 0.50%, the interest rate would have been adjusted by an amount equal to the difference between such rates at the end of that particular month. The loan was to be repaid in forty-five (45) monthly payments consisting of fifteen (15) monthly payments of only interest followed by thirty (30) equal monthly payments of principal and interest (the “Payment Terms”). In addition, at the end of the repayment term (or at early termination of the loan) a final payment equal to 4.5% of the loan would have been due and payable. The Company’s obligations under the Loan Agreement were secured by a first priority security interest in substantially all of its assets other than its intellectual property. The Company had also agreed not to pledge or otherwise encumber its intellectual property assets, subject to certain exceptions. In connection with the Loan Agreement, the Company issued to the Lender and its affiliates warrants to purchase a total of 2,492,523 shares of common stock at an exercise price of $0.1003 per share, which the Company refers to herein as the 2014 Lender Warrants. The 2014 Lender Warrants vested immediately, are all currently exercisable and have a term of ten (10) years. On August 25, 2016, the Company and the Lender entered into the First Amendment of Venture Loan and Security Agreement and an Amended and Restated Secured Promissory Note (collectively referred to herein as the “2016 Debt Restructuring”), which was effective as of August 1, 2016, pursuant to which the principal payments due from August 2016 through December 2016 was reduced to 33% of the principal payments due for these periods under the Loan Agreement. In consideration of these changes, (i) the Company paid the Lender an amendment fee of $25,000 and reimbursed the Lender’s legal expenses in the amount of $5,000, (ii) the Company granted the Lender a first priority security interest in substantially all of its assets, including its intellectual property, (iii) the interest rate of the loan was increased to 11.00% plus the amount by which the one month LIBOR Rate exceeds 0.50%, and (iv) the final payment was increased from 4.5% of the loan, or $225,000, to 6.5% of the loan, or $325,000. At December 31, 2016, the interest rate was 11.27% per annum. In connection with the 2016 Debt Restructuring, the Company also issued to the Lender a warrant to purchase up to 5,169,577 shares of the Company’s common stock at an exercise price of $0.0994 per share (the “2016 Lender Warrant”). The 2016 Lender Warrant vested immediately, is currently exercisable and has a term of ten (10) years. See Note 15 “Subsequent Events” for additional information with respect to an amendment to the Venture Loan and Security Agreement entered into in April 2017. The Company recorded a discount on the loan comprised of (i) $89,000 in cash fees paid to the Lender related to the Loan Agreement, (ii) $261,000 as the intrinsic value of the 2014 Lender Warrants, (iii) $30,000 in cash fees paid to the Lender related to the 2016 Debt Restructuring and (iv) $504,000 as the intrinsic value of the 2016 Lender Warrants. The discount on the loan is amortized over the term of the loan in the Company’s Statements of Operations. As of December 31, 2016, the unamortized discount associated with the loan was $579,000. The amended final non-principal payment of $325,000 will be accrued as additional interest expense, using the effective interest method, over the term of the loan. Cash interest expense for the years ended December 31, 2016 and 2015 was $429,000 and $456,000, respectively. Non-cash interest expense was $294,000 for the year ended December 31, 2016 compared to $153,000 for the year ended December 31, 2015. |
Fixed Assets |
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Fixed Assets | Note 6Fixed Assets The useful lives and balances of fixed assets at December 31, 2016 and 2015 consisted of the following:
Depreciation and amortization expense was $218,000 and $212,000, for the years ended December 31, 2016 and 2015, respectively. |
Intangible Assets |
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Intangible Assets | Note 7Intangible Assets Intangible assets at December 31, 2016 and 2015 consisted of the following:
Patent amortization expense was $33,000 and $137,000 for the years ended December 31, 2016 and 2015, respectively. Patent costs which are being amortized on a straight-line basis over a 10-year life, are scheduled to amortize as follows:
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Accrued Expenses |
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Accrued Expenses | Note 8Accrued Expenses Accrued expenses at December 31, 2016 and 2015 consisted of the following:
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Commitments and Contingencies |
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Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and contingencies | Note 9Commitments and Contingencies Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on its financial condition, results of operations or cash flows. Employment Agreements On May 19, 2016, the Company entered into an employment agreement with Stephan Toutain for the position of Chief Commercial Officer beginning on August 15, 2016 (the “Start Date”). The agreement provides for a minimum annual base salary of $315,000 and he is eligible for a bonus of 30% of his base salary pursuant to the Company’s bonus plan. Pursuant to the agreement, Mr. Toutain was granted options to purchase 3,738,933 shares of the Company’s common stock, which was equal to 1% of the Company’s fully diluted shares of the Company as of his Start Date, at an exercise price equal to fair market value of the Company’s common stock on the grant date of the option. The option will vest as to 25% of the shares on the first anniversary of the Start Date, and as to an additional 2.083% of the shares monthly thereafter. Mr. Toutain’s agreement is terminable at will by the Company or Mr. Toutain. If the Company terminates Mr. Toutain without cause, the Company will pay Mr. Toutain, in addition to any accrued, but unpaid compensation prior to termination, an amount equal to six months of his base salary in effect at the time of the termination. Bonus Plan On February 26, 2014, the Compensation Committee approved an Employee Bonus Plan (the “Employee Bonus Plan”) that replaces the Bonus Plan approved on December 21, 2012. Under the Employee Bonus Plan, bonuses may be awarded upon the achievement of corporate goals, however, the Compensation Committee has absolute discretion as to whether bonuses will be awarded and the size of any bonus, notwithstanding whether any such corporate goals are met. Bonus accruals totaling $166,000 were recorded in 2015 in accrued expenses on the balance sheet. In January 2016, the Board of Directors approved the 2015 bonus disbursement, which occurred in February 2016. For the year ended December 31, 2016 there was no bonus accrual and will be no bonus payout in the first quarter of 2017. Operating Leases The Company leases its office and laboratory space under a non-cancelable operating lease which is scheduled to expire on March 31, 2017. The lease agreement includes an initial base rent beginning in March 2014 with an escalation of 2.06% of the base rent in year two and another 2.06% increase in year three. In September 2016, the Company entered into the third amendment to the commercial lease (“Third Amendment”) to extend the lease from April 1, 2017 through March 31, 2019. The Third Amendment includes an initial base rent beginning in April 2017 with an escalation of 2.88% of the base rent in year two. Future minimum lease commitments under non-cancelable lease agreements with initial or remaining terms of one year or more at December 31, 2015, are as follows:
