10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

¨ 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: 001-33509

RESPONSE GENETICS, INC .

(Exact name of registrant as specified in its charter)

Delaware	11-3525548
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
organization)
1640 Marengo St., 6th Floor, Los Angeles, California	90033
(Address of principal executive offices)	(Zip Code)

(323) 224-3900

(Registrant’s telephone number, including area code)

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 Exchange 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 ¨

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x
(do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

On May 14, 2013, there were 32,797,625 shares of common stock, $.01 par value per share, issued and outstanding.

Response Genetics, Inc.

Form 10-Q

Table of Contents

		Page
		Number
Part I.	Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets — December 31, 2012 and March 31, 2013 (Unaudited)	1
	Unaudited Consolidated Statements of Operations and Comprehensive Loss — Three months ended March 31, 2012 and 2013	2
	Unaudited Consolidated Statements of Cash Flows —Three months ended March 31, 2012 and 2013	3
	Notes to Unaudited Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
Part II.	Other Information
Item 1.	Legal Proceedings	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32
Signatures		33
Exhibit Index
	EX-31.1 (Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)
	EX-31.2 (Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)
	EX-32 (Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

ii

RESPONSE GENETICS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31, 2012			March 31, 2013
				(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	9,041,478		$	8,034,310
Accounts receivable, net of allowance for doubtful accounts of $991,990 and $1,048,864 at December 31, 2012 and March 31, 2013, respectively.		5,373,023			5,269,551
Prepaid expenses and other current assets		576,112			1,053,860
Total current assets		14,990,613			14,357,721
Property and equipment, net		1,023,198			991,898
Intangible assets, net		575,409			555,124
Total assets	$	16,589,220		$	15,904,743
LIABILITIES, COMMON STOCK CLASSIFED OUTSIDE OF STOCKHOLDERS’ EQUITY (DEFICIT) AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	1,191,122		$	898,819
Accrued expenses		343,913			722,864
Accrued royalties		712,776			907,026
Accrued payroll and related liabilities		1,382,265			1,659,983
Capital lease obligation, current portion		158,669			150,270
Deferred revenue		483,052			-
Line of credit, current		1,000,000			-
Total current liabilities		5,271,797			4,338,962
Capital lease obligation, net of current portion		83,910			53,101
Line of credit, non-current		-			1,000,000
Total liabilities		5,355,707			5,392,063
Commitments and contingencies (Note 5)
Common stock classified outside of stockholders’ equity (deficit)		11,775,724			5,500,000
Stockholders’ equity (deficit)
Common stock, $0.01 par value; 50,000,000 shares authorized; 32,797,625 shares issued and outstanding at December 31, 2012 and March 31, 2013, respectively		232,414			278,032
Additional paid-in capital		56,766,036			63,101,466
Accumulated deficit		(57,276,664	)		(58,100,968	)
Accumulated other comprehensive loss		(263,997	)		(265,850	)
Total stockholders’ equity (deficit)		(542,211	)		5,012,680
Total liabilities, common stock classified outside of stockholders’ equity (deficit) and stockholders’ equity (deficit)	$	16,589,220		$	15,904,743

The accompanying notes are an integral part of these consolidated financial statements.

1

RESPONSE GENETICS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Three Months Ended March 31
	2012			2013
Net Revenue	$	3,981,644		$	5,624,191
Cost of revenue		2,700,858			2,533,722
Gross profit		1,280,786			3,090,469
Operating expenses:
Selling and marketing		1,453,807			1,442,235
General and administrative		2,358,450			2,135,186
Research and development		569,955			297,200
Total operating expenses		4,382,212			3,874,621
Operating loss		(3,101,426	)		(784,152	)
Other income (expense):
Interest expense		(23,177	)		(19,410	)
Interest income		14			43
Other		-			(20,785	)
Net loss	$	(3,124,589	)	$	(824,304	)
Unrealized loss on foreign currency translation		(512	)		(1,853	)
Comprehensive loss	$	(3,125,101	)	$	(826,157	)
Net loss per share — basic and diluted	$	(0.14	)	$	(0.03	)
Weighted-average shares — basic and diluted		22,948,916			32,797,625

The accompanying notes are an integral part of these consolidated financial statements.

2

RESPONSE GENETICS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
	2012			2013
Cash flows from operating activities:
Net loss	$	(3,124,589	)	$	(824,304	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		109,174			137,399
Share-based compensation		325,008			105,324
Bad debt expense		255,925			468,463
Changes in operating assets and liabilities:
Accounts receivable		(307,700	)		(364,991	)
Prepaid expenses and other current assets		85,968			(477,748	)
Accounts payable		373,637			(292,303	)
Accrued expenses		(750,028	)		378,951
Accrued royalties		(284,986	)		194,250
Accrued payroll and related liabilities		(118,817	)		277,718
Deferred revenue		—			(483,052	)
Net cash used in operating activities		(3,436,408	)		(880,293	)
Cash flows from investing activities:
Purchases of property and equipment		(273,293	)		(81,414	)
Purchases of software		—			(4,400	)
Net cash used in investing activities		(273,293	)		(85,814	)
Cash flows from financing activities:
Net proceeds from issuance of common stock		7,716,038			—
Capital lease payments		(35,560	)		(39,208	)
Net cash provided by financing activities		7,680,478			(39,208	)
Effect of foreign exchange rates on cash and cash equivalents		(512	)		(1,853	)
Net increase (decrease) in cash and cash equivalents		3,970,265			(1,007,168	)
Cash and cash equivalents:
Beginning of period		1,700,295			9,041,478
End of period	$	5,670,560		$	8,034,310
Cash paid during the period for:
Interest	$	23,177		$	19,410

The accompanying notes are an integral part of these consolidated financial statements.

3

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Operations and Basis of Accounting

Response Genetics, Inc. (the “Company”) was incorporated in the State of Delaware on September 23, 1999 as Bio Type, Inc. for the purpose of providing molecular profiling services of tumor tissue that has been formalin-fixed and embedded in paraffin. In August 2000, the Company changed its name to Response Genetics, Inc. 

The Company is a life science company engaged in the research, development, marketing and sale of pharmacogenomics-clinical diagnostic tests for cancer. Pharmacogenomics is the science of how an individual’s genetic makeup relates to drug response. Diagnostic tests based on pharmacogenomics facilitate the prediction of a response to drug therapy or survival following surgery based on an individual’s genetic makeup. In order to generate pharmacogenomic information from patient specimens for these tests, the Company uses its proprietary technologies that enable the Company to reliably and consistently extract ribonucleic acid (“RNA”) and deoxyribonucleic acid (“DNA”) from tumor specimens that are stored as formalin-fixed and paraffin-embedded (“FFPE”) specimens and, thereby to analyze genetic information contained in these tissues for each patient. The Company’s platforms include analysis of single biomarkers using the polymerase chain reaction method as well as global gene interrogation using microarray methods and fluorescence in situ hybridization (“FISH”) from paraffin or frozen tissue specimens. The Company primarily derives its revenue from the sale of its ResponseDX^® diagnostic testing products and by providing pharmacogenomic clinical trial testing services to pharmaceutical companies in the United States, Asia and Europe.

The Company’s goal is to provide cancer patients and their physicians with a means to make informed, individualized treatment decisions based on genetic analysis of tumor tissues. The Company’s pharmacogenomic analysis of clinical trial specimens for the pharmaceutical industry may provide data that will lead to a better understanding of the molecular basis for response to specific drugs and, therefore lead to individualized treatment.

Since its inception, the Company has devoted substantial effort in developing its products and has incurred losses and negative cash flows from operations. At March 31, 2013, the Company had an accumulated deficit of $58,100,968. The Company anticipates continued losses and negative cash flows as it funds its selling and marketing activities and research and development programs.

Based on the Company’s current operating plan which includes various assumptions concerning the level and timing of cash receipts from product sales and cash outlays for operating expenses and capital expenditures, management believes that existing cash and cash equivalents will be sufficient to meet the Company’s working capital requirements through the next twelve months.  The Company’s ability to successfully carry out its business plan is primarily dependent upon its ability to (1) attract and retain knowledgeable workers, (2) generate significant revenues, and (3) if needed, obtain sufficient additional capital at acceptable costs. The Company expects to seek additional financing and/or strategic investments; however, there can be no assurance that any additional financing or strategic investments will be available on acceptable terms, if at all.

If events or circumstances occur such that the Company does not meet its operating plan as expected, the Company will most likely be required to reduce certain discretionary spending, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives.  No adjustments have been made to the accompanying financial statements to reflect any of the matters discussed above.  The consolidated financial statements have been prepared on the basis that the Company will continue as a going concern.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year. The balances as of December 31, 2012 were derived from our audited financial statements as of December 31, 2012. The financial statements should be read in conjunction with the Company’s audited December 31, 2011 and 2012 consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and 2012 previously filed with the SEC on April 2, 2012 and March 27, 2013, respectively, as amended by the 10-K/A filed with the SEC on April 27, 2012 and April 29, 2013, respectively.

2. Summary of Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Response Genetics, Ltd., a Scottish corporation (the “Subsidiary”), which was incorporated in November 2006. The Subsidiary had no employees or active operations in 2012. All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassification

Certain reclassifications have been made to prior period amounts to conform to current period presentation of gross profit in the statement of operations. These reclassifications did not have an impact on the Company’s financial condition as of December 31, 2012 nor statement of operations for the period ended March 31, 2012.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity date of three months or less from the date of purchase to be cash equivalents. The carrying value of cash equivalents approximates fair value due to the short-term nature and liquidity of these instruments. The Company’s cash equivalents are comprised of cash on hand, deposits in banks and money market investments.

4

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (continued)

Accounts Receivable

Pharmaceutical Accounts Receivable

The Company invoices its clients as specimens are processed and any other contractual obligations are met. The Company’s contracts with clients typically require payment within 45 days of the date of invoice. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its clients to make required payments. The Company specifically analyzes accounts receivable and historical bad debts, client credit, current economic trends and changes in client payment trends when evaluating the adequacy of the allowance for doubtful accounts. Account balances are charged-off against the allowance when it is probable the receivable will not be recovered. To date, the Company’s pharmaceutical customers have primarily been large pharmaceutical companies. As a result, bad debts from pharmaceutical accounts receivable to date have been minimal. Pharmaceutical company accounts receivable as of December 31, 2012 and March 31, 2013 were $2,549,665 and $1,917,601, respectively.  There were no allowances for doubtful accounts recorded against these pharmaceutical accounts receivable at December 31, 2012 and March 31, 2013.

ResponseDX^® Accounts Receivable

ResponseDX^® accounts receivable are recorded from two primary payors: (1) Medicare and (2) third party payros such as commercial insurance and private payors or self-pay (“Private Payors”).  ResponseDX^® accounts receivable are recorded at established billing rates less an estimated billing adjustment, based on reporting models utilizing historical cash collection percentages and updated for current effective reimbursement factors.  Management performs ongoing valuations of accounts receivable balances based on management’s evaluation of historical collection experience and industry trends.  Based on the historical experience for our Medicare and Private Payor accounts, management has determined, based on a detailed analysis, that accounts receivable associated with certain billings are unlikely to be collected. Therefore, the Company has recorded an allowance for doubtful accounts of $991,990 and $1,048,864 as of December 31, 2012 and March 31, 2013. The Company’s bad debt expense for the three months ended March 31, 2012 and 2013 was $178,065 and $468,463, respectively.

ResponseDX^® accounts receivable as of December 31, 2012 and March 31, 2013, consisted of the following:

	December 31, 2012			March 31, 2013
				(Unaudited)
Net Medicare receivable	$	890,936		$	1,449,049
Net Private Payor receivable		2,924,412			2,951,765
		3,815,348			4,400,814
Allowance for doubtful accounts		(991,990	)		(1,048,864	)
Total	$	2,823,358		$	3,351,950

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the double declining balance and straight-line methods over the estimated useful lives of the assets. The Company has determined the estimated useful lives of its property and equipment, as follows:

Laboratory equipment	5 to 7 years
Furniture and Equipment	3 to 7 years
Leasehold Improvements	Shorter of the useful life (5 to 7 years) or the lease term

Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the related accounts and the resulting gain or loss is reflected in the statements of operations. The Company has capitalized costs related to the development of database software (see Note 3). The portion of this database placed into service is amortized in accordance with ASC 350-40, Internal-Use Software. The amortization period is five years using the straight-line method.

5

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies - (continued)

Revenue Recognition

Pharmaceutical Revenue

Revenues that are derived from testing services provided to pharmaceutical companies are recognized on a contract specific basis pursuant to the terms of the related agreements. Revenue is recognized in accordance with ASC 605, Revenue Recognition, which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured.

Revenues are recorded on an accrual basis as the contractual obligations are completed and as a set of assays is processed through the Company’s laboratory under a specified contractual protocol and are recorded on the date the tests are completed. Certain contracts have minimum assay requirements that, if not met, result in payments that are due upon the completion of the designated period. In these cases, revenues are recognized when the end of the specified contract period is reached.

On occasion, the Company may enter into a contract that requires the client to provide an advance payment for specimens that will be processed at a later date. In these cases, the Company records this advance as deferred revenue and recognizes the revenue as the specimens are processed or at the end of the contract period, as appropriate.

The Company recorded revenue from pharmaceutical clients of $1,029,842 and $2,441,693 for the three months ended March 31, 2012 and 2013, respectively.

ResponseDX^® Revenue

Revenues that are derived from ResponseDX^® testing services are recognized in accordance with ASC 605, Revenue Recognition , which requires that four basic criteria be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. We record revenues when our tests have confirmed results which is evidence that the services have been performed.

Revenues are recorded on an accrual basis as the contractual obligations are completed and as a set of assays is processed through our laboratory under a specified contractual protocol.

ResponseDX^® Private Payor and Medicare revenues are recorded at established billing rates less an estimated billing adjustment, based on reporting models utilizing historical cash collection percentages and updated for current effective reimbursement factors. The Company’s Medicare provider number allows it to invoice and collect from Medicare. The Company’s invoicing to Medicare is primarily based on amounts allowed by Medicare for the service provided as defined by Common Procedural Terminology (“CPT”).

The following details ResponseDX^® revenue for the three months ended March 31, 2012 and 2013:

	Three Months
	Ended March 31,
	(Unaudited)
	2012		2013
Net Medicare revenue	$	1,460,318	$	1,344,215
Private Payor revenue		1,485,643		1,838,283
Other		5,841		–
Net ResponseDX® revenue	$	2,951,802	$	3,182,498

6

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies - (continued)

Revenue Recognition – (continued)

Cost-Containment Measures

Both government and private pay sources have instituted cost-containment measures designed to limit payments made to providers of health care services, which include diagnostic test providers such as the Company, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company.

Regulatory Matters

A portion of the Company’s revenues are derived from Medicare reimbursement. Laws and regulations governing Medicare programs are complex and subject to change and to interpretation, and the Company may be adversely affected by future changes in the applicable laws and regulations and governmental investigations, lawsuits or private actions which include mandatory damages, fines, penalties, criminal charges, loss or suspension of licenses and/or suspension or exclusion from Medicare and certain other governmental programs. The Company believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing.

Medicare reimbursement rates are subject to regulatory changes and government funding restrictions. In January 2013, the initial 2013 annual Medicare fee schedule update was announced which included proposed changes to Medicare reimbursement rates that significantly reduced the reimbursement rates for certain of the testing services we provide. The Company is participating with other impacted organizations to provide guidance to the local Medicare Administrative Contractor (“MAC”) that may result in adjustments to the proposed reimbursement rates to better reflect the value of the services being performed. As a result of this guidance, the local MAC updated certain pricing on or about April 3, 2013 which reflected an increase in many of the tests originally priced in January 2013. It is anticipated that continued guidance provided to Medicare and the local MAC by impacted organizations will result in additional fee increases during 2013. If, however, the current level of reduction in reimbursement rates is adopted as is, it may have a material adverse effect on the Company's operations.

As a result of these Current Procedural Terminology (“CPT”) code changes and Medicare price changes, we have experienced a departure from our normal reimbursement patterns with Medicare and other payors. Specifically, we have experienced delays in certain reimbursements for services and an increase in initial denials of claims for certain services provided. Accordingly, we revaluated the assumptions employed in our model for estimating revenue to be recognized for ResponseDX^® testing. We view the code and price changes described above as affecting only the assumptions we used in pricing our services. The nature of the testing we provide, the evidence we gather to establish the credit worthiness of our payors and the delivery method of our services have not changed from prior periods, and there are no indicators that these assumptions require change.

We performed an analysis that considered our historical patterns of revenue by payor in conjunction with the fluctuations we experienced in the quarter ended March 31, 2013 to arrive at the revenue recorded for the quarter. We believe that the changes in CPT codes and pricing that are causing confusion and erratic payment experience in the payor community will take some time to resolve. The time needed for resolution will depend upon the local MAC releasing additional pricing changes and potentially, revisions to previously revised prices, and upon the private payor community adopting the new CPT codes and some level of revised pricing. Accordingly, our revenue recognition estimates could be materially affected in future periods as pricing and payments patterns change and develop, and we may be materially affected by future or retroactive price changes.

Cost of Revenue

Cost of revenue represents the cost of materials, direct labor, royalties, costs associated with processing tissue specimens including pathological review, staining, microdissection, paraffin extraction, reverse transcription polymerase chain reaction, fluorescence in situ hybridization (“FISH”), quality control analyses, license fees and delivery charges necessary to render an individualized test result. Costs associated with performing tests are recorded as the tests are processed.

License Fees

The Company licenses technology for the extraction of RNA and DNA from FFPE tumor specimens from the University of Southern California (“USC”) in exchange for royalty fees on revenue generated by use of the technology. These royalties are calculated as a fixed percentage of revenue that we generate from use of the technology licensed from USC. Total license fees expensed in cost of revenue under the license agreement with USC were $56,502 and $104,105 for the three months ended March 31, 2012 and 2013, respectively. We also maintain a non-exclusive license to use Roche Molecular Systems, Inc.’s (“Roche”) PCR, homogenous PCR, and reverse transcription PCR processes. We pay Roche a fixed percentage royalty fee for revenue that we generate through use of this technology. Royalties expensed in cost of revenue under the Roche agreement totaled $63,468 and $90,145 for the three months ended March 31, 2012 and 2013, respectively.

We are subject to potentially significant variations in royalties recorded in any period. While the amount paid is based on a fixed percentage from revenues of specific tests pursuant to terms set forth in the agreements with USC and Roche, the amount due is calculated based on the revenue we recognize using the respective licensed technology. As discussed above, this revenue can vary from period to period as it is dependent on the timing of the specimens submitted by our clients for testing.

7

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies - (continued)

Research and Development

The Company expenses costs associated with research and development activities as incurred. Research and development costs are expensed as incurred and classified as research and development costs. Certain costs such as lab supplies and reagents that cannot be specifically identified are allocated based on the number of samples processed in total by the lab and R&D departments in total. Research and development costs include employee costs (salaries, payroll taxes, benefits, and travel), equipment depreciation and warranties and maintenance, laboratory supplies, primers and probes, reagents, patent costs and occupancy costs.

Line of Credit

On July 14, 2011, the Company entered into a line of credit agreement with Silicon Valley Bank (the “Bank”). The agreement has been amended most recently on March 7, 2013. The line of credit is collateralized by the Company’s pharmaceutical and Medicare receivables. The amended maximum amount that can be borrowed from the credit line is $2,000,000. As of March 31, 2013, the amount the Company can draw from the loan was equal to the lesser of (i) the Company’s calculated borrowing base, which was 80% of certain of the Company’s accounts receivable, or (ii) the amount available under the credit line. Prior to the line of credit’s first amendment on December 14, 2011, the Bank issued letters of credit up to a maximum amount of $500,000. Any issued letters of credit reduced the amount available to borrow under the line of credit on a dollar for dollar basis. As of March 31, 2013, the interest fees associated with this line of credit were set at the prime rate plus 1%. For the period ended March 31, 2013, the rate being charged to the Company was 5%. As needed from time to time, the Company may draw on this line of credit for use for general corporate purposes. As of December 31, 2012 and March 31, 2013, the Company has drawn $1,000,000 against the line of credit and no letters of credit were outstanding. The line of credit is subject to various financial covenants and, as of March 31, 2013, the Company was in compliance with these covenants. However, prior to the most recent amendment on March 7, 2013, the Company was not in compliance with certain covenants. The September 28, 2012 amendment provided forbearance for the failure to comply with these certain covenants through November 30, 2012, and modified the covenants to include a requirement that the Company maintain account balances at the Bank totaling a minimum of $4,000,000 during the covered forbearance period. The December 6, 2012 amendment to the agreement extended the forbearance for the failure to comply with these certain covenants and the requirement for the Company to maintain account balances at the Bank totaling a minimum of $4,000,000 through December 31, 2012. In addition, pursuant to the March 7, 2013 amendment, the Bank waived the Company's existing breach of financial covenants under the credit agreement and the parties restructured the line of credit to provide that, among other things: (i) the revolving line of credit's maturity date was extended to March 7, 2015, (ii) the fee for the unused portion of the revolving line of credit was reduced from 0.375% to 0.250% per annum of the average unused portion of the revolving line of credit, (iii) the Company must continue to meet certain reporting requirements including providing financial statements and a certificate of compliance with the terms and conditions of the credit agreement by an authorized officer to the Bank within 45 days of the last day of each calendar quarter, provided that if the Company has less than $4,000,000 in its account at the Bank at any time during such calendar quarter, the Company must provide the financial statements and the certificate of compliance within 30 days of the end of such calendar quarter and providing a monthly report on revenues realized from private payors, (iv) the financial covenants were amended and restated to require the Company to maintain a ratio of quick assets to current liabilities of 1:50 to 1:00 and meet certain specified minimum adjusted earnings before interest, taxes, depreciation and amortization requirements as defined in the amendment and measured on a monthly basis and (v) the Bank is granted certain additional inspection of books, records and collateral rights.

