COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENTS

12 Months Ended

Dec. 31, 2014

COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENTS [Abstract]

COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENTS

NOTE 14 — COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENTS:

In 2014 and 2013, the Company earned $1,672,258 million and $2,028,917 million, respectively, from research revenues and milestones. The Company is now involved in additional feasibility and development contracts related to its DPP® technology. The total expended on R&D in 2014 and 2013, was approximately $4.0 million and $3.7 million, respectively.

National Institutes of Health (NIH) Grant:

In March 2011, the Company received a $2,850,000 million, 3-year grant from the United States National Institutes of Health to complete development of a test for Tuberculosis. Grants are invoiced after expenses are incurred. The Company earned, for the years ended December 31, 2014 and 2013, $388,000 and $1,089,000, respectively from this grant. The Company has earned $2,850,000 from this grant from inception through December 31, 2014, of which $1,019,000 was paid to sub-contractors.

Battelle/CDC DPP® Influenza Immunity Test:

In November 2014, the Company entered into a follow-on, milestone-based development agreement bringing the total up to $1,239,000 based on Chembio's previous successful initial development of a multiplex rapid point-of-care ("POC") influenza immunity test utilizing its patented Dual Path Platform (DPP®) technology. The follow on agreement contemplates a period of approximately six months in which the follow-on development activity is to be completed. For the years ended Decmber 31, 2014 and 2013, the Company earned $115,000 and $643,500, respectively from this grant. The Company has earned $1,036,000 from this grant from inception through December 31, 2014.

Cooperative research agreement with a U.S. government agency:

In May 2013, the Company was awarded a cooperative research agreement with a U.S. government agency for up to $883,000 for an 8 month development project to develop rapid POC diagnostic tests for five infectious diseases associated with febrile illness. For the years ended Decmber 31, 2014 and 2013, the Company earned $117,000 and $766,000, respectively from this grant. The Company has earned $883,000 from this grant from inception through December 31, 2014.

d. RVR DPP® technology transfer agreement

In February 2014, the Company entered into a technology transfer agreement with RVR Diagnostics for $1,500,000. The agreement was modified in September 2014. Per the agreement, as modified, the Company earned $1,125,000 in milestone payments during 2014.

e. RVR Dengue agreement

In October 2014, he Company entered into a development agreement with RVR Diagnostics for $300,000. Revenue for this agreement is being recognized under a proportional performance method. As of December 31, 2014 the Company earned $60,000 from this agreement.

Governmental Regulation:

All of the Company's existing and proposed diagnostic products are regulated by the United States Food and Drug Administration (FDA), United States Department of Agriculture, certain state and local agencies, and/or comparable regulatory bodies in other countries. Most aspects of development, production, and marketing, including product testing, authorizations to market, labeling, promotion, manufacturing, and record keeping are subject to review. After marketing approval has been granted, Chembio must continue to comply with governmental regulations. Failure to comply with these regulations can result in significant penalties.

- Definition

The entire disclosure for research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period.

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