Rent expense was $347,000 and $352,000 for the years ended December 31, 2016 and 2015, respectively |
Capital Stock |
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Capital Stock [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock | Note 10Capital Stock Authorized Preferred and Common Stock As of December 31, 2016, the Company has 6,000,000 shares of preferred stock, par value $0.001 authorized and 450,000,000 shares of common stock, par value $0.001 authorized. As of December 31, 2016 the Company has 229,381,059 shares of common stock outstanding and the following shares of common stock are reserved for issuance:
On May 17, 2013, the Company entered into a Common Stock Purchase Agreement (the “2013 Purchase Agreement”) with various accredited investors (the “2013 Investors”), pursuant to which the Company sold securities to the 2013 Investors in a private placement transaction (the “May 2013 Private Placement”). In the May 2013 Private Placement, the Company sold an aggregate of 43,715,847 shares of its common stock at a price of $0.2745 per share for gross proceeds of $12,000,000. The 2013 Investors also received warrants to purchase up to an aggregate of 32,786,885 shares of common stock an exercise price of $0.2745 per share (the “2013 Warrants”). The 2013 Warrants were immediately exercisable as to 63% of the shares issuable thereunder. The remaining 37% of the shares issuable under the 2013 Warrants were to become exercisable upon an increase in the number of authorized shares of common stock. On August 9, 2013, the Company’s shareholders’ approved an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock from 150,000,000 to 300,000,000 shares, which provided for adequate authorized shares for all potential common stock equivalents issued pursuant to the May 2013 Private Placement. The 2013 Warrants are all currently exercisable and have a term of seven years from the date they became exercisable. For its services in this transaction, the placement agent received cash compensation in the amount of approximately $780,000 and the placement agent and an affiliate received warrants to purchase an aggregate of 2,295,082 shares of common stock, at an exercise price of $0.2745 per share (the “2013 Placement Agent Warrants”). The 2013 Placement Agent Warrants became exercisable on August 9, 2013, following shareholder approval of an increase in the Company’s authorized shares of common stock and expire August 9, 2020. The cash compensation and the fair value of the warrants were recorded as issuance costs resulting in a reduction to shareholders’ equity. In connection with the May 2013 Private Placement, all preferred stockholders converted their shares of Preferred Stock to common stock resulting in the issuance of 39,089,161 shares of common stock (the “2013 Preferred Conversion”) and $14,316,255 in principal amount of outstanding convertible debt held by a related party was converted into 2,521,222 shares of common stock (the “2013 Debt Conversion”). In September 2014, the Company issued warrants to the Company’s financial consultant, Danforth Advisors, to purchase up to 100,000 shares of common stock at a price of $0.25 per share. The warrants have a ten (10) year term and vested on a monthly basis over two years. These warrants have fully vested as of December 31, 2016. The fair value of the warrants at issuance was recorded as equity totaling $24,000 and was fully amortized as of December 31, 2016. The non-cash compensation expense for the years ended December 31, 2016 and 2015 was $9,000 and $12,000 respectively. On December 23, 2014, the Company entered into the 2014 Purchase Agreement with the 2014 Investors, pursuant to which it sold to the 2014 Investors in the December 2014 Private Placement an aggregate of 50,099,700 shares of common stock at a price of $0.1003 per share for gross proceeds of approximately $5.025 million. The 2014 Investors also received 2014 Warrants to purchase up to an aggregate of 50,099,700 shares of common stock at an exercise price of $0.1003 per share. The 2014 Warrants are all currently exercisable and have a term of seven years. For services related to this transaction, the placement agent, its legal counsel and the Company’s legal counsel received an aggregate of $218,000 in cash fees and the placement agent and an affiliate received warrants to purchase an aggregate of 89,731 shares of common stock (the “2014 Placement Agent Warrants”). The cash fees and the fair value of the 2014 Placement Agent Warrants were recorded as equity issuance costs resulting in a reduction to shareholders’ equity. The 2014 Warrants and the 2014 Placement Agent Warrants were recorded as equity at fair value on the date of issuance. On the closing date of the December 2014 Private Placement, the fair value of the 2014 Warrants was $5.2 million, and the fair value of the 2014 Placement Agent Warrants was $9,000. On July 29, 2016, the Company entered into the 2016 Purchase Agreement with the 2016 Investors, pursuant to which the Company sold to the 2016 Investors in the 2016 Private Placement an aggregate of 56,262,571 shares of common stock at a price of $0.0994 per share for gross proceeds of approximately $5.6 million. The 2016 Investors also received the 2016 Warrants to purchase up to an aggregate of 56,262,571 shares of common stock at an exercise price of $0.0994 per share. The 2016 Warrants vested immediately, are all currently exercisable and have a term of seven years. For services related to this transaction, the Company’s legal counsel received $63,000 in cash fees. The fair value of the 2016 Warrants at issuance was $6.5 million. Fair value of the 2016 Warrants was calculated using the following inputs in a Black-Scholes model:
Registration Rights Agreements In connection with the December 2014 Private Placement, on December 23, 2014, the Company also entered into a Registration Rights Agreement with the 2014 Investors and the placement agent, pursuant to which the Company was required to file a registration statement on Form S-1 within 45 days of December 23, 2014 to cover the resale of (i) the shares of common stock sold to the 2014 Investors and the shares of common stock underlying the 2014 Warrants and (ii) the shares of common stock underlying the 2014 Placement Agent Warrants. The Company filed the registration statement on February 6, 2015, and it was declared effective on March 31, 2015. In connection with the July 2016 Private Placement, on July 29, 2106, the Company also entered into a Registration Rights Agreement with the 2016 Investors, pursuant to which the Company was required to file a registration statement on Form S-1 within 45 days of July 29, 2016 to cover the resale of the shares of common stock sold to the 2016 Investors and the shares of common stock underlying the 2016 Warrants. The Company filed the