As of December 31, 2012, the line of credit under the credit agreement was classified as a current liability of the Company on the accompanying balance sheet as the line of credit had a maturity date less than one year from December 31, 2012. As of March 31, 2013, the maturity date of the line of credit has been extended to March 7, 2015 and therefore the line of credit is classified as a non-current liability.

From time to time, the Company’s calculated borrowing base under its Bank line of credit may decrease to a level where the Company is in an over-advance position in which case the Company will be required to repay any outstanding amounts greater than the calculated borrowing base for such covered period back to the Bank immediately. The Company will be able to draw down on the credit line again with respect to such paid back amount once the Company is in compliance with the borrowing base requirement.

Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

ASC 740, Income Taxes, clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of December 31, 2012 and March 31, 2013, the Company does not have a liability for unrecognized tax benefits. The Company recognizes interest and penalties associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the balance sheet. For the periods ended March 31, 2012 and 2013, interest and penalties totaling $0 and $107, respectively, were recorded in the Consolidated Statement of Operations.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Stock Compensation, Share-Based Payment. Stock-based compensation expense for all stock-based compensation awards granted is based on the grant-date fair value estimated in accordance with the provisions of ASC 718.  The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option vesting period. As further described in Note 7, certain awards granted to Thomas Bologna, the Company’s Chairman and Chief Executive Officer, were recognized based on an accelerated vesting basis triggered by market conditions rather than a straight-line basis.

The Company accounts for equity instruments issued to non-employees in accordance with ASC 505, Equity. Under ASC 505, stock option awards issued to non-employees are measured at fair value using the Black-Scholes option-pricing model and recognized pursuant to a performance model.

8

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies - (continued)

Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates in these consolidated financial statements have been made for revenue, allowances for doubtful accounts, impairment of long-lived assets, depreciation of property and equipment and stock-based compensation. Actual results could differ materially from those estimates.

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates potential impairment by comparing the carrying amount of the asset with the estimated undiscounted future cash flows associated with the use of the asset and its eventual disposition. Should the review indicate that the assets cost is not recoverable, the carrying value of the asset would be reduced to its fair value, which is measured by future discounted cash flows. 

Foreign Currency Translation

The financial position and results of operations of the Company’s foreign subsidiary are determined using local currency as the functional currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each period-end. Statement of Operations amounts are translated at the average rate of exchange prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss in stockholders’ equity (deficit).

Comprehensive Loss

The components of comprehensive loss are accumulated net loss and unrealized foreign currency translation adjustments for the three months ended March 31, 2012 and 2013.

Fair Value of Financial Instruments

Cash and cash equivalents are stated at cost, which approximates fair market value.  Cash equivalents consist of money market accounts, with fair values estimated based on quoted market prices. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies. For additional information see Note 12.

Advertising Costs

The Company markets its services through its advertising activities in trade publications and on the internet. Advertising costs are included in selling and marketing expenses on the statements of operations and are expensed as incurred.  Advertising costs for the three months ended March 31, 2012 and 2013 were $8,881 and $0, respectively.

9

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies - (continued)

Concentration of Credit Risk and Clients and Limited Suppliers

Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. All of the Company’s non-interest bearing cash balances were fully insured at December 31, 2012 due to a temporary federal program in effect from December 31, 2011 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning on January 1, 2013, federal insurance coverage reverted to $250,000 per depositor at each financial institution, and the Company’s non-interest bearing cash balances again exceeded federally insured limits. There were no funds in interest-bearing accounts that exceeded the federally insured limits as of March 31, 2013. At March 31, 2013, $7,236 of cash was held outside of the United States and is uninsured.

Revenue sources that account for greater than 10 percent of total revenue are provided below.

	Three Months Ended March 31,
	2012					2013
	(Unaudited)					(Unaudited)
	Revenue		Percent of Total Revenue			Revenue		Percent of Total Revenue
Abbott Molecular, Inc.	$	32,466		1	%	$	910,182		15	%
GlaxoSmithKline LLC and GlaxoSmithKline Biologicals S.A.	$	719,087		18	%	$	1,356,384		23	%
Medicare, net of contractual allowances	$	1,460,318		37	%	$	1,376,900		23	%

Customers that account for greater than 10 percent of gross accounts receivable are provided below.

	As of December 31, 2012					As of March 31, 2013
	( Unaudited )					( Unaudited )
	Receivable Balance		Percent of Total Receivables			Receivable Balance		Percent of Total Receivables
Abbott Molecular, Inc.	$	377,296		5.9	%	$	697,622		10.5	%
GlaxoSmithKline LLC and GlaxoSmithKline Biologicals S.A.	$	1,691,144		26.6	%	$	712,477		10.8	%
Medicare, net of contractual allowances	$	890,936		14.0	%	$	1,449,049		22.9	%

Many of the supplies and reagents used in the Company’s testing process are procured from a limited number of suppliers. Any supply interruption or an increase in demand beyond the suppliers’ capabilities could have an adverse impact on the Company’s business. Management believes it can identify alternative sources, if necessary, but it is possible such sources may not be identified in sufficient time to avoid an adverse impact on its business. Refer also to Note 6 for further discussion regarding these supply agreements. The Company purchases certain laboratory supplies and reagents primarily from two suppliers. Purchases from these two suppliers accounted for approximately 68% and 65% of the Company’s reagent purchases for the three months ended March 31, 2012 and 2013, respectively.

10

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

3. Property and Equipment and Intangible Assets

Property and equipment and intangible assets consist of the following:

	December 31, 2012			March 31, 2013
				(Unaudited)
Laboratory equipment	$	3,315,812		$	3,379,883
Furniture and equipment		660,626			675,219
Leasehold improvements		305,059			307,809
		4,281,497			4,362,911
Less: Accumulated depreciation		(3,258,299	)		(3,371,013	)
Total property and equipment, net	$	1,023,198		$	991,898
Purchased software	$	562,699		$	567,099
Internally developed software		108,362			108,362
		671,061			675,461
Less: Accumulated amortization		(95,652	)		(120,337	)
Total intangible assets, net	$	575,409		$	555,124

Intangible assets are carried at the cost to obtain them. Purchased software and internally developed intangible assets are amortized using the straight-line method over the estimated useful life of five years. Depreciation expense, included in cost of revenue, general and administrative expenses, and research and development expenses for the three months ended March 31, 2012 and 2013 was $109,174 and $137,401, respectively. 

Capital Lease

The Company leases certain equipment that is recorded as capital leases. This equipment is included in property and equipment on the accompanying balance sheet as of March 31, 2013 as follows:

	(Unaudited)
Equipment purchased under capital leases	$	451,234
Less: Accumulated amortization		(262,489	)
Equipment purchased under capital leases, net	$	188,745

Future minimum lease payments under capital leases as of March 31, 2013 are as follows:

Years ending December 31,	(Unaudited)
2013	$	130,641
2014		87,119
Total minimum lease payments		217,760
Less amount represented by interest		(14,389	)
Less current portion		(150,270	)
Capital lease obligation, net of current portion	$	53,101

11

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

4. Loss Per Share

The Company calculates net loss per share in accordance with ASC 260, Earnings Per Share. Under the provisions of ASC 260, basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive common stock equivalents then outstanding. Common stock equivalents consist of shares of common stock issuable upon the exercise of stock options and warrants.

The following table sets forth the computation for basic and diluted loss per share:

	Three Months Ended March 31,
	2012			2013
	(Unaudited)			(Unaudited)
Numerator:
Net loss	$	(3,124,589	)	$	(824,304	)
Numerator for basic and diluted earnings per share	$	(3,124,589	)	$	(824,304	)
Denominator:
Denominator for basic and diluted earnings per share — weighted-average shares outstanding		22,948,916			32,797,625
Basic and diluted loss per share	$	(0.14	)	$	(0.03	)

Outstanding stock options and warrants to purchase 1,777,099 and 1,711,643 shares for the periods ended March 31, 2012 and 2013, respectively, were excluded from the calculation of diluted loss per share as their effect would have been antidilutive.

5. Commitments and Contingencies

Operating Leases

The Company leases 20,753 square feet of office and laboratory space in Los Angeles, California, under a noncancelable operating lease that will expire on June 30, 2013. The Company is currently in negotiations to amend and extend this lease. However, there can be no assurance that the Company will be able to amend and extend the lease on terms acceptable to the Company. The Company also leased 1,460 square feet of space in Frederick, Maryland, where administrative functions were performed until July 31, 2012. The Company moved the administrative functions performed out of this office primarily to its Los Angeles facilities and closed the Maryland office on July 31, 2012. The lease for the Maryland office expired on January 31, 2013.

Rent expense, which is classified in cost of revenue, general and administrative, and research and development expenses was $181,334 and $160,790 for the three months ended March 31, 2012 and 2013, respectively.

Future minimum lease payments by year and in the aggregate, under the Company’s noncancelable operating leases for facilities, equipment and software as a service, consist of the following at March 31, 2013:

Years Ending December 31,	Unaudited
2013	$	428,190
2014		95,084
2015		95,084
2016		13,271
Total	$	631,629

12

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

5. Commitments and Contingencies – (continued)

Systems and Services Agreement

The Company entered into a systems and service agreement with Xifin, Inc. on December 21, 2011.  The term of this agreement is for 36 months, at a rate of $20,000 a month with automatic renewal for 12 months thereafter, unless termination notice is given by either party.  

Guarantees

The Company enters into indemnification provisions under its agreements with other counterparties in its ordinary course of business, typically with business partners, clients and landlords. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company's activities. These indemnification provisions generally survive termination of the underlying agreement. The Company reviews its exposure under these agreements no less than annually, or more frequently when events require. The Company believes the estimated fair value of these agreements is minimal as, historically, no payments have been made by the Company under these indemnification obligations. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2012 and March 31, 2013.

Legal Matters

The Company is, from time to time, involved in legal proceedings, regulatory actions, claims and litigation arising in the ordinary course of business. These matters are not expected to have a material adverse effect upon the Company’s financial condition.

Employment Agreements

The Company has employment contracts with several individuals, which provide for annual base salaries and potential bonuses. These contracts contain certain change of control, termination and severance clauses that require the Company to make payments to certain of these employees if certain events occur as defined in their respective contracts.

6. License and Collaborative Agreements

License Agreement with the University of Southern California (“USC”)

In April 2000, as amended in June 2002 and April 2005, the Company entered into a license agreement with USC. Under this agreement, USC granted the Company a worldwide, exclusive license with the right to sublicense, the patents for nucleic acid extraction methodologies (“RGI-1”) and related technology, for use in human and veterinary diagnostic laboratory services, the sale of clinical diagnostic products, and the sale of research products to the research community. USC retains the right under the agreement to use the technology for research and educational purposes.

In consideration for this license, the Company agreed to pay USC royalties based on a percentage of net sales of products or services that make use of RGI-1 and related technology and to meet a certain minimum in royalty payments.   Royalty expense relating to this agreement amounted to $56,502 and $104,105 for the three months ended March 31, 2012 and 2013, respectively.  Such expense is included in cost of revenue in the accompanying statements of operations.

License Agreement with Roche Molecular Systems (“Roche”)

In November 2004, the Company entered into a non-exclusive license to use Roche’s technology including specified nucleic acid amplification processes (“PCR Processes”) to perform certain human invitro clinical laboratory services. In consideration for this license, the Company is obligated to pay royalties to Roche, based on a percentage of net sales of products or services that make use of the PCR Processes. Royalty expense included in cost of revenue relating to this agreement amounted to $63,468 and $90,145 for the three months ended March 31, 2012 and 2013, respectively.

In November 2004, the Company also entered into an agreement with Roche, pursuant to which the Company is collaborating with Roche to produce commercially viable assays used in the validation of genetic markers for pharmaceutical companies. Specifically, the Company has licensed the rights to Roche to use the pre-diagnostic assays the Company develops in the course of using its RNA-extraction technologies to provide testing services to pharmaceutical companies and to produce diagnostic kits that then can be sold commercially to those pharmaceutical companies. Roche is required to pay the Company royalties of a certain percentage of net sales of such diagnostic kits sold to pharmaceutical companies. Through March 31, 2103, Roche has not been required to pay any royalties to the Company pursuant to this agreement.

13

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. License and Collaborative Agreements - (continued)

Services Agreement with Taiho Pharmaceutical Co., Ltd. (“Taiho”)

In July of 2001, the Company entered into an agreement with Taiho pursuant to which the Company provides Taiho with RGI-1 generated molecular-based tumor analyses for use in guiding chemotherapy treatment for cancer patients and for use in Taiho’s business of developing and marketing pharmaceutical and diagnostic products for use against cancer. Pursuant to the agreement, as amended, the Company appointed Taiho as the exclusive purchaser in Japan of tests and testing services based upon the RGI-1 using gene expression through 2010 for: (i) any one or the combination of specified molecular markers, (ii) the therapeutic use of specified compounds, or (iii) the diagnosis or therapeutic treatment of specified precancerous and cancerous diseases. The Company also granted Taiho the right to be a non-exclusive purchaser in Japan of tests and testing services based upon the RGI-1 using gene expression, other than those for which Taiho has exclusivity, for: (i) any one or combination of molecular markers, (ii) the therapeutic use of any compound or biological product against cancer, or (iii) the diagnosis or therapeutic treatment of precancerous and cancerous diseases.

In consideration for the testing services provided, Taiho paid an upfront payment at the commencement of the agreement and is obligated to pay regular testing fees, covering the specific services performed on a monthly basis.  In December 2009, the Company amended its agreement with Taiho and the agreement was renewed for an additional three years. According to the terms of the renewal, Taiho’s appointment as an exclusive purchaser in Japan of certain tests and testing services and its minimum purchasing obligations ended on December 31, 2010 and as such, Taiho was only obligated to purchase tests and testing services based on its needs for 2011 and 2012.

Until its minimum purchasing obligations ended on December 31, 2010, Taiho was obligated to purchase a minimum amount of testing services from the Company each calendar quarter. Revenue recognized under this agreement for the three months ended March 31, 2012 and 2013 was $244,125 and $33,920, respectively. As of the date of filing of this Quarterly Report on Form 10-Q, the Company continues to provide services to Taiho. The Company and Taiho are currently discussing amending and extending this agreement which amended agreement would be effective and govern all services the Company provided to Taiho as of January 1, 2013. There can be no assurance, however, that the Company will be able to amend and extend the Taiho agreement on terms acceptable to the Company, if at all.

Services Agreement with GlaxoSmithKline, LLC formerly known as SmithKline Beecham Corporation (d.b.a. GlaxoSmithKline or “GSK”)

In January 2006, the Company entered into a master services agreement with GSK, a leading pharmaceutical manufacturer, pursuant to which the Company provides services in connection with profiling the expression of various genes from a range of human cancers. Under the agreement, the Company provides GSK with testing services as described in individual protocols and GSK pays the Company for such services based on the pricing schedule established for each particular protocol. GSK is obligated to make minimum annual payments to the Company under the agreement and also was obligated to make a non-refundable upfront payment to the Company, to be credited against work undertaken pursuant to the agreement. In January 2006, the Company received an upfront payment of $2,000,000, which was initially recorded as deferred revenue. The timing of the recognition of these amounts is dependent upon when GSK submits the specimens for testing. There was no remaining deferred revenue balance associated with this agreement for the periods ended December 31, 2012 or March 31, 2013.

In December 2008, the Company amended and restated its master services agreement with GSK and extended the term of the agreement for a two-year period, with the option for the parties to extend the agreement for additional one-year periods at the end of the term, upon their mutual written agreement. In addition, the Company became a preferred provider to GSK and its affiliates of genetic testing services on a fee-for-service basis and, in anticipation of the services to be provided, GSK agreed to make a non-refundable upfront payment of approximately $1,300,000, which was received in January 2010.  There was no remaining deferred revenue balance associated with this agreement for the periods ended December 31, 2012 or March 31, 2013.

The Company recognized revenue of $77,477 and $0 relating to the GSK agreement for the three months ended March 31, 2012 and 2013, respectively.

Non-Exclusive License Agreement with GSK

In March 2010, the Company entered into a non-exclusive license agreement with GSK.  Under the agreement, the Company granted GSK a non-exclusive, sublicenseable license to its proprietary PCR analysis technology and diagnostic expertise to assess BRAF gene mutations in human tumor samples.  As part of the agreement, the Company received a non-refundable technology access fee in consideration for the transfer of the Company’s technology to GSK. The agreement also contains milestone provisions which would allow the Company to earn further payments from GSK.  The Company earned a $500,000 milestone payment from GSK that was recorded as revenue in 2012.

14

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. License and Collaborative Agreements - (continued)

Master Services Agreement with GlaxoSmithKline Biologicals S.A. (“GSK Bio”)

On July 26, 2012, the Company entered into a second amended and restated master services agreement with GSK Bio, the vaccine division of GSK. Pursuant to this agreement, which has an effective date of May 15, 2012, the Company provides testing services for clinical trials and epidemiology studies relating to GSK Bio’s cancer immunotherapies. The Company performs these testing services on a fee-for-service basis as embodied in written task orders. GSK Bio retains the intellectual property rights to inventions, improvements and data resulting from the services performed under the agreement. The Company retains all intellectual property rights to its testing services, proprietary processes and all accompanying patent information owned by the Company. All intellectual property owned by either party on the date of the agreement remains the exclusive property of the owning party.

The agreement will expire on December 31, 2014, provided that any outstanding task orders at the time of termination will not thereby terminate (unless otherwise agreed in writing by the parties), and any such task orders will continue for the respective terms specified in such task orders (and the parties shall continue to perform their obligations thereunder). GSK Bio may terminate the agreement, without cause, upon 90 days’ written notice to the Company. The Company may terminate the agreement, without cause, upon one year’s written notice to GSK Bio. The agreement may also be terminated early if either party enters bankruptcy or similar proceedings or in the event of a material breach. GSK Bio may terminate the agreement immediately if the Company experiences a “change of control,” as defined in the agreement.

The agreement also provides for mutual indemnification by the parties and contains customary representations, warranties and covenants, including covenants governing the parties’ use of confidential information and representations regarding adequate insurance coverage or self-insurance.

The Company recognized revenue of $641,610 and $1,356,384 relating to the services performed for GSK Bio for the three months ended March 31, 2012 and 2013, respectively.

Commission Agreement with Hitachi Chemical Co., Ltd.

On July 26, 2007, the Company entered into a collaboration agreement with Hitachi, a leading diagnostics manufacturer in Japan. Under the terms of this agreement, Hitachi used the Company's proprietary and patented techniques to extract genetic information from FFPE tissue samples collected in Southeast Asia, Australia and New Zealand. As part of this collaboration agreement, the Company provides Hitachi with the technical information and assistance necessary to perform the testing services. Hitachi is responsible for expenses related to the cost of laboratory equipment and modification to the laboratory facilities, as well as the cost of reagents. The Southeast Asian countries covered under this agreement include Japan, North Korea, South Korea, Taiwan, Mongolia, Pakistan, Bangladesh, Sri Lanka, Nepal, Singapore, Malaysia, Indonesia, Brunei, Thailand, Myanmar, Laos, Cambodia, Vietnam and the Philippines (the “Territory”).

The collaboration agreement had an initial term expiring on June 30, 2010, with an automatic renewal for one year at the end of the original period under the same terms and conditions. Pursuant to the agreement, Hitachi performed certain testing services and received a percentage of the revenue collected from the Company's clients in the Territory, which totaled $85,920 and $0 for the three months ended March 31, 2012 and 2013, respectively. These amounts were recorded as cost of revenue in the consolidated statement of operations and comprehensive loss. Due to the closing of Hitachi’s applicable facility in the Territory, the Company and Hitachi agreed to terminate this agreement effective September 30, 2012.