registration statement on September 12, 2016, and it was declared effective on September 27, 2016. Venture Loan and Security Agreement On December 23, 2014, the Company entered into the Loan Agreement with the Lender under which the Company has borrowed $5.0 million. In connection with the Loan Agreement, the Company issued to the Lender and its affiliates 2014 Lender Warrants to purchase a total of 2,492,523 shares of common stock at an exercise price of $0.1003 per share. The 2014 Lender Warrants vested immediately, are all currently exercisable and have a term of ten (10) years. The fair value of the 2014 Lender Warrants at issuance was $261,000 On August 25, 2016, the Company and The Lender agreed to the 2016 Debt Restructuring, which was effective as of August 1, 2016, pursuant to which the principal payments due from August 2016 through December 2016 were reduced to 33% of the principal payments due for these periods under the Loan Agreement. In connection with the 2016 Debt Restructuring, the Company issued to the Lender the 2016 Lender Warrant to purchase up to 5,169,577 shares of the Company’s common stock at an exercise price of $0.0994 per share. The 2016 Lender Warrant vested immediately, is currently exercisable and has a term of ten (10) years. The 2014 Lender Warrants and 2016 Lender Warrants were recorded as equity at fair value on the date of issuance. Fair value of the 2014 Lender Warrants and 2016 Lender Warrants was calculated using the Black-Scholes model. Fair value of the 2016 Lender Warrants was calculated using the following inputs in a Black-Scholes model:
The fair value of the 2016 Lender Warrants at issuance was $504,000. Cash interest paid during the years ended December 31, 2016 and 2015 totaled $429,000 and $456,000, respectively. Non-cash interest related to debt discounts was $294,000 for the year ended December 31, 2016, compared to $153,000 for the year ended December 31, 2015. The debt discount balance was $579,000 as of December 31, 2016. Principal payments due under the terms of the Loan Agreement and the 2016 Debt Restructuring are as follows:
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Stock-Based Compensation Arrangements |
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Stock-Based Compensation Arrangements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Arrangements | Note 11Stock-Based Compensation Arrangements On August 9, 2013, the Company’s shareholders’ approved the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”). The 2013 Plan allows for the issuance of up to 8,860,000 additional shares of our common stock pursuant to awards granted under the 2013 Plan. Additionally, the 2013 plan allows for the issuance of up to a maximum of 2,435,500 additional shares of our common stock, pursuant to the cancellation, forfeiture, or expiry, of awards granted under the 2004 Plan and terminated on or after the 2013 plan approval on August 9, 2013. On July 21, 2015, the Company’s stockholders approved an amendment to the 2013 Plan to increase the number of shares of common stock available for issuance thereunder by 30,000,000 shares. During the year ended December 31, 2016, the Company granted 10,622,392 stock options under the 2013 Plan. At December 31, 2016, the Company had an aggregate of 20,729,144 shares of common stock available for grant under the 2013 Plan. Stock Option Grants Per his employment agreement, Mark Carbeau was entitled to receive a grant of options to purchase shares of the Company’s common stock equal to 5% of the number of shares of the Company’s stock issued in the 2016 Private Placement, assuming the conversion of all convertible securities issued in the 2016 Private Placement, which equals 5,626,257 shares, at a per share exercise price equal to the fair market value of the Company’s common stock on the date of the grant. Pursuant to the terms of the 2013 Plan, the Company cannot issue options or other grants for more than 5,000,000 shares to any one person in a calendar year. Consequently, on October 20, 2016, the Company granted Mr. Carbeau options to purchase 5,000,000 shares of the Company’s common stock at an exercise price of $0.17544 per share and expects to grant the remaining options to which Mr. Carbeau is entitled in 2017. These options will vest as to 25% of the shares on July 29, 2017 and as to an additional 2.083% of the shares on the last day of each successive month thereafter, provided that Mr. Carbeau remains employed by the Company on the vesting date. Per his employment agreement, Stephan Toutain was entitled to receive a grant of options to purchase shares of the Company’s common stock equal to 1% of the Company’s fully diluted shares as of his start date at an exercise price equal to fair market value of the Company’s common stock on the grant date of the option. Consequently, on October 20, 2016, the Company granted Mr. Toutain options to purchase 3,738,933 shares of the Company’s common stock at an exercise price of $0.17544 per share. These options will vest as to 25% of the shares on August 15, 2017, and as to an additional 2.083% of the shares monthly thereafter. It is the Company’s policy to grant stock options with an exercise price equal to the fair market value of the Company’s common stock at the grant date, and stock options to employees generally vest over four years based upon continuous service. Historically, the majority of the Company’s stock options have been granted in connection with the employee’s start date with the Company. In addition, the Company may grant stock options in recognition of promotion and/or performance. For purposes of determining the stock-based compensation expense for stock option awards in 2016 and 2015, the Black-Scholes option-pricing model was used with the following weighted-average assumptions:
Using these assumptions, the weighted average grant date fair value of options granted in 2016 and 2015 was $0.15 and $0.16, respectively. Restricted Stock Awards Holders of restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting and dividend rights. Recipients of restricted stock awards are generally not required to pay any consideration to the Company for these restricted stock awards. The Company measures the fair value of the shares based on the last reported price at which the Company’s common stock traded on the date of the grant and compensation cost is recognized over the remaining service period. During each of the years ended December 31, 2016 and 2015, the Company granted no restricted stock awards. Employee Stock Purchase Plan Purchases made under the Company’s Employee Stock Purchase Plan are deemed to be compensatory because employees may purchase stock at a price equal to 85% of the fair market value of the Company’s common stock on either the first day or the last day of a calendar quarter, whichever is lower. During the years ended December 31, 2016 and 2015, employees purchased 229,951 and 203,879 shares, respectively, of common stock at a weighted-average purchase price of $0.08 and $0.10, respectively, while the weighted-average market value was $0.09 and $0.12 per share, respectively, resulting in compensation expense of $2,921 and $4,053, respectively. The following table details stock option and restricted stock activity for the years ended December 31, 2016 and 2015.
The following table details further information regarding stock options and restricted stock outstanding and exercisable at December 31, 2016:
The aggregate intrinsic value in the preceding table is based on the last reported price at which the Company’s common stock traded on December 31, 2016, of $0.11. The following table summarizes the status of the Company’s non-vested options for the years ended December 31, 2016 and 2015:
Total cost for stock-based compensation arrangements is as follows:
As of December 31, 2016 and 2015, there was approximately $2,705,027 and $2,248,591 respectively, of total unrecognized compensation related to non-vested share-based compensation arrangements granted under the Company’s stock plans. That cost is expected to be recognized over a weighted average period of approximately 2.8 and 3.11 years, respectively. |
Employee Benefit Plan |
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Dec. 31, 2016 | ||
Compensation and Retirement Disclosure [Abstract] | ||
Employee Benefit Plan | Note 12Employee Benefit Plan The Company sponsors a profit sharing plan covering substantially all of its employees. The profit sharing plan allows for pre-tax employee contributions. The Company may, at the discretion of the Board of Directors, match a portion of the participant contributions. The Company currently contributes 25% of any amount employees contribute, up to a maximum of $1,500 per participant per calendar year. Company contributions vest over a period of five years based on the participant’s initial service date with the Company. During the years ended December 31, 2016 and 2015, $13,520 and $2,239, respectively, was contributed by the Company to the plan. |
Income Taxes |
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Income Taxes | Note 13Income Taxes For the years ended December 31, 2016 and 2015, the Company recorded no tax provision or benefit. While the Company has incurred losses from operations it has not recorded an income tax benefit for 2016 or 2015 as it has recorded a valuation allowance against net operating losses and other net deferred tax assets due to uncertainties related to the ability of these tax assets to be realized. Deferred tax assets and liabilities are determined based on the difference between financial statement and tax bases using enacted federal and state tax rates in effect for the year in which the differences are expected to reverse. As of December 31, 2016 and 2015, the expected income tax effect of the Company’s deferred tax assets (liabilities) consisted of the following:
As of December 31, 2016, the Company had gross net operating loss (NOL) and research tax credit carryforwards of approximately $94.9 million and $1.7 million, respectively, for federal income tax purposes, expiring in varying amounts through the year 2036. Of the $94.9 million NOL carryforward, $2.5 million relates to stock-based compensation and has not been reflected in the deferred taxes and when the benefit of these losses, if any, is realized, the Company will credit additional paid in capital. As of December 31, 2016, the Company had gross NOL and research tax credit carryforwards of approximately $17.6 million and $1.1 million for state income tax purposes, expiring in varying amounts through the year 2036. The Company’s ability to use its NOL and tax credit carryforwards to reduce future taxes is subject to the restrictions provided by Section 382 of the Internal Revenue Code of 1986. These restrictions provide for limitations on the Company’s utilization of its NOL and tax credit carryforwards following a greater than 50% ownership change during the prescribed testing period. On March 5, 2003, the Company had such a change. As a result, all of the Company’s NOL carryforwards as of that date are limited as to utilization. The annual limitation may result in the expiration of certain of the carryforwards prior to utilization. In addition, the Company’s equity offerings, including those in May 2013, December 2014 and July 2016, may have resulted in qualifying changes in ownership. A formal study, which the Company has not undertaken, is required to determine applicability of restrictions, and might indicate that the Company’s NOL carryforwards are subject to additional limitations on utilization. The Company is subject to taxation in the United States and the Commonwealth of Massachusetts. As of December 31, 2016, tax years for 2013, 2014 and 2015 are subject to examination by the tax authorities. Since the Company is in a loss carry-forward position, the Company is generally subject to U.S. federal and state income tax examinations by tax authorities for all years for which a loss carry-forward is utilized. However, carryforward attributes from prior years may still be adjusted upon examination by tax authorities if they are used in an open period. The benefit for income taxes differs from the federal statutory rate due to the following:
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Risks and Uncertainties |
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Dec. 31, 2016 | ||
Risks and Uncertainties [Abstract] | ||
Risks and Uncertainties | Note 14Risks and Uncertainties The Company develops genetic risk assessment tests and performs research for its own benefit. As of December 31, 2016, the Company has introduced five genetic risk assessment tests commercially. Commercial success of the Company’s genetic risk assessment tests will depend on their success as being deemed to be scientifically credible and cost-effective by consumers and the marketing success of the Company and its collaborative partners. Research in the field of disease predisposing genes and genetic markers is intense and highly competitive. The Company has many competitors in the United States and abroad that have considerably greater financial, technical, marketing, and other resources available. If the Company does not discover disease predisposing genes or genetic markers and develop risk assessment tests and launch such services or products before its competitors, then the potential for significant revenues may be reduced or eliminated. During the years ended December 31, 2016 and 2015, approximately 24% and 45%, respectively, of the Company’s revenue came from sales through our Merchant Network and Channel Partner Agreement with Amway Global, a subsidiary of Alticor, and 4% and 13%, respectively, of our revenue came from sales through ABG’s promotional product bundle program. |
Subsequent Events |
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Dec. 31, 2016 | ||
Subsequent Events [Abstract] | ||
Subsequent Events | Note 15Subsequent Events In January 2017, Mark Carbeau was granted an option to purchase 1,278,653 shares of the Company’s common stock related to the 2016 performance review process. This option has an exercise price of $0.1237 per share. The option vests as to ¼ of the shares on January 25, 2018, and as to 1/36 of the remaining unvested shares at the beginning of each calendar month thereafter beginning on February 1, 2018 In January 2017, Kenneth Kornman was granted an option to purchase 3,625,746 shares of the Company’s common stock related to the 2016 performance review process. This option has an exercise price of $0.1237 per share. The option vests as to ¼ of the shares on January 25, 2018, and as to 1/36 of the remaining unvested shares at the beginning of each calendar month thereafter beginning on February 1, 2018 In January 2017, Stephan Toutain was granted an option to purchase 365,093 shares of the Company’s common stock related to the 2016 performance review process. This option has an exercise price of $0.1237 per share. The option vests as to ¼ of the shares on January 25, 2018, and as to 1/36 of the remaining unvested shares at the beginning of each calendar month thereafter beginning on February 1, 2018. On April 17, 2017, the Company sold $500,000 of Convertible Notes (the “2017 Notes”) to each of Bay City Capital and Horizon Technology Finance Corporation (the “Note Holders”), for a total of $1,000,000 in aggregate principal. The 2017 Notes will convert into common stock if certain conditions are met. In connection with the issuance of the 2017 Notes, the Company also issued warrants to purchase common stock to the Note Holders. See Item 9B “Other Information” for more details. Also on April 17, 2017, the Company entered into a series of agreements, including the Second Amendment of Venture Loan and Security Agreement and a warrant to purchase common stock, to restructure its existing debt under the Loan Agreement with the Lender, which resulted in the deferral of the principal amount due to the Lender on April 1, May 1, and June 1, 2017, and the potential deferral of the principal amount due to the Lender on July 1, August 1 and September 1, 2017, such potential deferral of principal is dependent upon whether, as of June 15, 2017, the Company