15

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7. Stock Option Plans

In March 2000, the Company adopted a Stock Option Plan (the “2000 Stock Plan”) as approved by its Board of Directors. Under the 2000 Stock Plan, the Company granted options to acquire up to 1,600,000 shares of common stock. In connection with the adoption of the 2006 Employee, Director and Consultant Stock Plan, as further discussed below, the Company is to grant no additional options under the 2000 Stock Plan. Under the 2000 Stock Plan, there were no options to purchase shares of the Company’s common stock that remained outstanding as of March 31, 2013. Prior to March 2007, the Company also granted options to purchase 16,000 shares of common stock to two consultants which were granted under separate agreements outside of the 2000 Stock Plan.

On October 26, 2006, the Board of Directors of the Company approved, and on May 1, 2007, reapproved the adoption of the 2006 Employee, Director and Consultant Stock Plan (the “2006 Stock Plan”). The stockholders approved the 2006 Stock Plan on June 1, 2007. The initial number of shares which may be issued from time to time pursuant to the 2006 Stock Plan was 2,160,000 shares of common stock. Also, the 2006 Stock Plan includes the number of shares subject to purchase under options issued under the 2000 Stock Plan, where the options expired on or after October 18, 2006, subject to a maximum of 210,000 additional options.  In addition, on the first day of each fiscal year of the Company during the period beginning in fiscal year 2008 and ending on the second day of fiscal year 2017, the number of shares that may be issued from time to time pursuant to the 2006 Stock Plan is increased by the lesser of (i) 200,000 shares or equivalent, after determination of the effect of any stock split, stock dividend, combination or similar transactions as set forth in the 2006 Stock Plan, (ii) 5% of the number of outstanding shares of common stock of the Company on such date or (iii) an amount determined by the Board of Directors of the Company.  The initial number of shares available for issuance of 2,160,000 increased by 210,000 for options issued under the 2000 Stock Plan expiring after October 2006 and by 200,000 in 2008, 2009, 2010, 2011 and 2012, resulting in the total number of shares that may be issued as of January 1, 2013 to be 3,570,000.  As of March 31, 2013, there were 1,858,357 options available for grant under the 2006 Stock Plan.

Employee options vest according to the terms of the specific grant and expire 10 years from the date of grant. Non-employee option grants to date typically vest over a 2 to 3 year period. The Company had 1,711,643 options outstanding at a weighted average exercise price of $2.03 at March 31, 2013. There were 938,262 non-vested stock options outstanding with a weighted average grant date fair value of $1.37 at March 31, 2013.  As of March 31, 2013, there was $678,757 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2006 Stock Plan. That cost is expected to be recognized over a weighted-average period of 3.24 years.

Except for the certain grants of restricted common stock and common stock options containing market conditions as described below, the Company estimated share-based compensation expense for the three months ended March 31, 2012 and 2013 using the Black-Scholes model with the following weighted average assumptions:

	Three Months Ended March 31,
	2012			2013
	(Unaudited)			(Unaudited)
Risk free interest rate		1.22-1.38	%		1.03-1.14	%
Expected dividend yield		—			—
Expected volatility		101.1-101.7	%		104.0-104.9	%
Expected term **(in years)		6.25			6.25
Forfeiture rate		7.0	%		7.0	%

** Expected term is calculated using SAB 107, Simplified Formula. Management has concluded that the use of the simplified method for calculating the expected term of its common stock option grants is appropriate given the Company’s lack of history of option exercises.

The following table summarizes the stock option activity for the 2006 Plan for the three months ended March 31, 2013:

	Number of Shares			Weighted Average Exercise Price		Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding, December 31, 2012		1,749,310		$	2.12		8.32	$	151,919
Granted (Unaudited)		95,000		$	1.39		9.91		—
Exercised (Unaudited)		—		$	—		—		—
Expired (Unaudited)		(68,484	)		3.80		6.05		27
Forfeited (Unaudited)		(64,183	)	$	1.63		—		3,400
Outstanding, March 31, 2013 (Unaudited)		1,711,643		$	2.03		8.24	$	92,464
Exercisable, March 31, 2013 (Unaudited)		773,381		$	2.84		7.03	$	14,606

The weighted-average grant-date fair value of options granted during the nine months ended March 31, 2012 and 2013 was $1.47 and $1.39, respectively.    

16

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7. Stock Option Plans – (continued)

The following table provides additional information regarding options outstanding under the 2006 Plan as of March 31, 2013 (Unaudited):

		Options Outstanding				Options Exercisable
Exercise Price		Number of Options		WA Remaining Contractual Term		Number of Options		WA Remaining Contractual Term
$	1.00 to 1.99		1,292,517		8.95		374,316		8.14
	2.00 to 2.99		201,626		7.66		181,565		7.70
	3.00 to 3.99		71,000		5.33		71,000		5.33
	4.00 to 4.99		11,500		4.40		11,500		4.40
	5.00 to 5.99		-		-		-		-
	6.00 to 6.99		-		-		-		-
	7.00		135,000		4.19		135,000		4.19
			1,711,643		8.24		773,381		7.03

Stock-based compensation expense was classified as follows in the results of operation:

	Three Months Ended March 31,
	( Unaudited )
	2012		2013
Cost of revenue	$	16,689	$	13,487
Research and development		2,481		9,842
Sales and marketing		14,367		17,400
General and administrative		291,471		64,595
Totals	$	325,008	$	105,324

Thomas Bologna was appointed Chief Executive Officer of the Company on December 21, 2011 and in connection with his appointment, Mr. Bologna was awarded stock options outside of the 2006 Stock Plan. Pursuant to the employment agreement between the Company and Mr. Bologna, dated December 21, 2011, and in reliance on NASDAQ Listing Rule 5636(c), the Company granted Mr. Bologna (i) a stock option to purchase 600,000 shares of the Company’s common stock, which vests monthly over 36 months from the date of grant, subject to his continued employment with the Company, (ii) a stock option to purchase 300,000 shares of the Company’s common stock, which vests in two equal installments on the first day of the 18th and 36th calendar months from the date of grant, subject to his continued employment with the Company, or if earlier, the date on which the 30-day trailing average closing price of the Company’s common stock equals or exceeds $1.80, and (iii) 270,000 shares of restricted common stock of the Company, which vest on the date on which the 30-day trailing average closing price of the Company’s common stock equals or exceeds $2.40. The exercise price of the stock options is $1.20 per share, the closing price of the Company’s common stock on the day prior to the date of grant. The expense recognized in connection with these grants was $103,332 and $44,531 for the three months ended March 31, 2012 and 2013, respectively, and is included in the above table.

17

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7. Stock Option Plans – (continued)

Since the restricted shares of common stock grant vests upon attainment of a target price for the Company’s common stock and each tranche of the 300,000 share common stock option grant can vest sooner than the stated vesting dates based upon attainment of a target price for the Company’s common stock, these awards are deemed to include market conditions for purposes of determining the valuation and accounting for the awards. Accordingly, the fair value of the restricted shares of common stock grant and each tranche of the 300,000 share common stock option grant that Mr. Bologna received was determined using a Monte-Carlo simulation model to simulate the Company’s stock prices in the future that would trigger or not trigger the market conditions. For these awards containing market conditions, the compensation amount will be attributed over the service date unless vesting occurs sooner due to achieving the market condition.

The following table summarizes these awards to Mr. Bologna:

Type	Grant Date	Number of Awards		Intrinsic Value as of March 31, 2013		Exercise Price		Options Exercisable		Remaining Contractual Term
Restricted Shares of Common Stock	12/21/2011		270,000	$	32,400	$	—		—		8.7
Options	12/21/2011		600,000	$	72,000	$	1.20		250,000		8.7
Options	12/21/2011		300,000	$	36,000	$	1.20		300,000		8.7

During the first quarter of 2012, Mr. Bologna’s stock award of 300,000 shares met the conditions for vesting in that the 30-day trailing average closing price of the Company’s common stock exceeded $1.80. The Company recognized expense of $129,000 for the vesting of this tranche of options for Mr. Bologna’s stock awards during the quarter ended March 31, 2012.

8. Common Stock Warrants

The Company issues warrants to purchase common shares of the Company either as compensation for services or as additional incentive for investors who may purchase common stock. The value of warrants issued for compensation is accounted for as a non-cash expense to the Company at the fair value of the warrants issued.

In June 2007, in conjunction with the initial public offering, the Company issued 100,000 warrants to purchase 100,000 shares of its common stock at an exercise price of $7.70 to the underwriters as part of the initial public offering which expired in June 2012. There were no warrants granted during the three months ended March 31, 2012 and 2013.

18

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

9. Income Taxes

Deferred income taxes result from temporary differences between income tax and financial reporting computed at the effective income tax rate. The Company has established a valuation allowance against its net deferred tax asset due to the uncertainty surrounding the realization of such asset. Management periodically evaluates the recoverability of the deferred tax assets. At such time it is determined that it is more likely than not that deferred tax assets are realizable, the valuation allowance will be reduced.

The Company files U.S. federal, U.S. state, and foreign tax returns. The Company’s major tax jurisdictions are U.S. federal and the State of California. The Company is subject to tax examinations for the open years from 2003 through 2012.

10. Segment Information

The Company operates in a single reporting segment, with an operating facility in the United States.

The following enterprise wide disclosure was prepared on a basis consistent with the preparation of the consolidated financial statements.

The following tables contain certain financial information by geographic area:

	Three Months Ended March 31,
	2012		2013
	(Unaudited)		(Unaudited)
Revenue:
United States	$	3,095,909	$	4,153,172
Europe		641,610		1,361,249
Japan		244,125		109,770
	$	3,981,644	$	5,624,191

	December 31, 2012		March 31, 2013
			(Unaudited)
Long-lived assets:
United States	$	1,598,607	$	1,547,022

19

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

11. Sale of Common Stock

Common stock classified outside of stockholders’ equity (deficit)

March 2010 Private Placement

On March 5, 2010, the Company entered into a purchase agreement with certain affiliates of and funds managed by Lansdowne Partners Limited Partnership (“Lansdowne”), Greenway Capital Partners and Paragon Associates for the private placement of 3,005,349 newly-issued shares of the Company’s common stock at a per share price of $1.31.  The closing of the sale of the shares occurred on March 5, 2010.  In connection with the acquisition of the shares, the purchasers were granted certain preemptive rights permitting them to maintain their percentage ownership interests in connection with future issuances of the Company’s capital stock, subject to various exceptions and limitations.  Lansdowne participated in the private placement by electing to exercise the preemptive rights granted to it pursuant to the purchase agreement by and between the Company and Lansdowne, dated July 22, 2009. Net proceeds received from this financing were approximately $3,879,403.

In connection with the private placement, the Company also entered into a registration rights agreement, dated March 5, 2010, with the purchasers pursuant to which it agreed to file, within 45 days of the closing of the private placement, a registration statement with the SEC to register the shares for resale, which registration statement was required to become effective within 120 days following the closing.  The Company also granted certain "piggyback" registration rights to the purchasers which are triggered if the Company proposes to file a registration statement for its own account or the account of one or more shareholders until the earlier of the sale of all of the shares or the shares becoming eligible for sale under Rule 144(b)(1) without restriction.

Pursuant to the registration rights agreement, dated March 5, 2010, the Company filed a registration statement with the SEC to register the 3,005,349 shares sold to Lansdowne, Greenway and Paragon for resale, which became effective on May 19, 2010 and which registration statement remained effective as of March 31, 2013.

Under the registration rights agreements with the purchasers, the Company is obligated to use commercially reasonable efforts to (i) cause the registration statement described above to remain continuously effective and (ii) to maintain the listing of the Company’s common stock on NASDAQ or other exchanges, as defined, for a period that will terminate on the earlier of March 5, 2013 or the date on which the purchasers have sold all shares of common stock.  The Company is also required to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  In the event the Company fails to satisfy its obligations under the registration rights agreements, the Company would be in breach of said agreements, in which event, the purchases would be entitled to pursue all rights and remedies at law or equity including an injunction or other equitable relief. These registration rights agreements do not provide an explicitly stated or defined penalty due upon a breach.  Because (i) the potential penalty for any breach of these registration rights agreement is not explicitly stated or defined, which prohibits the Company from applying the guidance of ASC 825-20-15, Registration Payment Arrangements and (ii) complying with all filing requirements under the Exchange Act as described above is not solely within the Company’s control, the Company  is required to present the investment of approximately $3,879,403 in the Company’s common stock as common stock outside of stockholders’ equity in the accompanying consolidated balance sheet under ASC 480-10-S99-3, Classification and Measurement of Redeemable Securities.

On January 18, 2012, the Company removed the restrictions on 3,658,676 shares purchased by Lansdowne, of which 600,769 related to this offering, and reclassified the shares to common stock from common stock classified outside of equity (deficit). On March 5, 2013, the Company reclassified the remaining shares of common stock from this offering to common stock from common stock classified outside of equity (deficit). Therefore, as of December 31, 2012 and March 31, 2013, a total of $3,092,396 and $0 of common stock was classified outside of stockholders’ equity (deficit), respectively.

20

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

11. Sale of Common Stock – (continued)

February 2012 Private Placement

On February 2, 2012, the Company entered into purchase agreements with various investors (collectively, the “February Investors”) for the private placement of an aggregate of 5,257,267 newly-issued shares of the Company’s common stock (the “February Shares”) at a purchase price of $1.50 per share (the “February 2012 Private Placement”). Net cash proceeds raised in the February 2012 Private Placement were approximately $7,822,000. The February Investors participating in the February 2012 Private Placement were various institutions and all officers and directors of the Company. The final closing of the February 2012 Private Placement (the “February Closing”) occurred on February 2, 2012.

In connection with the February 2012 Private Placement, the Company also entered into registration rights agreements, each dated February 2, 2012, with the February Investors pursuant to which the Company agreed to file, within 90 days of the February Closing, a registration statement with the SEC to register the February Shares for resale, which registration statement was required to become effective within 180 days following the February Closing. The Company also granted the February Investors certain “piggyback” registration rights, which are triggered if the Company proposes to file a registration statement for its own account or the account of one or more shareholders until the earlier of the sale of all of the February Shares or the February Shares becoming eligible for sale under Rule 144(b)(1) without restriction.

Pursuant to the registration rights agreements dated February 2, 2012, the Company filed a registration statement with the SEC on April 30, 2012, to register the February Shares for resale. This registration statement became effective on May 17, 2012 and remained effective as of March 31, 2013.

Under the registration rights agreements with the February Investors, the Company is obligated to use commercially reasonable efforts to (i) cause the registration statement described above to remain continuously effective and (ii) to maintain the listing of the Company’s common stock on NASDAQ or other exchanges, as defined, for a period that will terminate on the earlier of February 2, 2013, the date on which the February Investors have sold all covered registrable securities or the date on which there are no longer any covered registrable securities outstanding.  The Company is also required to file with the SEC in a timely manner all reports and other documents required of the Company required of the Company under the Exchange Act.  In the event the Company fails to satisfy its obligations under the registration rights agreements, the Company would be in breach of said agreements, in which event, the February Investors would be entitled to pursue all rights and remedies at law or equity including an injunction or other equitable relief. These registration rights agreements do not provide an explicitly stated or defined penalty due upon a breach.  Because (i) the potential penalty for any breach of these registration rights agreement is not explicitly stated or defined, which prohibits the Company from applying the guidance of ASC 825-20-15, Registration Payment Arrangements and (ii) complying with all filing requirements under the Exchange Act as described above is not solely within the Company’s control, the Company was required to present the investment of approximately $7,885,900 in the Company’s common stock as common stock outside of stockholders’ equity in the accompanying consolidated balance sheet under ASC 480-10-S99-3, Classification and Measurement of Redeemable Securities.

As of March 31, 2013, the Company has reclassified all of the February Shares to common stock from common stock classified outside of equity (deficit). Therefore, as of December 31, 2012 and March 31, 2013, a total of $3,183,328 and $0 of common stock was classified outside of stockholders’ equity (deficit), respectively.

September 2012 Private Placement

On September 13, 2012, the Company entered into a purchase agreement (the “Purchase Agreement”) with Glaxo Group Limited, an affiliate of GSK (the “GSK Investor”) and two existing investors, Swiftcurrent Partners, L.P. and Swiftcurrent Offshore, Ltd. (collectively with the GSK Investor, the “September Investors”) for the private placement of an aggregate of 8,000,000 newly-issued shares of the Company’s common stock (the “September Shares”) at a purchase price of $1.10 per share (the “September 2012 Private Placement”). The Company raised gross cash proceeds of $8,800,000 in the September 2012 Private Placement, which closed on September 13, 2012 (the “Closing”).

Pursuant to the Purchase Agreement, for so long as the GSK Investor or its affiliates own at least 50% of the September Shares it purchased pursuant to the Purchase Agreement, the GSK Investor has the right to designate one non-voting board observer (the "Board Observer"). The Board Observer, if appointed, has the right to attend all meetings of the Board of Directors of the Company and to receive all board meeting materials, subject to certain restrictions set forth in the Purchase Agreement. As of the date hereof, the GSK Investor has not exercised its right to designate the Board Observer.

In connection with the September 2012 Private Placement, the Company also entered into a registration rights agreement, dated September 13, 2012 (the “September Registration Rights Agreement”), with the September Investors pursuant to which the Company agreed to file, within 45 days of the Closing, a registration statement with the SEC to register the September Shares for resale, which registration statement was required to become effective within 180 days following the Closing. The Company also granted the September Investors certain “piggyback” registration rights, which are triggered if the Company proposes to file a registration statement for its own account or the account of one or more stockholders until the earlier of the sale of all of the September Shares or the September Shares becoming eligible for sale under Rule 144(b)(1) without restriction.

21

RESPONSE GENETICS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

11. Sale of Common Stock – (continued)

Under the September Registration Rights Agreement, the Company is obligated to use commercially reasonable efforts to cause a registration statement to become effective and to remain continuously effective and to maintain the listing of the covered common stock on NASDAQ or other exchanges, as defined, for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, (ii) the date on which there are no longer any Registrable Securities outstanding or (iii) three years from the date of filing of such Registration Statement (the “ Effectiveness Period ”) and advise each September Investor in writing when the Effectiveness Period has expired. “Registrable Securities” means (i) the September Shares and (ii) shares of capital stock or any other securities issued or issuable with respect to or in exchange for the September Shares; provided, that, a security shall cease to be a Registrable Security with respect to a September Investor upon (A) sale by such September Investor pursuant to a registration statement or Rule 144 under the Securities Act of 1933, or (B) such security becoming eligible for sale by such September Investor without restriction pursuant to Rule 144(b)(1).   In the event the Company fails to satisfy its obligations under the September Registration Rights Agreement, the Company would be in breach of such agreement, in which event, the September Investors would be entitled to pursue all rights and remedies at law or equity including an injunction or other equitable relief. The September Registration Rights Agreement does not provide an explicitly stated or defined penalty due upon a breach.  Because the potential penalty for any breach of these registration rights agreement is not explicitly stated or defined, which prohibits the Company from applying the guidance of ASC 825-20-15, Registration Payment Arrangements , the Company was required to present the investment of approximately $8,800,000 in the Company’s common stock as common stock outside of stockholders’ equity in the accompanying consolidated balance sheet under ASC 480-10-S99-3, Classification and Measurement of Redeemable Securities.

Pursuant to the September Registration Rights Agreement, the Company filed a registration statement with the SEC on October 26, 2012, to register the September Shares for resale. This registration statement became effective on November 13, 2012 and remained effective as of March 31, 2013.

As of December 31, 2012, the Company has removed the restriction on 3,000,000 of the 8,000,000 September Shares and reclassified the shares to common stock from common stock classified outside of stockholders’ equity (deficit). Therefore, as of December 31, 2012 and March 31, 2013, a total of $5,500,000 of common stock relating to the 5,000,000 remaining restricted September Shares was classified outside of stockholders’ equity (deficit) related to this transaction.

Activity in common stock classified outside of stockholders’ equity (deficit) was as follows:

	Number of Shares			Amount
Balance, December 31, 2012		9,561,847		$	11,775,724
Issuance of common stock classified outside of stockholders’ equity (deficit)		-			-
Reclassificiation to stockholders’ equity (deficit), excluding offering costs of $110,179 offset against paid-in capital		(4,561,847	)		(6,277,723	)
Balance, March 31, 2013 (unaudited)		5,000,000		$	5,500,000

12. Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.  ASC 820 establishes a three-level valuation hierarchy of valuation techniques that is based on observable and unobservable inputs. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The first two inputs are considered observable and the last unobservable, that may be used to measure fair value and include the following:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of December 31, 2012, the Company held certain assets that are required to be measured at fair value on a recurring basis, including its cash and cash equivalents. The fair value of these assets was determined using the following inputs in accordance with ASC 820 at December 31, 2012 and March 31, 2013:

	Fair Value Measurement as of December 31, 2012
	Total		Level 1		Level 2		Level 3
Description	$		$		$		$
Money market accounts (1)		10,000		10,000		—		—

	Fair Value Measurement as of March 31, 2013
	(Unaudited)
	Total		Level 1		Level 2		Level 3
Description	$		$		$		$
Money market accounts (1)		10,000		10,000		—		—

(1) Included in cash and cash equivalents on the accompanying consolidated balance sheet.