provides evidence reasonably satisfactory to the Lender that the Company is actively negotiating a clinical services or similar agreement, the terms of which are satisfactory to the Lender, which the Company believes, in good faith, it will enter into no later than September 1, 2017. In exchange for agreeing to defer principal payments, the Lender was granted a warrant to purchase common stock. The number of shares of common stock issuable upon exercise of the warrant is determined by dividing the amount of principal payments deferred by the exercise price of the warrant, which could result in the warrant being exercisable for between approximately 5,519,604 and 11,039,209 shares. The warrant has an exercise price of $0.10438 per share, is exercisable on a net issuance basis and has a 10-year term. See Item 9B “Other Information” for more details. On March 31, 2017, the Company announced that the Board of Directors had approved a work force restructuring, which became effective and was completed on March 30, 2017, to better utilize the Company’s resources, to align the Company’s organization to support its emerging cardiovascular testing program, for which it is seeking strategic interest, and to streamline its commercial strategy for its ILUSTRA Inflammation Management Program. As a consequence of the restructuring, the Company reduced its workforce in its commercial organization and administrative functions by eight persons. We continue to support the ILUSTRA Program deployments with customers and will advance new customer relationships that expand the evidence base of this program’s effectiveness. |
Summary of Significant Accounting Policies (Policies) |
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Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||
Management Estimates | Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates. The Company’s most critical accounting policies are more fully discussed in these notes to the financial statements. |
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Revenue Recognition | Revenue Recognition Revenue from genetic testing services is recognized when there is persuasive evidence of an arrangement, service has been rendered, the sales price is determinable and collectability is reasonably assured. Service is deemed to be rendered when the results have been reported to the individual who ordered the test. To the extent that tests have been prepaid but results have not yet been reported, recognition of all related revenue is deferred. As of December 31, 2016 and December 31, 2015, the Company had deferred genetic test revenue of $2.5 million and $3.2 million, respectively. Included in deferred revenue at December 31, 2016 is $2.4 million for kits that are still outstanding one year or longer after initial kit sale, of which $0.15 million was sold directly to consumers (credit card payments) and $2.3 million was sold to distributors as a promotional bundle. In 2012 and 2013, Access Business Group LLC (“ABG”), an affiliate of Alticor Inc., a related party (“Alticor”), placed purchase orders totaling approximately $3.3 million consisting of Weight Management test kits. The kits were included as part of a promotional bundle of products that ABG sold to their Individual Business Owners (“IBOs”). The Company recognizes breakage revenue related to genetic test kits utilizing the remote method. Under the remote method, breakage revenue should be recognized when the likelihood of the customer exercising rights of redemption becomes remote. The term remote requires statistical analysis of customer redemption patterns for all tests sold and returned. The Company analyzed redemption patterns from 2009 through 2015 and determined the period of time after which the likelihood of test redemption was remote was three years after the sale of a genetic test kit. Included in genetic test revenue in the years ended December 31, 2016 and 2015 is $191,000 and $218,000, respectively, of breakage revenue related to unredeemed genetic test kits sold in 2013 and 2012, respectively. The Company expects to continue to recognize breakage revenue on a quarterly basis based on the historical analysis. |
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Sales Commissions | Sales Commission On October 26, 2009, the Company entered into a Merchant Network and Channel Partner Agreement with Amway Corp., d/b/a/ Amway Global (“Amway Global”), a subsidiary of Alticor Inc. (“Alticor”). Pursuant to this Agreement, Amway Global sells the Company’s Inherent Health® brand of genetic tests through its e-commerce website via a hyperlink to our e-commerce site. The Company accounts for sales commissions due to Amway Global under the Merchant Network and Channel Partner Agreement in accordance with SEC Staff Accounting Bulletin (“SAB”) 104. Commissions are recorded as an expense at the time they become due which is at the point of sale. The cost of commissions was $225,000 and $302,000 for the years ended December 31, 2016 and 2015, respectively. |
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Accounts Receivable | Accounts Receivable Accounts receivable is stated at estimated net realizable value, which is generally the invoiced amount less any estimated discount related to payment terms. The Company offers its commercial genetic test customers a 2% cash discount if payment is made by bank wire transfer within 10 days of the invoice date. No accounts receivable reserve is required at December 31, 2016 as all accounts receivable are expected to be collected. |
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Inventory | Inventory Kit inventory is carried at lower of cost (first-in, first-out method) or market and no inventory reserve was deemed necessary for the years ended December 31, 2016 and 2015. As the Company does not manufacture any products, no overhead costs are included in inventory. Inventory is stored at a fulfillment provider. Inventory consisted of the following at December 31, 2016 and 2015:
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Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with FASB ASC 718, Compensation Stock Compensation. The standard addresses all forms of share-based payment (SBP) awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. The Company expenses SBP awards within compensation cost for SBP transactions measured at fair value. Compensation cost for the portion of awards for which the requisite service has not been rendered that are outstanding as of the effective date shall be recognized as the requisite service is rendered on or after the effective date. The compensation cost for that portion of awards shall be based on the grant-date fair value of those awards as calculated under the Black-Scholes option pricing model. Common stock purchased pursuant to our employee stock purchase plan will be expensed based upon the fair market value in excess of purchase price. |
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Income Taxes | Income Taxes The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns. The measurement of current and deferred tax liabilities and assets is based on provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Significant management judgment is required in determining the Company’s provision (benefit) for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against deferred tax assets. The Company has recorded a full valuation allowance against its deferred tax assets of approximately $36.4 million as of December 31, 2016, due to uncertainties related to its ability to utilize these assets. The valuation allowance is based on management’s estimates of taxable income by jurisdiction in which the Company operates and the period over which the deferred tax assets will be recoverable. In the event that actual results differ from these estimates or management adjusts these estimates in future periods, the Company may need to adjust its valuation allowance, which could materially impact its financial position and results of operations. As a result of the Company’s change in its capital structure during the quarters ended June 30, 2013, December 31, 2014 and September 30, 2016 the Company may have undergone IRC section 382 ownership changes which would limit its ability to realize the benefit of its tax attributes (i.e., federal/state net operating losses and research and development credits) during their respective carry forward periods. The Company has not performed an analysis to determine the extent of such limitations, if any. The Company reviews its recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. The Company reviews all material tax positions for all years open to statute to determine whether it is more likely than not that the positions taken would be sustained based on the technical merits of those positions. The Company did not recognize any adjustments for uncertain tax positions as of and during the year ended December 31, 2016. |
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Research and Development | Research and Development Research and development costs are expensed as incurred. |
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Basic and Diluted Net Loss per Common Share | Basic and Diluted Net Loss per Common Share The Company applies the provisions of FASB ASC 260, Earnings per Share, which establishes standards for computing and presenting earnings per share. Basic and diluted net loss per share was determined by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is the same as basic net loss per share for all the periods presented, as the effect of the potential common stock equivalents is anti-dilutive due to the loss in each period. Potential common stock equivalents excluded from the calculation of diluted net loss per share are as follows:
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Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. During the years ended December 31, 2016 and 2015, there were no items other than net loss included in the determination of comprehensive loss. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company, using available market information, has determined the estimated fair values of financial instruments. The stated values of cash, accounts receivable and accounts payable approximate fair value due to the short term nature of these instruments. The fair value of warrants is calculated using the Black-Scholes pricing model. |
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Cash and Cash Equivalents | Cash The Company maintains its cash with a domestic financial institution that the Company believes to be of high credit standing. The Company believes that, as of December 31, 2016, its concentration of credit risk related to cash was not significant. Cash is available on demand and is generally in excess of FDIC insurance limits. |
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Fixed Assets | Fixed Assets Fixed assets are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over estimated useful lives of three to five years. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the remaining term of the lease. |
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Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates its long-lived assets, including intangible assets, for impairment whenever events or changes in circumstances indicate that carrying amounts of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. Any write-downs, based on fair value, are to be treated as permanent reductions in the carrying amount of the assets. For the year ended December 31, 2015, the Company recorded a write down of $66,000 associated with the patents that no longer were needed to support the Company’s business. The Company determined that no impairment existed related to the Company’s long-lived assets at December 31, 2016. |
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Segment Reporting | Segment Reporting As of December 31, 2016 and 2015, the Company has one segment, the genetic test business. The Company develops genetic tests for sale into the emerging personalized health market and performs testing services that can help individuals improve and maintain their health through preventive measures. The Company’s principal operations and markets are located in the United States. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements FASB ASC 606 ASU 2014-09 - Revenue from contracts with customers. In May 2014, the FASB issued amended guidance on contracts with customers to transfer goods or services or contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). The guidance requires an entity to recognize revenue on contracts with customers 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. The guidance requires that an entity depict the consideration by applying the following five steps:
The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. This amendment is to be either retrospectively adopted to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In April 2015, the FASB voted to defer the required implementation date of ASU 2014-09 to December 2017. Public companies may elect to adopt the standard along the original timeline. Revenue from the Company’s genetic testing services is recognized when there is persuasive evidence of an arrangement, service has been rendered, the sales price is determinable and collectability is reasonably assured. Service is deemed to be rendered when the results have been reported to the individual who ordered the test or the requesting physician. To the extent that tests have been prepaid but results have not yet been reported, recognition of all related revenue is deferred. The Company is not electing to adopt early and is evaluating the impact of ASU 2014-09 on the Company’s financial disclosures. FASB ASU 2016-02 - Leases (Topic 842). In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements. FASB ASU No. 2016-09, - Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. In March 2016, the FASB issued ASU No. 2016-09. The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2016-09 on its consolidated financial statements. |
Summary of Significant Accounting Policies (Tables) |
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Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory consisted of the following at December 31, 2016 and 2015:
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Potential Common Stock Equivalents Excluded from Calculation of Diluted Net Loss per Share | Potential common stock equivalents excluded from the calculation of diluted net loss per share are as follows:
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Fixed Assets (Tables) |
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Schedule of useful lives and balances of fixed assets | The useful lives and balances of fixed assets at December 31, 2016 and 2015 consisted of the following:
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Intangible Assets (Tables) |
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Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Intangible Assets | Intangible assets at December 31, 2016 and 2015 consisted of the following:
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Patent Costs Amortized on a Straight-Line Basis | Patent costs which are being amortized on a straight-line basis over a 10-year life, are scheduled to amortize as follows:
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Accrued Expenses (Tables) |
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Accrued Liabilities, Current [Abstract] | ||||||||||||||||||||||||||||||||||
Schedule of accrued expenses | Accrued expenses at December 31, 2016 and 2015 consisted of the following:
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Commitments and Contingencies (Tables) |
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Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease commitments under non-cancelable lease agreements with initial or remaining terms of one year or more at December 31, 2015, are as follows:
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Capital Stock (Tables) |
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Authorized, Issued and Reserved shares of common stock | As of December 31, 2016 the Company has 229,381,059 shares of common stock outstanding and the following shares of common stock are reserved for issuance:
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Black-Scholes Pricing Model Assumptions to Determine Fair Value of Warrants | The fair value of the 2016 Warrants at issuance was $6.5 million. Fair value of the 2016 Warrants was calculated using the following inputs in a Black-Scholes model:
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Principal payments due under the terms of Loan Agreement | Principal payments due under the terms of the Loan Agreement and the 2016 Debt Restructuring are as follows:
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Black-Scholes Pricing Model Assumptions to Determine Fair Value of Warrants | Fair value of the 2016 Lender Warrants was calculated using the following inputs in a Black-Scholes model:
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Stock-Based Compensation Arrangements (Tables) |
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Stock-Based Compensation Arrangements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense for stock option awards | For purposes of determining the stock-based compensation expense for stock option awards in 2016 and 2015, the Black-Scholes option-pricing model was used with the following weighted-average assumptions:
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Common Stock Weighted Average Purchase Price | The following table details stock option and restricted stock activity for the years ended December 31, 2016 and 2015.