As of December 31, 2012 and March 31, 2013, the Company did not hold any liabilities that are required to be measured at fair value on a recurring basis.

13. Subsequent Events

Not applicable.

22

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Special Note Regarding Forward-Looking Statements

Certain information included or incorporated by reference in this Quarterly Report on Form 10-Q for the period ended on March 31, 2013 contains or may contain forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, as may be amended from time to time. Statements that are not historical facts, including statements that use terms such as “anticipate,” “believe,” “should,” “expect,” “intend,” “plan,” “project,” “seek” and “will” and that relate to our plans, objectives, strategy and intentions for future operations, future financial position, future revenues, projected costs and prospects are forward-looking statements but not all forward-looking statements contain these identifying words. Forward-looking statements relate to future periods and may, for example, include statements about our expectation that, for the foreseeable future, a significant amount of our revenues will be derived from ResponseDX^® product sales; our ability to maintain revenue from pharmaceutical clients; the factors that may impact our financial results; the extent of our net losses and our ability to achieve sustained profitability; our business strategy and our ability to achieve our strategic goals; our expectations regarding revenues from ResponseDX^® products; the amount of future revenues that we may derive from Medicare patients; the potential or intent to enter into distribution arrangements; our ability to sustain or increase demand for our tests; our sales forces’ capacity to sell our tests; plans for the development of additional tests; our expectation that our research and development, general and administrative and sales and marketing expenses will increase and our anticipated uses of those funds; our ability to comply with the requirements of a public company; our ability to attract and retain qualified employees; our compliance with federal and state regulatory requirements; the potential impact resulting from the regulation of our tests by the U.S. Food and Drug Administration; the impact of new or changing policies or regulation of our business; our belief that we have filed adequate patent and trademark applications to protect our intellectual property rights; the impact of accounting pronouncements and our accounting policies, estimates, assumptions or models on our financial results; and anticipated challenges to our business.

Forward-looking statements are subject to significant inherent risks and uncertainties that could cause actual results to differ materially from those expected. For us, these risks and uncertainties include, but are not limited to, our ability to develop and commercialize new product without unanticipated delay; the risk that we may not maintain reimbursement for our existing tests or any future tests; the risk that reimbursement pricing may change; the risks and uncertainties associated with the regulation of our tests; our ability to compete; our ability to obtain capital when needed; and our history of operating losses. In light of the risks and uncertainties inherent in all forward-looking statements, including the above, the inclusion of such statements in this Quarterly Report on Form 10-Q for the period ended on March 31, 2013 should not be considered as a representation by us that our objectives, projections or plans will be achieved. These statements are based on current plans, estimates and expectations. Actual results may differ materially from those projected in such forward-looking statements and therefore you should not place undue reliance on them. The forward-looking statements included in this Quarterly Report on Form 10-Q for the period ended on March 31, 2013 speak only as of the date hereof and we expressly disclaim any obligation or undertaking to publicly update any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes to the financial statements included elsewhere in this Quarterly Report on Form 10-Q for the period ended March 31, 2013 and our audited financial statements for the year ended December 31, 2012 included in our Annual Report on Form 10-K for the period ended December 31, 2012 previously filed with the Securities and Exchange Commission.

Overview

Response Genetics, Inc. (the “Company”) was incorporated in the State of Delaware on September 23, 1999 as Bio Type, Inc. for the purpose of providing molecular profiling services of tumor tissue that has been formalin-fixed and embedded in paraffin. In August 2000, we changed our name to Response Genetics, Inc.   

Our Approach

Clinical studies have shown that not all cancer chemotherapy works effectively in every patient, and that a number of patients receive therapy that has no benefit to them and may potentially even be harmful. Our goal is to provide cancer patients and their physicians with a means to make informed, individualized treatment decisions based on genetic analysis of tumor tissues. We are focusing our efforts in the following areas:

• Continued commercialization of our ResponseDX^® tests;

• Developing additional diagnostic tests for assessing the risk of cancer recurrence, prediction to therapy response and tumor classification in cancer patients; and

• Expanding our testing services business by pursuing new technologies through collaborations and in-licensing to expand our business.

Our technologies enable us to reliably and consistently extract the nucleic acids ribonucleic acid (“RNA”) and deoxyribonucleic acid (“DNA”) from tumor specimens that are stored as formalin-fixed and paraffin-embedded, specimens and thereby to analyze genetic information contained in these tissues. This is significant because the majority of patients diagnosed with cancer have a tumor biopsy sample stored in paraffin, while only a small percentage of patients’ tumor specimens are frozen. Our technologies also enable us to use the formalin-fixed paraffin embedded (“FFPE”) patient biopsies for the development of diagnostic tests.

23

ResponseDX^®

The outcome of cancer therapy is highly variable due to genetic differences among patients. Some patients respond well with tumor shrinkage and increase in life span. Other patients do not obtain benefit from the same therapy and may actually experience toxic side effects, psychological trauma and delay in effective treatment.

At present, most cancer treatment regimens are administered without any pre-selection of patients on the basis of their particular genetics. However, recent development of very sensitive molecular technologies has enabled researchers to identify and measure genetic and biochemical factors in patients’ tissues that may predict the probability of success or failure of many currently used anti-cancer agents. In order to increase the chances of a better outcome for cancer patients, we have and continue to expand our development of genetic tests for measuring predictive factors for tumor response in tumor tissue samples. We offer tests for non-small cell lung cancer (“NSCLC”), colorectal cancer (“CRC”) and gastric and gastroesophageal cancer (“GE”), and melanoma cancer patients’ tumor tissue specimens through our ResponseDX: Lung^®, ResponseDX: Colon^®, ResponseDX: Gastric^® and ResponseDX: Melanoma^® test suites at our laboratory located in Los Angeles, California, which is certified under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”). These tests serve to help oncologists make optional therapeutic decisions for cancer patients. The results from our tests may help oncologists choose among therapies to treat their cancer patients. As of March 31, 2013, our sales team consisted of 16 members located in the West Coast, Midwest, and East Coast areas of the United States.

Diagnostic Tests for Other Cancers

In addition to ResponseDX: Lung^®, ResponseDX: Colon^®, ResponseDX: Gastric^® and ResponseDX: Melanoma^®, we intend to develop and commercialize tests for other types of cancer. We also are identifying genetic profiles of tumors that are more or less responsive to a particular therapy. Following the development of tests to determine the most active therapy regimen for the individual patient at risk, we intend to leverage our relationships in the healthcare industry to market, sell or license these tests as a means for physicians to determine the courses of cancer treatment.

Pursue Additional Collaborations and In-licensing to Expand Our Business

We intend to pursue additional collaborations with pharmaceutical companies or in-licensing of products or technologies that will enable us to accelerate the implementation of our plans to expand the services we provide to oncologists and pathologists. We expect to implement this plan by way of licensing of technology and know-how, investments in other companies, strategic collaborations, and other similar transactions. We expect these collaborations to provide us with early access to new technologies available for commercialization.

There are no assurances that we will be able to continue making our current ResponseDX^® tests available, or make additional ResponseDX^® tests available; or that we will be able to develop and commercialize tests of other types of cancer; or that we will be able to expand our testing service business through collaborations.

We anticipate that, over the next 12 months, a substantial portion of our capital resources and efforts will be focused on sales and marketing activities related to our ResponseDX^® diagnostic tests, research and development to expand our series of diagnostic tests for cancer patients, and for other general corporate purposes.

Research and development expenses represented 8.0% and 7.7% of our total operating expenses for the three months ended March 31, 2012 and 2013, respectively. Major components of the $569,955 and $297,200 in research and development expenses for the three months ended March 31, 2012 and 2013, respectively, included supplies and reagents for our research activities, personnel costs, occupancy costs, equipment warranties and service, patent fees, insurance, business consulting and sample procurement costs.

24

Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as revenues and expenses during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from those estimates under different assumptions or conditions. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements.

Revenue Recognition

Pharmaceutical Revenue

Revenues that are derived from pharmacogenomic testing services provided to pharmaceutical companies are recognized on a contract specific basis pursuant to the terms of the related agreements. Revenue is recognized in accordance with ASC 605, Revenue Recognition, which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured.

Revenues are recorded on an accrual basis as the contractual obligations are completed and as a set of assays is processed through the Company’s laboratory under a specified contractual protocol and are recorded on the date the tests are completed. Certain contracts have minimum assay requirements that, if not met, result in payments that are due upon the completion of the designated period. In these cases, revenues are recognized when the end of the specified contract period is reached, if the minimum assay requirements are not met.

ResponseDX ^® Revenue

Net revenue for the Company’s diagnostic services is recognized on an accrual basis at the time discreet diagnostic tests are completed. Each test performed relates to a specimen encounter derived from a patient, and received by the Company on a specific date (such encounter is commonly referred to as an “accession”). The Company’s services are billed to various payors, including Medicare, private health insurance companies, healthcare institutions, and patients. The Company reports net revenue from contracted payors, including certain private health insurance companies, and healthcare institutions based on the contracted rate, or in certain instances, the Company’s estimate of the amount expected to be collected for the services provided. For billing to Medicare, the Company uses the published fee schedules, net of standard discounts (commonly referred to as “contractual allowances”). The Company reports net revenue from non-contracted payors, including certain private health insurance companies, based on the amount expected to be collected for the services provided. The Company analyzes historical payments from payors as a percentage of amounts billed by the Company to estimate expected collections for purposes of recording net revenue.

The Company has its Medicare provider number which allows it to invoice and collect from Medicare. Invoicing to Medicare is primarily based on amounts allowed by Medicare for the service provided as defined by Common Procedural Terminology (“CPT”) codes. In January 2013, the initial 2013 annual Medicare fee schedule update was announced which included proposed changes to Medicare reimbursement rates that significantly reduced the reimbursement rates for certain of the testing services we provide. The Company is participating with other impacted organizations to provide guidance to the local Medicare Administrative Contractor (“MAC”) that may result in adjustments to the proposed reimbursement rates to better reflect the value of the services being performed. As a result of this guidance, the local MAC updated certain pricing on or about April 3, 2013 which reflected an increase in many of the tests originally priced in January 2013. It is anticipated that continued guidance provided to Medicare and the local MAC by impacted organizations will result in additional fee increases during 2013. If, however, the current level of reduction in reimbursement rates is adopted as is, it may have a material adverse effect on the Company's operations.

As a result of these CPT code changes and Medicare price changes, we have experienced a departure from our normal reimbursement patterns with Medicare and other payors. Specifically, we have experienced delays in certain reimbursements for services and an increase in initial denials of claims for certain services provided. Accordingly, we revaluated the assumptions employed in our model for estimating revenue to be recognized for ResponseDX^® testing. We view the code and price changes described above as affecting only the assumptions we used in pricing our services. The nature of the testing we provide, the evidence we gather to establish the credit worthiness of our payors and the delivery method of our services have not changed from prior periods, and there are no indicators that these assumptions require change.

We performed an analysis that considered our historical patterns of revenue by payor in conjunction with the fluctuations we experienced in the quarter ended March 31, 2013 to arrive at the revenue recorded for the quarter. We believe that the changes in CPT codes and pricing that are causing confusion and erratic payment experience in the payor community will take some time to resolve. The time needed for resolution will depend upon the local MAC releasing additional pricing changes and potentially, revisions to previously revised prices, and upon the private payor community adopting the new CPT codes and some level of revised pricing. Accordingly, our revenue recognition estimates could be materially affected in future periods as pricing and payments patterns change and develop, and we may be materially affected by future or retroactive price changes.

License Fees

We have licensed technology for the extraction of RNA and DNA from FFPE tumor specimens from the University of Southern California (“USC’) in exchange for royalty fees on revenue generated by use of this technology. These royalties are calculated as a fixed percentage of revenue that we generate from use of the technology licensed from USC. Total license fees expensed in cost of revenue under the royalty agreement with USC were $56,502 and $104,105 for the three months ended March 31, 2012 and 2013, respectively. We also maintain a non-exclusive license to use Roche Molecular Systems, Inc.’s (“Roche”) polymerase chain reaction (“PCR”), homogenous PCR, and reverse transcription PCR processes. We pay Roche a fixed percentage royalty fee for revenue that we generate through use of this technology. Royalties expensed in cost of revenue under this agreement totaled $63,468 and $90,145 for the three months ended March 31, 2012 and 2013, respectively.

We are subject to potentially significant variations in royalties recorded in any period. While the amount paid is based on a fixed percentage from revenues of specific tests pursuant to terms set forth in the agreements with USC and Roche, the amount due is calculated based on the revenue we recognize using the respective licensed technology. As discussed above, this revenue can vary from period to period as it is dependent on the timing of the specimens submitted by our clients for testing.

25

Accounts Receivable and Allowance for Doubtful Accounts

We invoice our pharmaceutical clients as specimens are processed and any other contractual obligations are met. Our contracts with pharmaceutical clients typically require payment within 45 days of the date of invoice. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our clients to make required payments. We specifically analyze accounts receivable and historical bad debts, client credit, current economic trends and changes in client payment trends when evaluating the adequacy of the allowance for doubtful accounts. Account balances are charged-off against the allowance when it is probable the receivable will not be recovered. To date, our clients have primarily been large pharmaceutical companies. Bad debts to date have been minimal and there is no allowance for doubtful accounts for our pharmaceutical revenue at December 31, 2012 and March 31, 2013.

We bill Medicare and private payors (“Private Payors”) for ResponseDX^® upon completion of the required testing services. As such, we take assignment of benefits and the risk of collection with Medicare and Private Payors. We continue to monitor the collection history for Medicare and Private Payors.  Based on the historical experience for our Medicare and Private Payor accounts, we have determined, based on a detailed analysis, that accounts receivable associated with certain billings are unlikely to be collected. Therefore, we have recorded an allowance for doubtful accounts of $991,990 and $1,048,864 as of December 31, 2012 and March 31, 2013, respectively.

An allowance for doubtful accounts is recorded for estimated uncollectible amounts due from the Company’s various payor groups. The process for estimating the allowance for doubtful accounts involves significant assumptions and judgments. Specifically, the allowance for doubtful accounts is adjusted periodically, and is principally based upon an evaluation of historical collection experience of accounts receivable for the Company’s various payor classes. After appropriate collection efforts, accounts receivable are written off and deducted from the allowance for doubtful accounts. Additions to the allowance for doubtful accounts are charged to bad debt expense. The payment realization cycle for certain governmental and managed care payors can be lengthy, involving denial, appeal, and adjudication processes, and is subject to periodic adjustments that may be significant.

We cannot guarantee that we will continue to experience the same credit loss rates that we have in the past. Measurement of such losses requires consideration of historical loss experience, including the need to adjust for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and financial health of specific customers. We consider all available information in our assessments of the adequacy of the reserves for uncollectible accounts.

Income Taxes

We estimate our tax liability through calculations we perform for the determination of our current tax liability, together with assessing temporary differences resulting from the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in our balance sheets. Our management then assesses the likelihood that deferred tax assets will be recovered in future periods through future operating results. To the extent that we cannot conclude that it is more likely than not that the benefit of such assets will be realized, we establish a valuation allowance to adjust the net carrying value of such assets. The carrying value of our net deferred tax assets assumes that we will be able to generate sufficient future taxable income, based on management’s estimates and assumptions. These estimates and assumptions take into consideration future taxable income and ongoing feasible tax strategies in determining recoverability of such assets. Our valuation allowance is subject to significant change based on management’s estimates of future profitability and the ultimate realization of the deferred tax assets. The Company has established a full valuation allowance against its net deferred tax assets due to the uncertainty surrounding the realization of such assets.

Results of Operations

Quarters Ended March 31, 2013 and March 31, 2012

Revenues:   Revenues were $5,624,191 for the quarter ended March 31, 2013, as compared to $3,981,644 for the quarter ended March 31, 2012, an increase of $1,642,547. The increase was primarily due to increases in pharmaceutical revenues of $1,411,851 and ResponseDX^® revenue of $230,696. ResponseDX^® revenue accounted for 56.6% of total revenue for the quarter ended March 31, 2013 compared to 74.1% for the quarter ended March 31, 2012. The increase in ResponseDx^® revenues primarily relates to our continued focus on the restructuring of the sales team during the first quarter of 2013. The increase in pharmaceutical revenues is primarily related to our two most significant pharmaceutical customers that accounted for approximately 40% of our revenue, as compared to one customer accounting for approximately 22% of our revenue for the quarter ended March 31, 2012.

Cost of Revenues:   Cost of revenue for the quarter ended March 31, 2013 was $2,533,722 as compared to $2,700,858 for the quarter ended March 31, 2012, a decrease of $167,136 or 6.2%. This decrease resulted primarily from lower fees to Hitachi of $85,920, personnel costs of $57,447, consulting of $116,230, and shipping of $37,882 offset in part by increases in lab supplies and reagent costs of $81,953 and depreciation of $50,961. Cost of revenues as a percentage of revenues was 45.1% for the quarter ended March 31, 2013, as compared to 67.8% for the quarter ended March 31, 2012.

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Research and Development Expenses:   Research and development expenses were $297,200 for the quarter ended March 31, 2013, as compared to $569,955 for the quarter ended March 31, 2012, a decrease of $272,755 or 47.9%. This decrease resulted primarily from a decrease in lab supplies of $186,570, legal fees of $38,963 and depreciation of $28,750. We expect research and development expenses to increase as we continue work to develop additional aspects of our technology, introduce new tests and to study diagnostic indicators for various forms of cancer.

General and Administrative Expenses:  General and administrative expenses were $2,135,186 for the quarter ended March 31, 2013, as compared to $2,358,450 for the quarter ended March 31, 2012, a decrease of $223,264 or 9.5%. This decrease resulted primarily from lower personnel costs of $168,357, consulting fees of $103,652, travel expense of $52,305, and legal fees of $45,529 offset in part by increases in bad debt expense of $212,538 and a reduction of over accrued business licenses and taxes of $108,000 during the quarter ended March 31, 2012 which reduced the 2012 expenses but did not recur in the quarter ended March 31, 2013.

Sales and Marketing Expenses:   Sales and marketing expenses were $1,442,235 for the quarter ended March 31, 2013, as compared to $1,453,807 for the quarter ended March 31, 2012, a decrease of $11,572 or 0.8%. The decrease primarily resulted from lower ResponseDX^® promotional, meeting and advertising expenses of $93,538 offset by higher personnel costs of $89,447. We expect that sales and marketing costs will continue to increase sequentially as we expand our sales and marketing team and related activities.

Other Income and Expense:  Other income and expense primarily represents the interest expense we incur on our revolving credit facility with Silicon Valley Bank and other equipment financing arrangements. Interest expense decreased to $19,410 for the three months ended March 31, 2013 compared with $23,177 for the same period in 2012. The decrease primarily relates to lower interest costs associated with certain equipment financing.

Net Income/(Loss):  As a result of the foregoing, our net loss decreased by $2,300,285 to $824,304 for the three months ended March 31, 2013 as compared to a net loss of $3,124,589 for the three months ended March 31, 2012.

Liquidity and Capital Resources

We incurred net losses of $3,124,589 and $824,304 during the three months ended March 31, 2012 and 2013, respectively. Since our inception in September 1999, we have incurred cumulative losses and as of March 31, 2013, we had an accumulated deficit of $58,100,968. We have not yet achieved profitability and anticipate that we will likely incur additional losses for the next year. We cannot provide assurance as to when we will achieve profitability. We expect that our cash and cash equivalents will be used to fund our selling and marketing activities primarily related to our ResponseDX^® tests, research and development, and general corporate purposes. As a result, we will need to generate significant revenues to achieve profitability.  Management intends to effectively manage cash flows in 2013 and expects that cash and cash equivalents will be sufficient to meet the Company’s working capital requirements through the next 12 months. Nevertheless, until we can generate and maintain sufficient revenues to finance our cash requirements, which we may never do, we expect to finance additional cash needs primarily through public or private equity offerings, strategic collaborations, our line of credit and other financing opportunities.  We do not know whether additional funding will be available on acceptable terms, if at all.  If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate selling and marketing activities or research and development programs which may have a material adverse effect on the Company.

The Company is a party to a line of credit agreement with Silicon Valley Bank (the “Bank”) entered into on July 14, 2011, as last amended on March 7, 2013. The line of credit is collateralized by the Company’s pharmaceutical and Medicare receivables and the amended maximum amount that can be borrowed from the credit line is $2,000,000. As of March 31, 2013, the amount the Company can draw from the credit line was equal to the lesser of (i) the Company’s calculated borrowing base, which was 80% of certain of the Company’s accounts receivables, or (ii) the amount available under the credit line. As needed from time to time, the Company may draw on this line for use for general corporate purposes. The line of credit is subject to various financial covenants and we may fail to comply with these financial covenants due to, for example, the Company’s calculated borrowing base for a covered period decreasing below a level that the Company is in an over-advance position in which case, the Company will be required to repay any outstanding amounts greater than the calculated borrowing base for such covered period back to the Bank immediately. The Company will be able to draw down on the credit line again with respect to such paid back amount once the Company is in compliance with the borrowing base requirement. As of March 31, 2013, the Company was in compliance with all financial covenants under the credit agreement.