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Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range | The following table details further information regarding stock options and restricted stock outstanding and exercisable at December 31, 2016:
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Schedule Of Non-Vested Options | The following table summarizes the status of the Company’s non-vested options for the years ended December 31, 2016 and 2015:
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Total Compensation Cost Recorded for Stock-Based Compensation | Total cost for stock-based compensation arrangements is as follows:
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Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities | As of December 31, 2016 and 2015, the expected income tax effect of the Company’s deferred tax assets (liabilities) consisted of the following:
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Schedule of Effective Income Tax Rate Reconciliation | The benefit for income taxes differs from the federal statutory rate due to the following:
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Summary of Significant Accounting Policies (Schedule Of Inventory) (Detail) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Line Items] | ||
Raw materials | $ 68,447 | $ 112,372 |
Finished goods | 4,617 | 12,211 |
Total inventory, net | $ 73,064 | $ 124,583 |
Summary of Significant Accounting Policies (Potential Common Stock Equivalents Excluded from Calculation of Diluted Net Loss per Share) (Detail) - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potential common stock equivalents excluded from the calculation of diluted net loss per share | 181,096,546 | 109,958,855 |
Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potential common stock equivalents excluded from the calculation of diluted net loss per share | 31,363,319 | 21,657,776 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potential common stock equivalents excluded from the calculation of diluted net loss per share | 149,733,227 | 88,301,079 |
Summary of Significant Accounting Policies- Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Significant Accounting Policies [Line Items] | ||
Deferred revenue | $ 2,500,000 | $ 3,200,000 |
Sales commissions | $ 225,000 | 302,000 |
Percentage of cash discount offered to customers | 2.00% | |
Deferred tax assets, valuation allowance | $ 36,388,000 | 33,455,000 |
Impairment of Intangible Assets, Finite-lived | 66,000 | |
ABG [Member] | ||
Significant Accounting Policies [Line Items] | ||
Purchase Order Placed | 3,300,000 | |
Genetic Test Revenue [Member] | ||
Significant Accounting Policies [Line Items] | ||
Breakage Revenue | 191,000 | $ 218,000 |
Customer Payment [Member] | ||
Significant Accounting Policies [Line Items] | ||
Deferred revenue | 150,000 | |
Kits Components [Member] | ||
Significant Accounting Policies [Line Items] | ||
Deferred revenue | 2,400,000 | |
Distributors [Member] | ||
Significant Accounting Policies [Line Items] | ||
Deferred revenue | $ 2,300,000 |
Fixed Assets (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Computer software, computer equipment and office equipment | 3 years | |
Laboratory equipment, Useful Life | 5 years | |
Furniture and fixtures, Useful Life | 5 years | |
Leasehold improvements, Useful Life | 5 years | |
Website development, Useful Life | 3 years | |
Computer software, computer equipment and office equipment | $ 516,511 | $ 516,511 |
Laboratory equipment | 1,896,417 | 1,887,454 |
Furniture and fixtures | 40,349 | 40,349 |
Leasehold improvements | 309,618 | 309,618 |
Website development | 374,453 | 298,553 |
Property, Plant and Equipment, Gross | 3,137,348 | 3,052,485 |
Less Accumulated depreciation and amortization | (2,626,156) | (2,408,585) |
Total | $ 511,192 | $ 643,900 |
Fixed Assets - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Utilities Operating Expense, Depreciation and Amortization | $ 218,000 | $ 212,000 |
Intangible Assets (Schedule of Intangible Assets) (Detail) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule Of Intangible Assets Disclosure [Line Items] | ||
Patent costs | $ 1,154,523 | $ 1,154,523 |
Less Accumulated amortization | (1,129,094) | (1,029,497) |
Less Write off related to patents no longer in use | 0 | (66,147) |
Total | $ 25,429 | $ 58,879 |
Intangible Assets (Patent Costs Amortized on Straight-Line Basis) (Detail) |
Dec. 31, 2016
USD ($)
|
---|---|
Expected Amortization Expense [Line Items] | |
2017 | $ 19,117 |
2018 | 6,312 |
Finite-Lived Intangible Assets, Net, Total | $ 25,429 |
Intangible Assets - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Schedule Of Intangible Assets Disclosure [Line Items] | ||
Patent amortization expense | $ 33,450 | $ 136,886 |
Patent life | 10 years |
Accrued Expenses (Detail) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Payroll and vacation | $ 81,928 | $ 412,674 |
Other | 156,159 | 85,014 |
Total accrued expenses | $ 238,087 | $ 497,688 |
Commitments and Contingencies (Detail) |
Dec. 31, 2016
USD ($)
|
---|---|
2017 | $ 344,129 |
2018 | 347,608 |
2019 | 86,864 |
Operating Leases, Future Minimum Payments Due | 778,601 |
Office Lease [Member] | |
2017 | 335,279 |
2018 | 345,020 |
2019 | 86,864 |
Operating Leases, Future Minimum Payments Due | 767,163 |
Copier Lease [Member] | |
2017 | 6,624 |
2018 | 1,104 |
2019 | 0 |
Operating Leases, Future Minimum Payments Due | 7,728 |
Net Lease [Member] | |
2017 | 341,903 |
2018 | 346,124 |
2019 | 86,864 |
Operating Leases, Future Minimum Payments Due | 774,891 |
Office Equipment [Member] | |
2017 | 2,226 |
2018 | 1,484 |
2019 | 0 |
Operating Leases, Future Minimum Payments Due | $ 3,710 |
Capital Stock (Black Scholes model to determine the fair value of the warrants) (Detail) |
1 Months Ended | |
---|---|---|