In addition, we expect to use our capital to fund research and development and to make capital expenditures to keep pace with the expansion of our research and development programs and to scale up our commercial operations. The amount and timing of actual expenditures may vary significantly depending upon a number of factors, such as the progress of our product development, regulatory requirements, commercialization efforts, and the amount of cash used by operations. We expect that we will continue to generate revenue through our pharmacogenomic testing services and ResponseDX^® testing services that we provide to pharmaceutical clients and to the users of our ResponseDX^® testing services which include oncologists, pathologists, hospitals, and cancer care centers.  These revenues are not guaranteed and are not expected to substantially offset the costs associated with our expansion efforts.

Sales of Common Stock

Under the Company’s Articles of Incorporation, the Company has one class of common stock and its holders have no preemptive, subscription, redemption or conversion rights.  As described below and in Note 11 in the notes to Consolidated Financial Statements, the Company sold shares of its common stock during the first and third quarters of 2012.  In connection with certain of these offerings, the Company entered into registration rights agreements with the purchasers of the common shares which give such purchasers certain registration rights.

27

Common stock classified outside of stockholders’ equity (deficit)

March 2010 Private Placement

On March 5, 2010, the Company entered into a purchase agreement with certain affiliates of and funds managed by Lansdowne Partners Limited Partnership (“Lansdowne”), Greenway Capital Partners and Paragon Associates for the private placement of 3,005,349 newly-issued shares of the Company’s common stock at a per share price of $1.31.  The closing of the sale of the shares occurred on March 5, 2010.  In connection with the acquisition of the shares, the purchasers were granted certain preemptive rights permitting them to maintain their percentage ownership interests in connection with future issuances of the Company’s capital stock, subject to various exceptions and limitations.  Lansdowne participated in the private placement by electing to exercise the preemptive rights granted to it pursuant to the purchase agreement by and between the Company and Lansdowne, dated July 22, 2009. Net proceeds received from this financing were approximately $3,879,403.

In connection with the private placement, the Company also entered into a registration rights agreement, dated March 5, 2010, with the purchasers pursuant to which it agreed to file, within 45 days of the closing of the private placement, a registration statement with the SEC to register the shares for resale, which registration statement was required to become effective within 120 days following the closing.  The Company also granted certain "piggyback" registration rights to the purchasers which are triggered if the Company proposes to file a registration statement for its own account or the account of one or more shareholders until the earlier of the sale of all of the shares or the shares becoming eligible for sale under Rule 144(b)(1) without restriction.

Pursuant to the registration rights agreement, dated March 5, 2010, the Company filed a registration statement with the SEC to register the 3,005,349 shares sold to Lansdowne, Greenway and Paragon for resale, which became effective on May 19, 2010 and which registration statement remained effective as of March 31, 2013.

Under the registration rights agreements with the purchasers, the Company is obligated to use commercially reasonable efforts to (i) cause the registration statement described above to remain continuously effective and (ii) to maintain the listing of the Company’s common stock on NASDAQ or other exchanges, as defined, for a period that will terminate on the earlier of March 5, 2013 or the date on which the purchasers have sold all shares of common stock.  The Company is also required to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  In the event the Company fails to satisfy its obligations under the registration rights agreements, the Company would be in breach of said agreements, in which event, the purchases would be entitled to pursue all rights and remedies at law or equity including an injunction or other equitable relief. These registration rights agreements do not provide an explicitly stated or defined penalty due upon a breach.  Because (i) the potential penalty for any breach of these registration rights agreement is not explicitly stated or defined, which prohibits the Company from applying the guidance of ASC 825-20-15, Registration Payment Arrangements and (ii) complying with all filing requirements under the Exchange Act as described above is not solely within the Company’s control, the Company  is required to present the investment of approximately $3,879,403 in the Company’s common stock as common stock outside of stockholders’ equity in the accompanying consolidated balance sheet under ASC 480-10-S99-3, Classification and Measurement of Redeemable Securities.

On January 18, 2012, the Company removed the restrictions on 3,658,676 shares purchased by Lansdowne, of which 600,769 related to this offering, and reclassified the shares to common stock from common stock classified outside of equity (deficit). On March 5, 2013, the Company reclassified the remaining shares of common stock from this offering to common stock from common stock classified outside of equity (deficit). Therefore, as of December 31, 2012 and March 31, 2013, a total of $3,092,396 and $0 of common stock was classified outside of stockholders’ equity (deficit), respectively.

February 2012 Private Placement

On February 2, 2012, the Company entered into purchase agreements with various investors (collectively, the “February Investors”) for the private placement of an aggregate of 5,257,267 newly-issued shares of the Company’s common stock (the “February Shares”) at a purchase price of $1.50 per share (the “February 2012 Private Placement”). Net cash proceeds raised in the February 2012 Private Placement were approximately $7,822,000. The February Investors participating in the February 2012 Private Placement were various institutions and all officers and directors of the Company. The final closing of the February 2012 Private Placement (the “February Closing”) occurred on February 2, 2012.

In connection with the February 2012 Private Placement, the Company also entered into registration rights agreements, each dated February 2, 2012, with the February Investors pursuant to which the Company agreed to file, within 90 days of the February Closing, a registration statement with the SEC to register the February Shares for resale, which registration statement was required to become effective within 180 days following the February Closing. The Company also granted the February Investors certain “piggyback” registration rights, which are triggered if the Company proposes to file a registration statement for its own account or the account of one or more shareholders until the earlier of the sale of all of the February Shares or the February Shares becoming eligible for sale under Rule 144(b)(1) without restriction.

Pursuant to the registration rights agreements dated February 2, 2012, the Company filed a registration statement with the SEC on April 30, 2012, to register the February Shares for resale. This registration statement became effective on May 17, 2012 and remained effective as of March 31, 2013.

Under the registration rights agreements with the February Investors, the Company is obligated to use commercially reasonable efforts to (i) cause the registration statement described above to remain continuously effective and (ii) to maintain the listing of the Company’s common stock on NASDAQ or other exchanges, as defined, for a period that will terminate on the earlier of February 2, 2013, the date on which the February Investors have sold all covered registrable securities or the date on which there are no longer any covered registrable securities outstanding.  The Company is also required to file with the SEC in a timely manner all reports and other documents required of the Company required of the Company under the Exchange Act.  In the event the Company fails to satisfy its obligations under the registration rights agreements, the Company would be in breach of said agreements, in which event, the February Investors would be entitled to pursue all rights and remedies at law or equity including an injunction or other equitable relief. These registration rights agreements do not provide an explicitly stated or defined penalty due upon a breach.  Because (i) the potential penalty for any breach of these registration rights agreement is not explicitly stated or defined, which prohibits the Company from applying the guidance of ASC 825-20-15, Registration Payment Arrangements and (ii) complying with all filing requirements under the Exchange Act as described above is not solely within the Company’s control, the Company was required to present the investment of approximately $7,885,900 in the Company’s common stock as common stock outside of stockholders’ equity in the accompanying consolidated balance sheet under ASC 480-10-S99-3, Classification and Measurement of Redeemable Securities.

As of March 31, 2013, the Company has reclassified all of the February Shares to common stock from common stock classified outside of equity (deficit). Therefore, as of December 31, 2012 and March 31, 2013, a total of $3,183,328 and $0 of common stock was classified outside of stockholders’ equity (deficit), respectively.

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September 2012 Private Placement

On September 13, 2012, the Company entered into a purchase agreement (the “Purchase Agreement”) with Glaxo Group Limited, an affiliate of GSK (the “GSK Investor”) and two existing investors, Swiftcurrent Partners, L.P. and Swiftcurrent Offshore, Ltd. (collectively with the GSK Investor, the “September Investors”) for the private placement of an aggregate of 8,000,000 newly-issued shares of the Company’s common stock (the “September Shares”) at a purchase price of $1.10 per share (the “September 2012 Private Placement”). The Company raised gross cash proceeds of $8,800,000 in the September 2012 Private Placement, which closed on September 13, 2012 (the “Closing”).

Pursuant to the Purchase Agreement, for so long as the GSK Investor or its affiliates own at least 50% of the September Shares it purchased pursuant to the Purchase Agreement, the GSK Investor has the right to designate one non-voting board observer (the "Board Observer"). The Board Observer, if appointed, has the right to attend all meetings of the Board of Directors of the Company and to receive all board meeting materials, subject to certain restrictions set forth in the Purchase Agreement. As of the date hereof, the GSK Investor has not exercised its right to designate the Board Observer.

In connection with the September 2012 Private Placement, the Company also entered into a registration rights agreement, dated September 13, 2012 (the “September Registration Rights Agreement”), with the September Investors pursuant to which the Company agreed to file, within 45 days of the Closing, a registration statement with the SEC to register the September Shares for resale, which registration statement was required to become effective within 180 days following the Closing. The Company also granted the September Investors certain “piggyback” registration rights, which are triggered if the Company proposes to file a registration statement for its own account or the account of one or more stockholders until the earlier of the sale of all of the September Shares or the September Shares becoming eligible for sale under Rule 144(b)(1) without restriction.

Under the September Registration Rights Agreement, the Company is obligated to use commercially reasonable efforts to cause a registration statement to become effective and to remain continuously effective and to maintain the listing of the covered common stock on NASDAQ or other exchanges, as defined, for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, (ii) the date on which there are no longer any Registrable Securities outstanding or (iii) three years from the date of filing of such Registration Statement (the “ Effectiveness Period ”) and advise each September Investor in writing when the Effectiveness Period has expired. “Registrable Securities” means (i) the September Shares and (ii) shares of capital stock or any other securities issued or issuable with respect to or in exchange for the September Shares; provided, that, a security shall cease to be a Registrable Security with respect to a September Investor upon (A) sale by such September Investor pursuant to a registration statement or Rule 144 under the Securities Act of 1933, or (B) such security becoming eligible for sale by such September Investor without restriction pursuant to Rule 144(b)(1).   In the event the Company fails to satisfy its obligations under the September Registration Rights Agreement, the Company would be in breach of such agreement, in which event, the September Investors would be entitled to pursue all rights and remedies at law or equity including an injunction or other equitable relief. The September Registration Rights Agreement does not provide an explicitly stated or defined penalty due upon a breach.  Because the potential penalty for any breach of these registration rights agreement is not explicitly stated or defined, which prohibits the Company from applying the guidance of ASC 825-20-15, Registration Payment Arrangements , the Company was required to present the investment of approximately $8,800,000 in the Company’s common stock as common stock outside of stockholders’ equity in the accompanying consolidated balance sheet under ASC 480-10-S99-3, Classification and Measurement of Redeemable Securities.

Pursuant to the September Registration Rights Agreement, the Company filed a registration statement with the SEC on October 26, 2012, to register the September Shares for resale. This registration statement became effective on November 13, 2012 and remained effective as of March 31, 2013.

As of December 31, 2012, the Company has removed the restriction on 3,000,000 of the 8,000,000 September Shares and reclassified the shares to common stock from common stock classified outside of stockholders’ equity (deficit). Therefore, as of December 31, 2012 and March 31, 2013, a total of $5,500,000 of common stock relating to the 5,000,000 remaining restricted September Shares was classified outside of stockholders’ equity (deficit) related to this transaction.

29

Comparison of Cash Flows for the Three Months Ended March 31, 2012 and 2013

As of March 31, 2012, we had $5,670,560 in cash and cash equivalents, working capital of $5,559,932 and an accumulated deficit of $52,644,174. As of March 31, 2013, we had $8,034,310 in cash and cash equivalents, working capital of $10,018,759 and an accumulated deficit of $58,100,968.

Cash flows provided by operating activities

During the three months ended March 31, 2013, the Company used cash flows in operating activities of $880,293 compared to $3,436,408 used in the three months ended March 31, 2012. The decrease in cash used in operating activities of $2,556,115 was due mainly to a reduction in the net loss from $3,124,589 for the quarter ended March 31, 2012 to $824,304 for the quarter ended March 31, 2013. Other items that impacted cash flows from operating activities include increases in accounts receivable, prepaid expenses, accrued expenses, royalties and payroll-related liabilities and decreases in accounts payable and deferred revenue.

The increase in accounts receivable related mainly to increases in Medicare receivables resulting from the recent changes to the molecular codes used for billing. It is anticipated that these Medicare related billings will take longer to collect in the short-term as a result of these recent changes. This increase was partially offset by a decrease in accounts receivable related to pharmaceutical client revenues, as the Company collected several large invoices during the quarter ended March 31, 2013.

Cash flows used in investing activities

Net cash used in investing activities was $273,293 for the three months ended March 31, 2012 and $85,814 for the three months ended March 31, 2013. The reduction in cash used in investing activities was primarily attributable to the purchase of equipment for our laboratory, including an individual machine costing approximately $111,000, during the quarter ended March 31, 2012.

Cash flows used in financing activities

Cash flows from financing activities for the three months ended March 31, 2012 provided net cash of $7,680,478 relating to the sale of common stock. Cash flows from financing activities for the three months ended March 31, 2013 used net cash of $39,208 for scheduled repayment of capital lease obligations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

ITEM 4. Controls and Procedures.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Under the supervision, and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15 as of the end of the period covered by this report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures were effective as of the date of this report.

It should be noted that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As a result, there can be no assurance that a control system will succeed in preventing all possible instances of error and fraud. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and the conclusions of our Principal Executive Officer and the Principal Financial Officer are made at the “reasonable assurance” level.

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.

The Company is, from time to time, involved in legal proceedings, regulatory actions, claims and litigation arising in the ordinary course of business. These matters are not expected to have a material adverse effect upon the Company’s financial condition.

ITEM 1A. Risk Factors.

Not applicable.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

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ITEM 3. Defaults Upon Senior Securities.

None.

ITEM 4. Mine Safety Disclosures.

Not applicable.

ITEM 5. Other Information.

None.

ITEM 6. Exhibits.

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RESPONSE GENETICS, INC.
DATE: May 15, 2013	By:	/s/ Thomas A. Bologna
		Thomas A. Bologna
		Chief Executive Officer (Principal Executive Officer)
DATE: May 15, 2013	By:	/s/ Kevin R. Harris
		Kevin R. Harris
		Interim Chief Financial Officer (Principal Financial Officer)

33

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Thomas A. Bologna, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Response Genetics, Inc.;

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;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2013

/s/ Thomas A. Bologna

Thomas A. Bologna

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kevin R. Harris, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Response Genetics, Inc.;

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;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2013

/s/ Kevin R. Harris

Kevin R. Harris

Interim Chief Financial Officer

EX-32

Exhibit 32

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Response Genetics, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report for the period ended March 31, 2013 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 15, 2013	/s/ Thomas A. Bologna
	Chief Executive Officer
Dated: May 15, 2013	/s/ Kevin R. Harris
	Interim Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification “accompanies” the Form 10-Q to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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Loss Per Share (Computation for Basic and Diluted Loss Per Share) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Numerator:
Net loss	$ (824,304)	$ (3,124,589)
Numerator for basic and diluted earnings per share	$ (824,304)	$ (3,124,589)
Denominator:
Denominator for basic and diluted earnings per share - weighted-average shares	32,797,625	22,948,916
Basic and diluted loss per share	$ (0.03)	$ (0.14)

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Sale of Common Stock (Schedule of Common Stock Classified Outside of Stockholders' Equity) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013
Amount
Beginning balance	$ 11,775,724
Ending balance	5,500,000
Offering costs offset against paid-in capital	110,179
Common Stock [Member]
Number of Shares
Beginning balance	9,561,847
Issuance of common stock classified outside of stockholders' equity (deficit)
Reclassificiation to stockholders' equity (deficit), excluding offering costs of $110,179 offset against paid-in capital	(4,561,847)
Ending balance	5,000,000
Amount
Beginning balance	11,775,724
Issuance of common stock classified outside of stockholders' equity (deficit)
Reclassificiation to stockholders' equity (deficit), excluding offering costs of $110,179 offset against paid-in capital	(6,277,723)
Ending balance	$ 5,500,000

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Stock Option Plans (Schedule of Stock-Based Compensation Included in Results of Operations) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation	$ 105,324	$ 325,008
Cost of Revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation	13,487	16,689
Research and Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation	9,842	2,481
Sales and Marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation	17,400	14,367
General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation	$ 64,595	$ 291,471

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Fair Value Measurements (Details) (USD $)	Mar. 31, 2013		Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market accounts	$ 10,000	[1]	$ 10,000	[1]
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market accounts	10,000		10,000	[1]
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market accounts		[1]		[1]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market accounts		[1]		[1]

[1] Included in cash and cash equivalents on the accompanying consolidated balance sheet.

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Stock Option Plans (Summary of Stock Option Activity) (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Number of Shares
Outstanding, December 31, 2011	1,749,310
Granted (Unaudited)	95,000
Exercised (Unaudited)
Expired (Unaudited)	(68,484)
Forfeited (Unaudited)	(64,183)
Outstanding, March 31, 2013 (Unaudited)	1,711,643	1,749,310
Exercisable, March 31, 2013 (Unaudited)	773,381
Weighted Average Exercise Price
Outstanding, December 31, 2011	$ 2.12
Granted (Unaudited)	$ 1.39
Exercised (Unaudited)
Expired (Unaudited)	$ 3.80
Forfeited (Unaudited)	$ 1.63
Outstanding, March 31, 2013 (Unaudited)	$ 2.03	$ 2.12
Exercisable, March 31, 2013 (Unaudited)	$ 2.84
Remaining Contractual Life (Years)
Outstanding, December 31, 2011	8 years 2 months 27 days	8 years 3 months 26 days
Granted (Unaudited)	9 years 10 months 28 days
Expired (Unaudited)	6 years 18 days
Forfeited (Unaudited)
Outstanding, March 31, 2013 (Unaudited)	8 years 2 months 27 days	8 years 3 months 26 days
Exercisable, March 31, 2013 (Unaudited)	7 years 11 days
Aggregate Intrinsic Value
Outstanding, December 31, 2011	$ 151,919
Granted (Unaudited)
Expired (Unaudited)	27
Forfeited (Unaudited)	3,400
Outstanding, March 31, 2013 (Unaudited)	92,464	151,919
Exercisable, March 31, 2013 (Unaudited)	$ 14,606

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Summary of Significant Accounting Policies (Schedule of Revenue Sources that Account for Greater than 10 Percent of Total Revenue) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue	$ 5,624,191	$ 3,981,644
Abbott Molecular, Inc. [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue	910,182	32,466
Percent of Total Revenue	15.00%	1.00%
GlaxoSmithKline and GlaxoSmithKline Biologicals [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue	1,356,384	719,087
Percent of Total Revenue	23.00%	18.00%
Medicare [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Revenue	$ 1,376,900	$ 1,460,318
Percent of Total Revenue	23.00%	37.00%

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2013

Segment Information [Abstract]

Schedule of Financial Information by Geographic Area

The following tables contain certain financial information by geographic area:

	Three Months Ended March 31,
	2012		2013
	(Unaudited)		(Unaudited)
Revenue:
United States	$	3,095,909	$	4,153,172
Europe		641,610		1,361,249
Japan		244,125		109,770
	$	3,981,644	$	5,624,191

	December 31, 2012		March 31, 2013
			(Unaudited)
Long-lived assets:
United States	$	1,598,607	$	1,547,022

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Common Stock Warrants (Details)	1 Months Ended
	Jun. 30, 2007
Common Stock Warrants [Abstract]
Warrants issued in conjunction with the initial public offering	100,000
Warrants issued to purchase shares of common stock	100,000
Exercise price of the warrants	7.70

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Commitments and Contingencies (Schedule of Future Minimum Lease Payments under Noncancelable Operating Leases) (Details) (USD $)	Mar. 31, 2013
Commitments and Contingencies [Abstract]
2013	$ 428,190
2014	95,084
2015	95,084
2016	13,271
Total	$ 631,629

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Property and Equipment and Intangible Assets (Schedule of Capital Leased Assets) (Details) (USD $)	Mar. 31, 2013
Property and Equipment and Intangible Assets [Abstract]
Equipment purchased under capital leases	$ 451,234
Less: Accumulated amortization	(262,489)
Equipment purchased under capital leases, net	$ 188,745

XML

Segment Information (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Revenue	$ 5,624,191	$ 3,981,644
United States [Member]
Segment Reporting Information [Line Items]
Revenue	4,153,172	3,095,909
Long-lived assets	1,547,022		1,598,607
Europe [Member]
Segment Reporting Information [Line Items]
Revenue	1,361,249	641,610
Japan [Member]
Segment Reporting Information [Line Items]
Revenue	$ 109,770	$ 244,125

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Stock Option Plans (Schedule of Options Outstanding) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding Number of Options	1,711,643
Options Outstanding WA Remaining Contractual Term	8 years 2 months 27 days
Options Exercisable Number of Options	773,381
Options Exercisable WA Remaining Contractual Term	7 years 11 days
$ 1.00 to 1.99 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, minimum	1.00
Exercise Price, maximum	1.99
Options Outstanding Number of Options	1,292,517
Options Outstanding WA Remaining Contractual Term	8 years 11 months 12 days
Options Exercisable Number of Options	374,316
Options Exercisable WA Remaining Contractual Term	8 years 1 month 21 days
$ 2.00 to 2.99 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, minimum	2.00
Exercise Price, maximum	2.99
Options Outstanding Number of Options	201,626
Options Outstanding WA Remaining Contractual Term	7 years 7 months 28 days
Options Exercisable Number of Options	181,565
Options Exercisable WA Remaining Contractual Term	7 years 8 months 12 days
$ 3.00 to 3.99 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, minimum	3.00
Exercise Price, maximum	3.99
Options Outstanding Number of Options	71,000
Options Outstanding WA Remaining Contractual Term	5 years 3 months 29 days
Options Exercisable Number of Options	71,000
Options Exercisable WA Remaining Contractual Term	5 years 3 months 29 days
$ 4.00 to 4.99 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, minimum	4.00
Exercise Price, maximum	4.99
Options Outstanding Number of Options	11,500
Options Outstanding WA Remaining Contractual Term	4 years 4 months 24 days
Options Exercisable Number of Options	11,500
Options Exercisable WA Remaining Contractual Term	4 years 4 months 24 days
$ 5.00 to 5.99 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, minimum	5.00
Exercise Price, maximum	5.99
Options Outstanding Number of Options
Options Outstanding WA Remaining Contractual Term
Options Exercisable Number of Options
Options Exercisable WA Remaining Contractual Term
$ 6.00 to 6.99 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, minimum	6.00
Exercise Price, maximum	6.99
Options Outstanding Number of Options
Options Outstanding WA Remaining Contractual Term
Options Exercisable Number of Options
Options Exercisable WA Remaining Contractual Term
$ 7.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, minimum	7.00
Exercise Price, maximum	7.00
Options Outstanding Number of Options	135,000
Options Outstanding WA Remaining Contractual Term	4 years 2 months 9 days
Options Exercisable Number of Options	135,000
Options Exercisable WA Remaining Contractual Term	4 years 2 months 9 days

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Loss Per Share

3 Months Ended

Mar. 31, 2013

Loss Per Share [Abstract]

Loss Per Share

4. Loss Per Share

The Company calculates net loss per share in accordance with ASC 260, Earnings Per Share. Under the provisions of ASC 260, basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive common stock equivalents then outstanding. Common stock equivalents consist of shares of common stock issuable upon the exercise of stock options and warrants.

The following table sets forth the computation for basic and diluted loss per share:

	Three Months Ended March 31,
	2012			2013
	(Unaudited)			(Unaudited)
Numerator:
Net loss	$	(3,124,589	)	$	(824,304	)
Numerator for basic and diluted earnings per share	$	(3,124,589	)	$	(824,304	)
Denominator:
Denominator for basic and diluted earnings per share - weighted-average shares outstanding		22,948,916			32,797,625
Basic and diluted loss per share	$	(0.14	)	$	(0.03	)

Outstanding stock options and warrants to purchase 1,777,099 and 1,711,643 shares for the periods ended March 31, 2012 and 2013, respectively, were excluded from the calculation of diluted loss per share as their effect would have been antidilutive.

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License and Collaborative Agreements (Details) (USD $)	3 Months Ended				12 Months Ended	3 Months Ended		1 Months Ended		3 Months Ended
	Mar. 31, 2013 Licensing Agreements [Member] University of Southern California [Member]	Mar. 31, 2012 Licensing Agreements [Member] University of Southern California [Member]	Mar. 31, 2013 Licensing Agreements [Member] Roche Molecular Systems [Member]	Mar. 31, 2012 Licensing Agreements [Member] Roche Molecular Systems [Member]	Dec. 31, 2012 Licensing Agreements [Member] Glaxo, Smith, Kline [Member]	Mar. 31, 2013 Service Agreements [Member] Taiho Pharmaceutical Co., Ltd. [Member]	Mar. 31, 2012 Service Agreements [Member] Taiho Pharmaceutical Co., Ltd. [Member]	Jan. 31, 2010 Service Agreements [Member] GlaxoSmithKline, LLC [Member]	Jan. 31, 2006 Service Agreements [Member] GlaxoSmithKline, LLC [Member]	Mar. 31, 2013 Service Agreements [Member] GlaxoSmithKline, LLC [Member]	Mar. 31, 2012 Service Agreements [Member] GlaxoSmithKline, LLC [Member]	Mar. 31, 2013 Service Agreements [Member] GSK Bio [Member]	Mar. 31, 2012 Service Agreements [Member] GSK Bio [Member]	Mar. 31, 2013 Collaborative Arrangement [Member] Hitachi Chemical Co., Ltd. [Member]	Mar. 31, 2012 Collaborative Arrangement [Member] Hitachi Chemical Co., Ltd. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty expense included in cost of revenue	$ 104,105	$ 56,502	$ 90,145	$ 63,468
Revenue recognized						33,920	244,125			0	77,477	1,356,384	641,610	0	85,920
Revenue deferred								1,300,000	2,000,000
Milestone payment received					$ 500,000
Collaborative agreement, optional additional period										1 year
Collaborative agreement, term										2 years
Collaborative agreement, automatic renewal period														1 year
Collaborative agreement, termination notice period												90 days

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Summary of Significant Accounting Policies (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Significant Accounting Policies [Line Items]
Revenue from pharmaceutical clients	$ 2,441,693	$ 1,029,842
Receivable Balance	5,269,551		5,373,023
Accounts receivable, allowance for doubtful accounts	1,048,864		991,990
Bad debt expense	468,463	255,925
Amortization period of software development costs	5 years
Line of credit, expiration date	Mar. 07, 2015
Line of credit, fee for unused portion	0.25%	0.375%
Line of credit, minimum quick ratio	1.5
Line of credit, maximum borrowing capacity	2,000,000
Line of credit, borrowing base percentage of pharmaceutical accounts receivable	80.00%
Line of credit, interest above prime rate	1.00%
Line of credit, interest charged	5.00%
Line of credit, amount drawn	1,000,000		1,000,000
Recognized interest and penalties	107	0
Required minimum bank balance	4,000,000
Advertising costs	0	8,881
Uninsured foreign cash balance	7,236
University of Southern California [Member]
Significant Accounting Policies [Line Items]
Royalties expensed in cost of revenue	104,105	56,502
Roche Molecular Systems [Member]
Significant Accounting Policies [Line Items]
Royalties expensed in cost of revenue	90,145	63,468
Cost of Goods, Total [Member] | Supplier Concentration Risk [Member]
Significant Accounting Policies [Line Items]
Concentration risk percentage	65.00%	68.00%
Letter of Credit [Member]
Significant Accounting Policies [Line Items]
Line of credit, maximum borrowing capacity	500,000
Clinical [Member]
Significant Accounting Policies [Line Items]
Payment period from the date of invoice	45 days
Receivable Balance	1,917,601		2,549,665
ResponseDX [Member]
Significant Accounting Policies [Line Items]
Receivable Balance	3,351,950		2,823,358
Accounts receivable, allowance for doubtful accounts	1,048,864		991,990
Bad debt expense	$ 468,463	$ 178,065

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Organization, Operations and Basis of Accounting (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Organization, Operations and Basis of Accounting [Abstract]
Accumulated deficit	$ 58,100,968	$ 57,276,664

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Stock Option Plans (Narrative) (Details) (USD $)	3 Months Ended			3 Months Ended											1 Months Ended		1 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Mar. 31, 2012 Stock Options [Member]	Mar. 31, 2013 Thomos Bologna [Member]	Mar. 31, 2012 Thomos Bologna [Member]	Mar. 31, 2013 Thomos Bologna [Member] Stock Options [Member]	Mar. 31, 2013 Thomos Bologna [Member] Stock Options [Member] Period One [Member]	Mar. 31, 2013 Thomos Bologna [Member] Stock Options [Member] Period Two [Member]	Mar. 31, 2013 Thomos Bologna [Member] Restricted Stock Units (RSUs) [Member]	Mar. 31, 2012 Minimum [Member] Stock Options [Member]	Mar. 31, 2013 Minimum [Member] Thomos Bologna [Member] Stock Options [Member]	Mar. 31, 2013 Minimum [Member] Thomos Bologna [Member] Restricted Stock Units (RSUs) [Member]	Mar. 31, 2012 Maximum [Member] Stock Options [Member]	Mar. 31, 2000 Stock Option Plan 2000 [Member]	Dec. 31, 2012 Stock Option Plan 2000 [Member]	Mar. 31, 2000 Other Stock Plans [Member]	Mar. 31, 2013 2006 Stock Plan [Member]	Dec. 31, 2012 2006 Stock Plan [Member]	Dec. 31, 2011 2006 Stock Plan [Member]	Dec. 31, 2010 2006 Stock Plan [Member]	Dec. 31, 2009 2006 Stock Plan [Member]	Dec. 31, 2008 2006 Stock Plan [Member]	Oct. 26, 2006 2006 Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized																210,000			3,570,000					2,160,000
Options outstanding	1,711,643		1,749,310
Number of consultants who were granted stock options																	2
Stock option granted, number of common stock shares	95,000							600,000	300,000						1,600,000		16,000
Increase in the number of shares available for issuance																			200,000	200,000	200,000	200,000	200,000
Increase in the number of shares available for issuance, percent of stock outstanding																		5.00%
Number of options available to grant																		1,858,357
Options expiration period				10 years
Options vesting period								36 months			2 years	18 months		3 years
Options outstanding, weighted average exercise price	$ 2.03		$ 2.12
Non-vested stock options outstanding	938,262
Non-vested stock options outstanding, Weighted average grant date fair value	$ 1.37
Unrecognized compensation costs related to non-vested stock options	$ 678,757
Unrecognized compensation costs related to non-vested stock options, recognition period	3 years 2 months 27 days
Stock options granted, average fair value	$ 1.39	$ 1.47
Average closing price of common stock												$ 1.80	$ 2.40
Number of days, for calculating average closing price of common stock												30 days	30 days
Number of restricted common stock granted										270,000
Stock option granted, exercise price	$ 1.39							$ 1.20	$ 1.20
Share-based compensation	$ 105,324	$ 325,008			$ 44,531	$ 103,332	$ 129,000

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Summary of Significant Accounting Policies (Schedule of ResponseDX Accounts Receivable) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Allowance for doubtful accounts	$ (1,048,864)	$ (991,990)
Total	5,269,551	5,373,023
Medicare [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Total	1,449,049	890,936
ResponseDX [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Accounts receivable	4,400,814	3,815,348
Allowance for doubtful accounts	(1,048,864)	(991,990)
Total	3,351,950	2,823,358
ResponseDX [Member] | Medicare [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Accounts receivable	1,449,049	890,936
ResponseDX [Member] | Private Payor [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Accounts receivable	$ 2,951,765	$ 2,924,412

XML

Summary of Significant Accounting Policies (Schedule of Estimated Useful Lives) (Details)	3 Months Ended
	Mar. 31, 2013
Laboratory Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Laboratory Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Furniture and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Furniture and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Leasehold Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Leasehold Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years

XML

Property and Equipment and Intangible Assets

3 Months Ended

Mar. 31, 2013

Property and Equipment and Intangible Assets [Abstract]

Property and Equipment and Intangible Assets

3. Property and Equipment and Intangible Assets

Property and equipment and intangible assets consist of the following:

	December 31, 2012			March 31, 2013
				(Unaudited)
Laboratory equipment	$	3,315,812		$	3,379,883
Furniture and equipment		660,626			675,219
Leasehold improvements		305,059			307,809
		4,281,497			4,362,911
Less: Accumulated depreciation		(3,258,299	)		(3,371,013	)
Total property and equipment, net	$	1,023,198		$	991,898
Purchased software	$	562,699		$	567,099
Internally developed software		108,362			108,362
		671,061			675,461
Less: Accumulated amortization		(95,652	)		(120,337	)
Total intangible assets, net	$	575,409		$	555,124

Intangible assets are carried at the cost to obtain them. Purchased software and internally developed intangible assets are amortized using the straight-line method over the estimated useful life of five years. Depreciation expense, included in cost of revenue, general and administrative expenses, and research and development expenses for the three months ended March 31, 2012 and 2013 was $109,174 and $137,401, respectively. 

Capital Lease

The Company leases certain equipment that is recorded as capital leases. This equipment is included in property and equipment on the accompanying balance sheet as of March 31, 2013 as follows:

	(Unaudited)
Equipment purchased under capital leases	$	451,234
Less: Accumulated amortization		(262,489	)
Equipment purchased under capital leases, net	$	188,745

Future minimum lease payments under capital leases as of March 31, 2013 are as follows:

Years ending December 31,	(Unaudited)
2013	$	130,641
2014		87,119
Total minimum lease payments		217,760
Less amount represented by interest		(14,389	)
Less current portion		(150,270	)
Capital lease obligation, net of current portion	$	53,101

XML

Summary of Significant Accounting Policies (Schedule of ResponseDX Revenue) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Net Revenue	$ 5,624,191	$ 3,981,644
Medicare [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Net Revenue	1,376,900	1,460,318
ResponseDX [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Net Revenue	3,182,498	2,951,802
ResponseDX [Member] | Medicare [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Net Revenue	1,344,215	1,460,318
ResponseDX [Member] | Private Payor [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Net Revenue	1,838,283	1,485,643
ResponseDX [Member] | Other Payor [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Net Revenue		$ 5,841

XML

Loss Per Share (Narrative) (Details)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares excluded from the calculation of diluted loss per share	1,711,643	1,777,099

XML

Sale of Common Stock (Details) (USD $)	3 Months Ended			1 Months Ended					3 Months Ended		0 Months Ended	1 Months Ended		0 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Jan. 18, 2012 March 2010 Private Placement [Member]	Mar. 31, 2013 March 2010 Private Placement [Member]	Dec. 31, 2012 March 2010 Private Placement [Member]	Mar. 31, 2013 February 2012 Private Placement [Member]	Dec. 31, 2012 February 2012 Private Placement [Member]	Dec. 31, 2012 September 2012 Private Placement [Member]	Mar. 31, 2013 September 2012 Private Placement [Member]	Feb. 02, 2012 Private Placement [Member]	Sep. 30, 2012 Private Placement [Member]	Jan. 18, 2012 Lansdowne Partners Limited Partnership, Greenway Capital Partners and Paragon Associates [Member]	Mar. 05, 2010 Lansdowne Partners Limited Partnership, Greenway Capital Partners and Paragon Associates [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock shares issued											5,257,267	8,000,000		3,005,349
Common stock issued, price per share											$ 1.50	$ 1.1		$ 1.31
Net proceeds from issuance of common stock		$ 7,716,038										$ 8,800,000
Net proceeds from issuance of shares in Private Placement											7,822,000			3,879,403
Registration statement filing period after closing of Private Placement											90 days	45 days		45 days
Registration statement effective period after closing of Private Placement											180 days	180 days		120 days
Number of shares included in a registration statement to be registered with the SEC														3,005,349
Common stock classified outside of stockholders' equity (deficit)	$ 5,500,000		$ 11,775,724		$ 0	$ 3,092,396	$ 0	$ 3,183,328	$ 5,500,000	$ 5,500,000	$ 7,885,900	$ 8,800,000		$ 3,879,403
Percentage of shares purchased required to be held for board observer designation right												50.00%
Shares of common stock reclassified to equity				600,769					3,000,000				3,658,676
Shares classified outside of stockholders' equity										5,000,000		8,000,000

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CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2013	Dec. 31, 2012
Current assets
Cash and cash equivalents	$ 8,034,310	$ 9,041,478
Accounts receivable, net of allowance for doubtful accounts of $991,990 and $1,048,864 at December 31, 2012 and March 31, 2013, respectively.	5,269,551	5,373,023
Prepaid expenses and other current assets	1,053,860	576,112
Total current assets	14,357,721	14,990,613
Property and equipment, net	991,898	1,023,198
Intangible assets, net	555,124	575,409
Total assets	15,904,743	16,589,220
Current liabilities
Accounts payable	898,819	1,191,122
Accrued expenses	722,864	343,913
Accrued royalties	907,026	712,776
Accrued payroll and related liabilities	1,659,983	1,382,265
Capital lease obligation, current portion	150,270	158,669
Deferred revenue		483,052
Line of credit, current		1,000,000
Total current liabilities	4,338,962	5,271,797
Capital lease obligation, net of current portion	53,101	83,910
Line of credit, non-current	1,000,000
Total liabilities	5,392,063	5,355,707
Commitments and contingencies (Note 5)
Common stock classified outside of stockholders' equity (deficit)	5,500,000	11,775,724
Stockholders' equity (deficit)
Common stock, $0.01 par value; 50,000,000 shares authorized; 32,797,625 shares issued and outstanding at December 31, 2012 and March 31, 2013, respectively	278,032	232,414
Additional paid-in capital	63,101,466	56,766,036
Accumulated deficit	(58,100,968)	(57,276,664)
Accumulated other comprehensive loss	(265,850)	(263,997)
Total stockholders' equity (deficit)	5,012,680	(542,211)
Total liabilities, common stock classified outside of stockholders' equity (deficit) and stockholders' equity (deficit)	$ 15,904,743	$ 16,589,220

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Stock Option Plans (Schedule of Assumptions Used to Estimate Share-Based Compensation Expense Using Black-Scholes Model) (Details)	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield
Expected term (in years)	6 years 3 months	[1]	6 years 3 months	[1]
Forfeiture rate	7.00%		7.00%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate	1.03%		1.22%
Expected volatility	104.00%		101.10%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate	1.14%		1.38%
Expected volatility	104.90%		101.70%

[1] Expected term is calculated using SAB 107, Simplified Formula. Management has concluded that the use of the simplified method for calculating the expected term of its common stock option grants is appropriate given the Company's lack of history of option exercises.

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Organization, Operations and Basis of Accounting

3 Months Ended

Mar. 31, 2013

Organization, Operations and Basis of Accounting [Abstract]

Organization, Operations and Basis of Accounting

1. Organization, Operations and Basis of Accounting

Response Genetics, Inc. (the "Company") was incorporated in the State of Delaware on September 23, 1999 as Bio Type, Inc. for the purpose of providing molecular profiling services of tumor tissue that has been formalin-fixed and embedded in paraffin. In August 2000, the Company changed its name to Response Genetics, Inc. 

The Company is a life science company engaged in the research, development, marketing and sale of pharmacogenomics-clinical diagnostic tests for cancer. Pharmacogenomics is the science of how an individual's genetic makeup relates to drug response. Diagnostic tests based on pharmacogenomics facilitate the prediction of a response to drug therapy or survival following surgery based on an individual's genetic makeup. In order to generate pharmacogenomic information from patient specimens for these tests, the Company uses its proprietary technologies that enable the Company to reliably and consistently extract ribonucleic acid ("RNA") and deoxyribonucleic acid ("DNA") from tumor specimens that are stored as formalin-fixed and paraffin-embedded ("FFPE") specimens and, thereby to analyze genetic information contained in these tissues for each patient. The Company's platforms include analysis of single biomarkers using the polymerase chain reaction method as well as global gene interrogation using microarray methods and fluorescence in situ hybridization ("FISH") from paraffin or frozen tissue specimens. The Company primarily derives its revenue from the sale of its ResponseDX^® diagnostic testing products and by providing pharmacogenomic clinical trial testing services to pharmaceutical companies in the United States, Asia and Europe.

The Company's goal is to provide cancer patients and their physicians with a means to make informed, individualized treatment decisions based on genetic analysis of tumor tissues. The Company's pharmacogenomic analysis of clinical trial specimens for the pharmaceutical industry may provide data that will lead to a better understanding of the molecular basis for response to specific drugs and, therefore lead to individualized treatment.

Since its inception, the Company has devoted substantial effort in developing its products and has incurred losses and negative cash flows from operations. At March 31, 2013, the Company had an accumulated deficit of $58,100,968. The Company anticipates continued losses and negative cash flows as it funds its selling and marketing activities and research and development programs.

Based on the Company's current operating plan which includes various assumptions concerning the level and timing of cash receipts from product sales and cash outlays for operating expenses and capital expenditures, management believes that existing cash and cash equivalents will be sufficient to meet the Company's working capital requirements through the next twelve months.  The Company's ability to successfully carry out its business plan is primarily dependent upon its ability to (1) attract and retain knowledgeable workers, (2) generate significant revenues, and (3) if needed, obtain sufficient additional capital at acceptable costs. The Company expects to seek additional financing and/or strategic investments; however, there can be no assurance that any additional financing or strategic investments will be available on acceptable terms, if at all.