Aug. 01, 2016 |
Jul. 29, 2016 |
|
Stockholders Equity [Line Items] | ||
Risk-free interest rate | 1.78% | |
Expected life | 10 years | |
Expected volatility | 138.81% | |
Dividend Yield | 0.00% | |
Warrant [Member] | ||
Stockholders Equity [Line Items] | ||
Risk-free interest rate | 1.52% | |
Expected life | 7 years | |
Expected volatility | 147.03% | |
Dividend Yield | 0.00% |
Capital Stock (Principal payments due under the terms of the Loan Agreement) (Detail) - Loan Agreement |
Dec. 31, 2016
USD ($)
|
---|---|
2017 | $ 2,304,545 |
2018 | 1,920,455 |
Long-term Debt | $ 4,225,000 |
Stock-Based Compensation Arrangements (Stock-based compensation expense for stock option awards) (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Risk-free interest rate | 1.24% | 1.54% |
Expected life | 5 years 8 months 23 days | 5 years 8 months 23 days |
Expected volatility | 146.30% | 138.80% |
Dividend yield | 0.00% | 0.00% |
Stock-Based Compensation Arrangements (Stock Option and Restricted Stock Grants) (Detail) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Shares | ||
Outstanding, beginning of period | 21,657,776 | 4,523,900 |
Granted | 10,622,392 | 18,193,027 |
Stock options exercised | (1,316) | 0 |
Restricted stock exercised | 0 | 0 |
Forfeited/Expired | (915,533) | (1,059,151) |
Outstanding, end of period | 31,363,319 | 21,657,776 |
Exercisable, end of period | 10,860,050 | 3,665,124 |
Weighted Avg. Exercise Price | ||
Outstanding, beginning of period | $ 0.21 | $ 0.39 |
Granted | 0.16 | 0.17 |
Stock options exercised | 0.05 | 0 |
Restricted stock exercised | 0 | 0 |
Forfeited/Expired | 0.33 | 0.17 |
Outstanding, end of period | 0.19 | 0.21 |
Exercisable, end of period | $ 0.23 | $ 0.32 |
Stock-Based Compensation Arrangements (Non-vested options) (Detail) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Non-vested options, beginning of year | 17,992,652 | 2,878,739 |
Non-vested options, beginning of year, Weighted Avg Exercise Price | $ 0.18 | $ 0.37 |
Granted, Shares | 10,622,392 | 18,193,027 |
Granted, Weighted Avg Exercise Price | $ 0.16 | $ 0.17 |
Vested, Shares | (8,035,609) | (2,038,435) |
Vested, Weighted Avg Exercise Price | $ 0.15 | $ 0.33 |
Forfeited, Shares | (76,166) | (1,040,679) |
Forfeited, Weighted Avg Exercise Price | $ 0.25 | $ 0.17 |
Non-vested options, end of year, Shares | 20,503,269 | 17,992,652 |
Non-vested options, end of year, Weighted Avg Exercise Price | $ 0.17 | $ 0.18 |
Stock-Based Compensation Arrangements (Stock-Based Compensation) (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation | $ 971,688 | $ 892,087 |
Stock option grants beginning of period [Member] | ||
Share-based Compensation | 846,347 | 730,102 |
Stock option grants [Member] | ||
Share-based Compensation | 122,420 | 157,932 |
Employee Stock Purchase Plan [Member] | ||
Share-based Compensation | 2,921 | 4,053 |
Director agreements [Member] | ||
Share-based Compensation | $ 0 | $ 0 |
Employee Benefit Plan - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay | 25.00% | |
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Amount | $ 1,500 | |
Defined Contribution Plan, Cost Recognized | $ 13,520 | $ 2,239 |
Income Taxes (Deferred tax assets (liabilities) (Detail) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred tax asset: | ||
Net operating loss carryforwards | $ 31,398,000 | $ 29,122,000 |
Accrued expenses | 19,000 | 87,000 |
Amortization of definite lived intangible assets | 0 | 10,000 |
Non-qualified stock option compensation | 598,000 | 315,000 |
Depreciation | 68,000 | 72,000 |
Deferred revenue | 943,000 | 880,000 |
Other | 1,000 | 139,000 |
Patents | 0 | (23,000) |
Deferred gain on installment sale | (1,000) | 0 |
State net operating loss carryforwards, net of federal tax benefit | 929,000 | 579,000 |
Research tax credit carryforwards | 2,433,000 | 2,274,000 |
Total deferred tax assets | 36,388,000 | 33,455,000 |
Valuation allowance | (36,388,000) | (33,455,000) |
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes (Provision for income taxes) (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Tax at statutory rate | (34.00%) | (34.00%) |
State taxes, net of federal benefit | 0.00% | 0.00% |
Research and development credit | (0.69%) | (1.30%) |
Share based payment expense | 0.00% | 1.60% |
Other | 0.42% | 0.70% |
Removal of deferred tax asset on federal net operating losses | 0.00% | 0.00% |
Establishment of deferred tax asset on state net operating losses and state deferred taxes, net of federal income tax benefits | (5.30%) | (4.90%) |
Change in valuation allowance | 39.60% | 37.90% |
Effective tax rate | 0.00% | 0.00% |
Income Taxes - Additional Information (Detail) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Income Taxes Disclosure [Line Items] | |
Operating Loss Carryforwards | $ 94.9 |
Equity Method Investment, Ownership Percentage | 50.00% |
Additional Paid-In Capital [Member] | |
Income Taxes Disclosure [Line Items] | |
Operating Loss Carryforwards | $ 94.9 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost | 2.5 |
Research Tax Credit Carryforward [Member] | |
Income Taxes Disclosure [Line Items] | |
Tax Credit Carryforward, Amount | 1.7 |
State and Local Jurisdiction [Member] | |
Income Taxes Disclosure [Line Items] | |
Operating Loss Carryforwards | $ 17.6 |
Operating Loss Carryforward Of Expiration Year | 2036 |
Tax Credit Carryforward, Amount | $ 1.1 |
Risks and Uncertainties - Additional Information (Detail) - Sales Revenue, Net [Member] |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Merchant Network And Channel Partner [Member] | ||
Concentration Risk [Line Items] | ||
Sales Revenue Goods Net Percentage | 24.00% | 45.00% |
ABG’s promotional product [Member] | ||
Concentration Risk [Line Items] | ||
Sales Revenue Goods Net Percentage | 4.00% | 13.00% |
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