If events or circumstances occur such that the Company does not meet its operating plan as expected, the Company will most likely be required to reduce certain discretionary spending, which could have a material adverse effect on the Company's ability to achieve its intended business objectives.  No adjustments have been made to the accompanying financial statements to reflect any of the matters discussed above.  The consolidated financial statements have been prepared on the basis that the Company will continue as a going concern.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions for Form 10-Q promulgated by the Securities and Exchange Commission (the "SEC"). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year. The balances as of December 31, 2012 were derived from our audited financial statements as of December 31, 2012. The financial statements should be read in conjunction with the Company's audited December 31, 2011 and 2012 consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and 2012 previously filed with the SEC on April 2, 2012 and March 27, 2013, respectively, as amended by the 10-K/A filed with the SEC on April 27, 2012 and April 29, 2013, respectively.

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Property and Equipment and Intangible Assets (Schedule of Property and Equipment and Intangible Assets) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 4,362,911	$ 4,281,497
Less: Accumulated depreciation	(3,371,013)	(3,258,299)
Total property and equipment, net	991,898	1,023,198
Intangible assets	675,461	671,061
Less: Accumulated amortization	(120,337)	(95,652)
Total intangible assets, net	555,124	575,409
Purchased Software [Member]
Property, Plant and Equipment [Line Items]
Intangible assets	567,099	562,699
Internally Developed Software [Member]
Property, Plant and Equipment [Line Items]
Intangible assets	108,362	108,362
Laboratory Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	3,379,883	3,315,812
Furniture and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	675,219	660,626
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 307,809	$ 305,059

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Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Loss Per Share [Abstract]

Computation for Basic and Diluted Loss Per Share

The following table sets forth the computation for basic and diluted loss per share:

	Three Months Ended March 31,
	2012			2013
	(Unaudited)			(Unaudited)
Numerator:
Net loss	$	(3,124,589	)	$	(824,304	)
Numerator for basic and diluted earnings per share	$	(3,124,589	)	$	(824,304	)
Denominator:
Denominator for basic and diluted earnings per share - weighted-average shares outstanding		22,948,916			32,797,625
Basic and diluted loss per share	$	(0.14	)	$	(0.03	)

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Property and Equipment and Intangible Assets (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Property and Equipment and Intangible Assets [Abstract]
Depreciation expense	$ 137,401	$ 109,174
Amortization period of software development costs	5 years

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Stock Option Plans (Tables)

3 Months Ended

Mar. 31, 2013

Stock Option Plans [Abstract]

Schedule of Assumptions Used to Estimate Share-Based Compensation Expense Using Black-Scholes Model

Except for the certain grants of restricted common stock and common stock options containing market conditions as described below, the Company estimated share-based compensation expense for the three months ended March 31, 2012 and 2013 using the Black-Scholes model with the following weighted average assumptions:

	Three Months Ended March 31,
	2012			2013
	(Unaudited)			(Unaudited)
Risk free interest rate		1.22-1.38	%		1.03-1.14	%
Expected dividend yield		-			-
Expected volatility		101.1-101.7	%		104.0-104.9	%
Expected term **(in years)		6.25			6.25
Forfeiture rate		7.0	%		7.0	%

** Expected term is calculated using SAB 107, Simplified Formula. Management has concluded that the use of the simplified method for calculating the expected term of its common stock option grants is appropriate given the Company's lack of history of option exercises.

Summary of Stock Option Activity

The following table summarizes the stock option activity for the 2006 Plan for the three months ended March 31, 2013:

	Number of Shares			Weighted Average Exercise Price		Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding, December 31, 2012		1,749,310		$	2.12		8.32	$	151,919
Granted (Unaudited)		95,000		$	1.39		9.91		-
Exercised (Unaudited)		-		$	-		-		-
Expired (Unaudited)		(68,484	)		3.80		6.05		27
Forfeited (Unaudited)		(64,183	)	$	1.63		-		3,400
Outstanding, March 31, 2013 (Unaudited)		1,711,643		$	2.03		8.24	$	92,464
Exercisable, March 31, 2013 (Unaudited)		773,381		$	2.84		7.03	$	14,606

Schedule of Options Outstanding

The following table provides additional information regarding options outstanding under the 2006 Plan as of March 31, 2013 (Unaudited):

		Options Outstanding				Options Exercisable
Exercise Price		Number of Options		WA Remaining Contractual Term		Number of Options		WA Remaining Contractual Term
$	1.00 to 1.99		1,292,517		8.95		374,316		8.14
	2.00 to 2.99		201,626		7.66		181,565		7.70
	3.00 to 3.99		71,000		5.33		71,000		5.33
	4.00 to 4.99		11,500		4.40		11,500		4.40
	5.00 to 5.99		-		-		-		-
	6.00 to 6.99		-		-		-		-
	7.00		135,000		4.19		135,000		4.19
			1,711,643		8.24		773,381		7.03

Schedule of Stock Based Compensation Included in Results of Operations

Stock-based compensation expense was classified as follows in the results of operation:

	Three Months Ended March 31,
	( Unaudited )
	2012		2013
Cost of revenue	$	16,689	$	13,487
Research and development		2,481		9,842
Sales and marketing		14,367		17,400
General and administrative		291,471		64,595
Totals	$	325,008	$	105,324

Schedule of Awards to Mr. Bologna

The following table summarizes these awards to Mr. Bologna:

Type	Grant Date	Number of Awards		Intrinsic Value as of March 31, 2013		Exercise Price		Options Exercisable		Remaining Contractual Term
Restricted Shares of Common Stock	12/21/2011		270,000	$	32,400	$	-		-		8.7
Options	12/21/2011		600,000	$	72,000	$	1.20		250,000		8.7
Options	12/21/2011		300,000	$	36,000	$	1.20		300,000		8.7

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Response Genetics, Ltd., a Scottish corporation (the "Subsidiary"), which was incorporated in November 2006. The Subsidiary had no employees or active operations in 2012. All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassification

Certain reclassifications have been made to prior period amounts to conform to current period presentation of gross profit in the statement of operations. These reclassifications did not have an impact on the Company's financial condition as of December 31, 2012 nor statement of operations for the period ended March 31, 2012.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity date of three months or less from the date of purchase to be cash equivalents. The carrying value of cash equivalents approximates fair value due to the short-term nature and liquidity of these instruments. The Company's cash equivalents are comprised of cash on hand, deposits in banks and money market investments.

Accounts Receivable

Pharmaceutical Accounts Receivable

The Company invoices its clients as specimens are processed and any other contractual obligations are met. The Company's contracts with clients typically require payment within 45 days of the date of invoice. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its clients to make required payments. The Company specifically analyzes accounts receivable and historical bad debts, client credit, current economic trends and changes in client payment trends when evaluating the adequacy of the allowance for doubtful accounts. Account balances are charged-off against the allowance when it is probable the receivable will not be recovered. To date, the Company's pharmaceutical customers have primarily been large pharmaceutical companies. As a result, bad debts from pharmaceutical accounts receivable to date have been minimal. Pharmaceutical company accounts receivable as of December 31, 2012 and March 31, 2013 were $2,549,665 and $1,917,601, respectively.  There were no allowances for doubtful accounts recorded against these pharmaceutical accounts receivable at December 31, 2012 and March 31, 2013.

ResponseDX^® Accounts Receivable

ResponseDX^® accounts receivable are recorded from two primary payors: (1) Medicare and (2) third party payros such as commercial insurance and private payors or self-pay ("Private Payors").  ResponseDX^® accounts receivable are recorded at established billing rates less an estimated billing adjustment, based on reporting models utilizing historical cash collection percentages and updated for current effective reimbursement factors.  Management performs ongoing valuations of accounts receivable balances based on management's evaluation of historical collection experience and industry trends.  Based on the historical experience for our Medicare and Private Payor accounts, management has determined, based on a detailed analysis, that accounts receivable associated with certain billings are unlikely to be collected. Therefore, the Company has recorded an allowance for doubtful accounts of $991,990 and $1,048,864 as of December 31, 2012 and March 31, 2013. The Company's bad debt expense for the three months ended March 31, 2012 and 2013 was $178,065 and $468,463, respectively.

ResponseDX^® accounts receivable as of December 31, 2012 and March 31, 2013, consisted of the following:

	December 31, 2012			March 31, 2013
				(Unaudited)
Net Medicare receivable	$	890,936		$	1,449,049
Net Private Payor receivable		2,924,412			2,951,765
		3,815,348			4,400,814
Allowance for doubtful accounts		(991,990	)		(1,048,864	)
Total	$	2,823,358		$	3,351,950

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the double declining balance and straight-line methods over the estimated useful lives of the assets. The Company has determined the estimated useful lives of its property and equipment, as follows:

Laboratory equipment	5 to 7 years
Furniture and Equipment	3 to 7 years
Leasehold Improvements	Shorter of the useful life (5 to 7 years) or the lease term

Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the related accounts and the resulting gain or loss is reflected in the statements of operations. The Company has capitalized costs related to the development of database software (see Note 3). The portion of this database placed into service is amortized in accordance with ASC 350-40, Internal-Use Software. The amortization period is five years using the straight-line method.

Revenue Recognition

Pharmaceutical Revenue

Revenues that are derived from testing services provided to pharmaceutical companies are recognized on a contract specific basis pursuant to the terms of the related agreements. Revenue is recognized in accordance with ASC 605, Revenue Recognition, which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured.

Revenues are recorded on an accrual basis as the contractual obligations are completed and as a set of assays is processed through the Company's laboratory under a specified contractual protocol and are recorded on the date the tests are completed. Certain contracts have minimum assay requirements that, if not met, result in payments that are due upon the completion of the designated period. In these cases, revenues are recognized when the end of the specified contract period is reached.

On occasion, the Company may enter into a contract that requires the client to provide an advance payment for specimens that will be processed at a later date. In these cases, the Company records this advance as deferred revenue and recognizes the revenue as the specimens are processed or at the end of the contract period, as appropriate.

The Company recorded revenue from pharmaceutical clients of $1,029,842 and $2,441,693 for the three months ended March 31, 2012 and 2013, respectively.

ResponseDX^® Revenue

Revenues that are derived from ResponseDX^® testing services are recognized in accordance with ASC 605, Revenue Recognition , which requires that four basic criteria be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. We record revenues when our tests have confirmed results which is evidence that the services have been performed.

Revenues are recorded on an accrual basis as the contractual obligations are completed and as a set of assays is processed through our laboratory under a specified contractual protocol.

ResponseDX^® Private Payor and Medicare revenues are recorded at established billing rates less an estimated billing adjustment, based on reporting models utilizing historical cash collection percentages and updated for current effective reimbursement factors. The Company's Medicare provider number allows it to invoice and collect from Medicare. The Company's invoicing to Medicare is primarily based on amounts allowed by Medicare for the service provided as defined by Common Procedural Terminology ("CPT").

The following details ResponseDX^® revenue for the three months ended March 31, 2012 and 2013:

	Three Months
	Ended March 31,
	(Unaudited)
	2012		2013
Net Medicare revenue	$	1,460,318	$	1,344,215
Private Payor revenue		1,485,643		1,838,283
Other		5,841		-
Net ResponseDX ® revenue	$	2,951,802	$	3,182,498

Cost-Containment Measures

Both government and private pay sources have instituted cost-containment measures designed to limit payments made to providers of health care services, which include diagnostic test providers such as the Company, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company.

Regulatory Matters

A portion of the Company's revenues are derived from Medicare reimbursement. Laws and regulations governing Medicare programs are complex and subject to change and to interpretation, and the Company may be adversely affected by future changes in the applicable laws and regulations and governmental investigations, lawsuits or private actions which include mandatory damages, fines, penalties, criminal charges, loss or suspension of licenses and/or suspension or exclusion from Medicare and certain other governmental programs. The Company believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing.

Medicare reimbursement rates are subject to regulatory changes and government funding restrictions. In January 2013, the initial 2013 annual Medicare fee schedule update was announced which included proposed changes to Medicare reimbursement rates that significantly reduced the reimbursement rates for certain of the testing services we provide. The Company is participating with other impacted organizations to provide guidance to the local Medicare Administrative Contractor ("MAC") that may result in adjustments to the proposed reimbursement rates to better reflect the value of the services being performed. As a result of this guidance, the local MAC updated certain pricing on or about April 3, 2013 which reflected an increase in many of the tests originally priced in January 2013. It is anticipated that continued guidance provided to Medicare and the local MAC by impacted organizations will result in additional fee increases during 2013. If, however, the current level of reduction in reimbursement rates is adopted as is, it may have a material adverse effect on the Company's operations.

As a result of these Current Procedural Terminology ("CPT") code changes and Medicare price changes, we have experienced a departure from our normal reimbursement patterns with Medicare and other payors. Specifically, we have experienced delays in certain reimbursements for services and an increase in initial denials of claims for certain services provided. Accordingly, we revaluated the assumptions employed in our model for estimating revenue to be recognized for ResponseDX^® testing. We view the code and price changes described above as affecting only the assumptions we used in pricing our services. The nature of the testing we provide, the evidence we gather to establish the credit worthiness of our payors and the delivery method of our services have not changed from prior periods, and there are no indicators that these assumptions require change.

We performed an analysis that considered our historical patterns of revenue by payor in conjunction with the fluctuations we experienced in the quarter ended March 31, 2013 to arrive at the revenue recorded for the quarter. We believe that the changes in CPT codes and pricing that are causing confusion and erratic payment experience in the payor community will take some time to resolve. The time needed for resolution will depend upon the local MAC releasing additional pricing changes and potentially, revisions to previously revised prices, and upon the private payor community adopting the new CPT codes and some level of revised pricing. Accordingly, our revenue recognition estimates could be materially affected in future periods as pricing and payments patterns change and develop, and we may be materially affected by future or retroactive price changes.

Cost of Revenue

Cost of revenue represents the cost of materials, direct labor, royalties, costs associated with processing tissue specimens including pathological review, staining, microdissection, paraffin extraction, reverse transcription polymerase chain reaction, fluorescence in situ hybridization ("FISH"), quality control analyses, license fees and delivery charges necessary to render an individualized test result. Costs associated with performing tests are recorded as the tests are processed.

License Fees

The Company licenses technology for the extraction of RNA and DNA from FFPE tumor specimens from the University of Southern California ("USC") in exchange for royalty fees on revenue generated by use of the technology. These royalties are calculated as a fixed percentage of revenue that we generate from use of the technology licensed from USC. Total license fees expensed in cost of revenue under the license agreement with USC were $56,502 and $104,105 for the three months ended March 31, 2012 and 2013, respectively. We also maintain a non-exclusive license to use Roche Molecular Systems, Inc.'s ("Roche") PCR, homogenous PCR, and reverse transcription PCR processes. We pay Roche a fixed percentage royalty fee for revenue that we generate through use of this technology. Royalties expensed in cost of revenue under the Roche agreement totaled $63,468 and $90,145 for the three months ended March 31, 2012 and 2013, respectively.

We are subject to potentially significant variations in royalties recorded in any period. While the amount paid is based on a fixed percentage from revenues of specific tests pursuant to terms set forth in the agreements with USC and Roche, the amount due is calculated based on the revenue we recognize using the respective licensed technology. As discussed above, this revenue can vary from period to period as it is dependent on the timing of the specimens submitted by our clients for testing.

Research and Development

The Company expenses costs associated with research and development activities as incurred. Research and development costs are expensed as incurred and classified as research and development costs. Certain costs such as lab supplies and reagents that cannot be specifically identified are allocated based on the number of samples processed in total by the lab and R&D departments in total. Research and development costs include employee costs (salaries, payroll taxes, benefits, and travel), equipment depreciation and warranties and maintenance, laboratory supplies, primers and probes, reagents, patent costs and occupancy costs.

Line of Credit

On July 14, 2011, the Company entered into a line of credit agreement with Silicon Valley Bank (the "Bank"). The agreement has been amended most recently on March 7, 2013. The line of credit is collateralized by the Company's pharmaceutical and Medicare receivables. The amended maximum amount that can be borrowed from the credit line is $2,000,000. As of March 31, 2013, the amount the Company can draw from the loan was equal to the lesser of (i) the Company's calculated borrowing base, which was 80% of certain of the Company's accounts receivable, or (ii) the amount available under the credit line. Prior to the line of credit's first amendment on December 14, 2011, the Bank issued letters of credit up to a maximum amount of $500,000. Any issued letters of credit reduced the amount available to borrow under the line of credit on a dollar for dollar basis. As of March 31, 2013, the interest fees associated with this line of credit were set at the prime rate plus 1%. For the period ended March 31, 2013, the rate being charged to the Company was 5%. As needed from time to time, the Company may draw on this line of credit for use for general corporate purposes. As of December 31, 2012 and March 31, 2013, the Company has drawn $1,000,000 against the line of credit and no letters of credit were outstanding. The line of credit is subject to various financial covenants and, as of March 31, 2013, the Company was in compliance with these covenants. However, prior to the most recent amendment on March 7, 2013, the Company was not in compliance with certain covenants. The September 28, 2012 amendment provided forbearance for the failure to comply with these certain covenants through November 30, 2012, and modified the covenants to include a requirement that the Company maintain account balances at the Bank totaling a minimum of $4,000,000 during the covered forbearance period. The December 6, 2012 amendment to the agreement extended the forbearance for the failure to comply with these certain covenants and the requirement for the Company to maintain account balances at the Bank totaling a minimum of $4,000,000 through December 31, 2012. In addition, pursuant to the March 7, 2013 amendment, the Bank waived the Company's existing breach of financial covenants under the credit agreement and the parties restructured the line of credit to provide that, among other things: (i) the revolving line of credit's maturity date was extended to March 7, 2015, (ii) the fee for the unused portion of the revolving line of credit was reduced from 0.375% to 0.250% per annum of the average unused portion of the revolving line of credit, (iii) the Company must continue to meet certain reporting requirements including providing financial statements and a certificate of compliance with the terms and conditions of the credit agreement by an authorized officer to the Bank within 45 days of the last day of each calendar quarter, provided that if the Company has less than $4,000,000 in its account at the Bank at any time during such calendar quarter, the Company must provide the financial statements and the certificate of compliance within 30 days of the end of such calendar quarter and providing a monthly report on revenues realized from private payors, (iv) the financial covenants were amended and restated to require the Company to maintain a ratio of quick assets to current liabilities of 1:50 to 1:00 and meet certain specified minimum adjusted earnings before interest, taxes, depreciation and amortization requirements as defined in the amendment and measured on a monthly basis and (v) the Bank is granted certain additional inspection of books, records and collateral rights.

As of December 31, 2012, the line of credit under the credit agreement was classified as a current liability of the Company on the accompanying balance sheet as the line of credit had a maturity date less than one year from December 31, 2012. As of March 31, 2013, the maturity date of the line of credit has been extended to March 7, 2015 and therefore the line of credit is classified as a non-current liability.

From time to time, the Company's calculated borrowing base under its Bank line of credit may decrease to a level where the Company is in an over-advance position in which case the Company will be required to repay any outstanding amounts greater than the calculated borrowing base for such covered period back to the Bank immediately. The Company will be able to draw down on the credit line again with respect to such paid back amount once the Company is in compliance with the borrowing base requirement.

Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

ASC 740, Income Taxes, clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of December 31, 2012 and March 31, 2013, the Company does not have a liability for unrecognized tax benefits. The Company recognizes interest and penalties associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the balance sheet. For the periods ended March 31, 2012 and 2013, interest and penalties totaling $0 and $107, respectively, were recorded in the Consolidated Statement of Operations.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Stock Compensation, Share-Based Payment. Stock-based compensation expense for all stock-based compensation awards granted is based on the grant-date fair value estimated in accordance with the provisions of ASC 718.  The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option vesting period. As further described in Note 7, certain awards granted to Thomas Bologna, the Company's Chairman and Chief Executive Officer, were recognized based on an accelerated vesting basis triggered by market conditions rather than a straight-line basis.

The Company accounts for equity instruments issued to non-employees in accordance with ASC 505, Equity. Under ASC 505, stock option awards issued to non-employees are measured at fair value using the Black-Scholes option-pricing model and recognized pursuant to a performance model.

Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates in these consolidated financial statements have been made for revenue, allowances for doubtful accounts, impairment of long-lived assets, depreciation of property and equipment and stock-based compensation. Actual results could differ materially from those estimates.

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates potential impairment by comparing the carrying amount of the asset with the estimated undiscounted future cash flows associated with the use of the asset and its eventual disposition. Should the review indicate that the assets cost is not recoverable, the carrying value of the asset would be reduced to its fair value, which is measured by future discounted cash flows. 

Foreign Currency Translation

The financial position and results of operations of the Company's foreign subsidiary are determined using local currency as the functional currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each period-end. Statement of Operations amounts are translated at the average rate of exchange prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss in stockholders' equity (deficit).

Comprehensive Loss

The components of comprehensive loss are accumulated net loss and unrealized foreign currency translation adjustments for the three months ended March 31, 2012 and 2013.

Fair Value of Financial Instruments

Cash and cash equivalents are stated at cost, which approximates fair market value.  Cash equivalents consist of money market accounts, with fair values estimated based on quoted market prices. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies. For additional information see Note 12.

Advertising Costs

The Company markets its services through its advertising activities in trade publications and on the internet. Advertising costs are included in selling and marketing expenses on the statements of operations and are expensed as incurred.  Advertising costs for the three months ended March 31, 2012 and 2013 were $8,881 and $0, respectively.

Concentration of Credit Risk and Clients and Limited Suppliers

Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. All of the Company's non-interest bearing cash balances were fully insured at December 31, 2012 due to a temporary federal program in effect from December 31, 2011 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning on January 1, 2013, federal insurance coverage reverted to $250,000 per depositor at each financial institution, and the Company's non-interest bearing cash balances again exceeded federally insured limits. There were no funds in interest-bearing accounts that exceeded the federally insured limits as of March 31, 2013. At March 31, 2013, $7,236 of cash was held outside of the United States and is uninsured.

Revenue sources that account for greater than 10 percent of total revenue are provided below.

	Three Months Ended March 31,
	2012					2013
	(Unaudited)					(Unaudited)
	Revenue		Percent of Total Revenue			Revenue		Percent of Total Revenue
Abbott Molecular, Inc.	$	32,466		1	%	$	910,182		15	%
GlaxoSmithKline LLC and GlaxoSmithKline Biologicals S.A.	$	719,087		18	%	$	1,356,384		23	%
Medicare, net of contractual allowances	$	1,460,318		37	%	$	1,376,900		23	%

Customers that account for greater than 10 percent of gross accounts receivable are provided below.

	As of December 31, 2012					As of March 31, 2013
	( Unaudited )					( Unaudited )
	Receivable Balance		Percent of Total Receivables			Receivable Balance		Percent of Total Receivables
Abbott Molecular, Inc.	$	377,296		5.9	%	$	697,622		10.5	%
GlaxoSmithKline LLC and GlaxoSmithKline Biologicals S.A.	$	1,691,144		26.6	%	$	712,477		10.8	%
Medicare, net of contractual allowances	$	890,936		14.0	%	$	1,449,049		22.9	%

Many of the supplies and reagents used in the Company's testing process are procured from a limited number of suppliers. Any supply interruption or an increase in demand beyond the suppliers' capabilities could have an adverse impact on the Company's business. Management believes it can identify alternative sources, if necessary, but it is possible such sources may not be identified in sufficient time to avoid an adverse impact on its business. Refer also to Note 6 for further discussion regarding these supply agreements. The Company purchases certain laboratory supplies and reagents primarily from two suppliers. Purchases from these two suppliers accounted for approximately 68% and 65% of the Company's reagent purchases for the three months ended March 31, 2012 and 2013, respectively.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
CONSOLIDATED BALANCE SHEETS [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 1,048,864	$ 991,990
Common stock, par value per share	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	32,797,625	32,797,625
Common stock, shares outstanding	32,797,625	32,797,625

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Fair Value Measurements

3 Months Ended

Mar. 31, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

12. Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.  ASC 820 establishes a three-level valuation hierarchy of valuation techniques that is based on observable and unobservable inputs. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The first two inputs are considered observable and the last unobservable, that may be used to measure fair value and include the following:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of December 31, 2012, the Company held certain assets that are required to be measured at fair value on a recurring basis, including its cash and cash equivalents. The fair value of these assets was determined using the following inputs in accordance with ASC 820 at December 31, 2012 and March 31, 2013:

	Fair Value Measurement as of December 31, 2012
	Total		Level 1		Level 2		Level 3
Description	$		$		$		$
Money market accounts (1)		10,000		10,000		-		-

	Fair Value Measurement as of March 31, 2013
	(Unaudited)
	Total		Level 1		Level 2		Level 3
Description	$		$		$		$
Money market accounts (1)		10,000		10,000		-		-

(1) Included in cash and cash equivalents on the accompanying consolidated balance sheet.

As of December 31, 2012 and March 31, 2013, the Company did not hold any liabilities that are required to be measured at fair value on a recurring basis.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 14, 2013
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Entity Registrant Name	RESPONSE GENETICS INC
Entity Central Index Key	0001124608
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		32,797,625

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Subsequent Events

3 Months Ended

Mar. 31, 2013

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

Not applicable.

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS [Abstract]
Net Revenue	$ 5,624,191	$ 3,981,644
Cost of revenue	2,533,722	2,700,858
Gross profit	3,090,469	1,280,786
Operating expenses:
Selling and marketing	1,442,235	1,453,807
General and administrative	2,135,186	2,358,450
Research and development	297,200	569,955
Total operating expenses	3,874,621	4,382,212
Operating loss	(784,152)	(3,101,426)
Other income (expense):
Interest expense	(19,410)	(23,177)
Interest income	43	14
Other	(20,785)
Net loss	(824,304)	(3,124,589)
Unrealized loss on foreign currency translation	(1,853)	(512)
Comprehensive loss	$ (826,157)	$ (3,125,101)
Net loss per share - basic and diluted	$ (0.03)	$ (0.14)
Weighted-average shares - basic and diluted	32,797,625	22,948,916

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Stock Option Plans

3 Months Ended

Mar. 31, 2013

Stock Option Plans [Abstract]

Stock Option Plans

7. Stock Option Plans

In March 2000, the Company adopted a Stock Option Plan (the "2000 Stock Plan") as approved by its Board of Directors. Under the 2000 Stock Plan, the Company granted options to acquire up to 1,600,000 shares of common stock. In connection with the adoption of the 2006 Employee, Director and Consultant Stock Plan, as further discussed below, the Company is to grant no additional options under the 2000 Stock Plan. Under the 2000 Stock Plan, there were no options to purchase shares of the Company's common stock that remained outstanding as of March 31, 2013. Prior to March 2007, the Company also granted options to purchase 16,000 shares of common stock to two consultants which were granted under separate agreements outside of the 2000 Stock Plan.

On October 26, 2006, the Board of Directors of the Company approved, and on May 1, 2007, reapproved the adoption of the 2006 Employee, Director and Consultant Stock Plan (the "2006 Stock Plan"). The stockholders approved the 2006 Stock Plan on June 1, 2007. The initial number of shares which may be issued from time to time pursuant to the 2006 Stock Plan was 2,160,000 shares of common stock. Also, the 2006 Stock Plan includes the number of shares subject to purchase under options issued under the 2000 Stock Plan, where the options expired on or after October 18, 2006, subject to a maximum of 210,000 additional options.  In addition, on the first day of each fiscal year of the Company during the period beginning in fiscal year 2008 and ending on the second day of fiscal year 2017, the number of shares that may be issued from time to time pursuant to the 2006 Stock Plan is increased by the lesser of (i) 200,000 shares or equivalent, after determination of the effect of any stock split, stock dividend, combination or similar transactions as set forth in the 2006 Stock Plan, (ii) 5% of the number of outstanding shares of common stock of the Company on such date or (iii) an amount determined by the Board of Directors of the Company.  The initial number of shares available for issuance of 2,160,000 increased by 210,000 for options issued under the 2000 Stock Plan expiring after October 2006 and by 200,000 in 2008, 2009, 2010, 2011 and 2012, resulting in the total number of shares that may be issued as of January 1, 2013 to be 3,570,000.  As of March 31, 2013, there were 1,858,357 options available for grant under the 2006 Stock Plan.

Employee options vest according to the terms of the specific grant and expire 10 years from the date of grant. Non-employee option grants to date typically vest over a 2 to 3 year period. The Company had 1,711,643 options outstanding at a weighted average exercise price of $2.03 at March 31, 2013. There were 938,262 non-vested stock options outstanding with a weighted average grant date fair value of $1.37 at March 31, 2013.  As of March 31, 2013, there was $678,757 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2006 Stock Plan. That cost is expected to be recognized over a weighted-average period of 3.24 years.

Except for the certain grants of restricted common stock and common stock options containing market conditions as described below, the Company estimated share-based compensation expense for the three months ended March 31, 2012 and 2013 using the Black-Scholes model with the following weighted average assumptions:

	Three Months Ended March 31,
	2012			2013
	(Unaudited)			(Unaudited)
Risk free interest rate		1.22-1.38	%		1.03-1.14	%
Expected dividend yield		-			-
Expected volatility		101.1-101.7	%		104.0-104.9	%
Expected term **(in years)		6.25			6.25
Forfeiture rate		7.0	%		7.0	%

** Expected term is calculated using SAB 107, Simplified Formula. Management has concluded that the use of the simplified method for calculating the expected term of its common stock option grants is appropriate given the Company's lack of history of option exercises.

The following table summarizes the stock option activity for the 2006 Plan for the three months ended March 31, 2013:

	Number of Shares			Weighted Average Exercise Price		Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding, December 31, 2012		1,749,310		$	2.12		8.32	$	151,919
Granted (Unaudited)		95,000		$	1.39		9.91		-
Exercised (Unaudited)		-		$	-		-		-
Expired (Unaudited)		(68,484	)		3.80		6.05		27
Forfeited (Unaudited)		(64,183	)	$	1.63		-		3,400
Outstanding, March 31, 2013 (Unaudited)		1,711,643		$	2.03		8.24	$	92,464
Exercisable, March 31, 2013 (Unaudited)		773,381		$	2.84		7.03	$	14,606

The weighted-average grant-date fair value of options granted during the nine months ended March 31, 2012 and 2013 was $1.47 and $1.39, respectively.    

The following table provides additional information regarding options outstanding under the 2006 Plan as of March 31, 2013 (Unaudited):

		Options Outstanding				Options Exercisable
Exercise Price		Number of Options		WA Remaining Contractual Term		Number of Options		WA Remaining Contractual Term
$	1.00 to 1.99		1,292,517		8.95		374,316		8.14
	2.00 to 2.99		201,626		7.66		181,565		7.70
	3.00 to 3.99		71,000		5.33		71,000		5.33
	4.00 to 4.99		11,500		4.40		11,500		4.40
	5.00 to 5.99		-		-		-		-
	6.00 to 6.99		-		-		-		-
	7.00		135,000		4.19		135,000		4.19
			1,711,643		8.24		773,381		7.03

Stock-based compensation expense was classified as follows in the results of operation:

	Three Months Ended March 31,
	( Unaudited )
	2012		2013
Cost of revenue	$	16,689	$	13,487
Research and development		2,481		9,842
Sales and marketing		14,367		17,400
General and administrative		291,471		64,595
Totals	$	325,008	$	105,324

Thomas Bologna was appointed Chief Executive Officer of the Company on December 21, 2011 and in connection with his appointment, Mr. Bologna was awarded stock options outside of the 2006 Stock Plan. Pursuant to the employment agreement between the Company and Mr. Bologna, dated December 21, 2011, and in reliance on NASDAQ Listing Rule 5636(c), the Company granted Mr. Bologna (i) a stock option to purchase 600,000 shares of the Company's common stock, which vests monthly over 36 months from the date of grant, subject to his continued employment with the Company, (ii) a stock option to purchase 300,000 shares of the Company's common stock, which vests in two equal installments on the first day of the 18th and 36th calendar months from the date of grant, subject to his continued employment with the Company, or if earlier, the date on which the 30-day trailing average closing price of the Company's common stock equals or exceeds $1.80, and (iii) 270,000 shares of restricted common stock of the Company, which vest on the date on which the 30-day trailing average closing price of the Company's common stock equals or exceeds $2.40. The exercise price of the stock options is $1.20 per share, the closing price of the Company's common stock on the day prior to the date of grant. The expense recognized in connection with these grants was $103,332 and $44,531 for the three months ended March 31, 2012 and 2013, respectively, and is included in the above table.

Since the restricted shares of common stock grant vests upon attainment of a target price for the Company's common stock and each tranche of the 300,000 share common stock option grant can vest sooner than the stated vesting dates based upon attainment of a target price for the Company's common stock, these awards are deemed to include market conditions for purposes of determining the valuation and accounting for the awards. Accordingly, the fair value of the restricted shares of common stock grant and each tranche of the 300,000 share common stock option grant that Mr. Bologna received was determined using a Monte-Carlo simulation model to simulate the Company's stock prices in the future that would trigger or not trigger the market conditions. For these awards containing market conditions, the compensation amount will be attributed over the service date unless vesting occurs sooner due to achieving the market condition.

The following table summarizes these awards to Mr. Bologna:

Type	Grant Date	Number of Awards		Intrinsic Value as of March 31, 2013		Exercise Price		Options Exercisable		Remaining Contractual Term
Restricted Shares of Common Stock	12/21/2011		270,000	$	32,400	$	-		-		8.7
Options	12/21/2011		600,000	$	72,000	$	1.20		250,000		8.7
Options	12/21/2011		300,000	$	36,000	$	1.20		300,000		8.7

During the first quarter of 2012, Mr. Bologna's stock award of 300,000 shares met the conditions for vesting in that the 30-day trailing average closing price of the Company's common stock exceeded $1.80. The Company recognized expense of $129,000 for the vesting of this tranche of options for Mr. Bologna's stock awards during the quarter ended March 31, 2012.

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License and Collaborative Agreements

3 Months Ended

Mar. 31, 2013

License and Collaborative Agreements [Abstract]

License and Collaborative Agreements

6. License and Collaborative Agreements

License Agreement with the University of Southern California ("USC")

In April 2000, as amended in June 2002 and April 2005, the Company entered into a license agreement with USC. Under this agreement, USC granted the Company a worldwide, exclusive license with the right to sublicense, the patents for nucleic acid extraction methodologies ("RGI-1") and related technology, for use in human and veterinary diagnostic laboratory services, the sale of clinical diagnostic products, and the sale of research products to the research community. USC retains the right under the agreement to use the technology for research and educational purposes.

In consideration for this license, the Company agreed to pay USC royalties based on a percentage of net sales of products or services that make use of RGI-1 and related technology and to meet a certain minimum in royalty payments.   Royalty expense relating to this agreement amounted to $56,502 and $104,105 for the three months ended March 31, 2012 and 2013, respectively.  Such expense is included in cost of revenue in the accompanying statements of operations.

License Agreement with Roche Molecular Systems ("Roche")

In November 2004, the Company entered into a non-exclusive license to use Roche's technology including specified nucleic acid amplification processes ("PCR Processes") to perform certain human invitro clinical laboratory services. In consideration for this license, the Company is obligated to pay royalties to Roche, based on a percentage of net sales of products or services that make use of the PCR Processes. Royalty expense included in cost of revenue relating to this agreement amounted to $63,468 and $90,145 for the three months ended March 31, 2012 and 2013, respectively.

In November 2004, the Company also entered into an agreement with Roche, pursuant to which the Company is collaborating with Roche to produce commercially viable assays used in the validation of genetic markers for pharmaceutical companies. Specifically, the Company has licensed the rights to Roche to use the pre-diagnostic assays the Company develops in the course of using its RNA-extraction technologies to provide testing services to pharmaceutical companies and to produce diagnostic kits that then can be sold commercially to those pharmaceutical companies. Roche is required to pay the Company royalties of a certain percentage of net sales of such diagnostic kits sold to pharmaceutical companies. Through March 31, 2103, Roche has not been required to pay any royalties to the Company pursuant to this agreement.

Services Agreement with Taiho Pharmaceutical Co., Ltd. ("Taiho")

In July of 2001, the Company entered into an agreement with Taiho pursuant to which the Company provides Taiho with RGI-1 generated molecular-based tumor analyses for use in guiding chemotherapy treatment for cancer patients and for use in Taiho's business of developing and marketing pharmaceutical and diagnostic products for use against cancer. Pursuant to the agreement, as amended, the Company appointed Taiho as the exclusive purchaser in Japan of tests and testing services based upon the RGI-1 using gene expression through 2010 for: (i) any one or the combination of specified molecular markers, (ii) the therapeutic use of specified compounds, or (iii) the diagnosis or therapeutic treatment of specified precancerous and cancerous diseases. The Company also granted Taiho the right to be a non-exclusive purchaser in Japan of tests and testing services based upon the RGI-1 using gene expression, other than those for which Taiho has exclusivity, for: (i) any one or combination of molecular markers, (ii) the therapeutic use of any compound or biological product against cancer, or (iii) the diagnosis or therapeutic treatment of precancerous and cancerous diseases.

In consideration for the testing services provided, Taiho paid an upfront payment at the commencement of the agreement and is obligated to pay regular testing fees, covering the specific services performed on a monthly basis.  In December 2009, the Company amended its agreement with Taiho and the agreement was renewed for an additional three years. According to the terms of the renewal, Taiho's appointment as an exclusive purchaser in Japan of certain tests and testing services and its minimum purchasing obligations ended on December 31, 2010 and as such, Taiho was only obligated to purchase tests and testing services based on its needs for 2011 and 2012.

Until its minimum purchasing obligations ended on December 31, 2010, Taiho was obligated to purchase a minimum amount of testing services from the Company each calendar quarter. Revenue recognized under this agreement for the three months ended March 31, 2012 and 2013 was $244,125 and $33,920, respectively. As of the date of filing of this Quarterly Report on Form 10-Q, the Company continues to provide services to Taiho. The Company and Taiho are currently discussing amending and extending this agreement which amended agreement would be effective and govern all services the Company provided to Taiho as of January 1, 2013. There can be no assurance, however, that the Company will be able to amend and extend the Taiho agreement on terms acceptable to the Company, if at all.

Services Agreement with GlaxoSmithKline, LLC formerly known as SmithKline Beecham Corporation (d.b.a. GlaxoSmithKline or "GSK")

In January 2006, the Company entered into a master services agreement with GSK, a leading pharmaceutical manufacturer, pursuant to which the Company provides services in connection with profiling the expression of various genes from a range of human cancers. Under the agreement, the Company provides GSK with testing services as described in individual protocols and GSK pays the Company for such services based on the pricing schedule established for each particular protocol. GSK is obligated to make minimum annual payments to the Company under the agreement and also was obligated to make a non-refundable upfront payment to the Company, to be credited against work undertaken pursuant to the agreement. In January 2006, the Company received an upfront payment of $2,000,000, which was initially recorded as deferred revenue. The timing of the recognition of these amounts is dependent upon when GSK submits the specimens for testing. There was no remaining deferred revenue balance associated with this agreement for the periods ended December 31, 2012 or March 31, 2013.

In December 2008, the Company amended and restated its master services agreement with GSK and extended the term of the agreement for a two-year period, with the option for the parties to extend the agreement for additional one-year periods at the end of the term, upon their mutual written agreement. In addition, the Company became a preferred provider to GSK and its affiliates of genetic testing services on a fee-for-service basis and, in anticipation of the services to be provided, GSK agreed to make a non-refundable upfront payment of approximately $1,300,000, which was received in January 2010.  There was no remaining deferred revenue balance associated with this agreement for the periods ended December 31, 2012 or March 31, 2013.

The Company recognized revenue of $77,477 and $0 relating to the GSK agreement for the three months ended March 31, 2012 and 2013, respectively.

Non-Exclusive License Agreement with GSK

In March 2010, the Company entered into a non-exclusive license agreement with GSK.  Under the agreement, the Company granted GSK a non-exclusive, sublicenseable license to its proprietary PCR analysis technology and diagnostic expertise to assess BRAF gene mutations in human tumor samples.  As part of the agreement, the Company received a non-refundable technology access fee in consideration for the transfer of the Company's technology to GSK. The agreement also contains milestone provisions which would allow the Company to earn further payments from GSK.  The Company earned a $500,000 milestone payment from GSK that was recorded as revenue in 2012.

Master Services Agreement with GlaxoSmithKline Biologicals S.A. ("GSK Bio")

On July 26, 2012, the Company entered into a second amended and restated master services agreement with GSK Bio, the vaccine division of GSK. Pursuant to this agreement, which has an effective date of May 15, 2012, the Company provides testing services for clinical trials and epidemiology studies relating to GSK Bio's cancer immunotherapies. The Company performs these testing services on a fee-for-service basis as embodied in written task orders. GSK Bio retains the intellectual property rights to inventions, improvements and data resulting from the services performed under the agreement. The Company retains all intellectual property rights to its testing services, proprietary processes and all accompanying patent information owned by the Company. All intellectual property owned by either party on the date of the agreement remains the exclusive property of the owning party.

The agreement will expire on December 31, 2014, provided that any outstanding task orders at the time of termination will not thereby terminate (unless otherwise agreed in writing by the parties), and any such task orders will continue for the respective terms specified in such task orders (and the parties shall continue to perform their obligations thereunder). GSK Bio may terminate the agreement, without cause, upon 90 days' written notice to the Company. The Company may terminate the agreement, without cause, upon one year's written notice to GSK Bio. The agreement may also be terminated early if either party enters bankruptcy or similar proceedings or in the event of a material breach. GSK Bio may terminate the agreement immediately if the Company experiences a "change of control," as defined in the agreement.

The agreement also provides for mutual indemnification by the parties and contains customary representations, warranties and covenants, including covenants governing the parties' use of confidential information and representations regarding adequate insurance coverage or self-insurance.

The Company recognized revenue of $641,610 and $1,356,384 relating to the services performed for GSK Bio for the three months ended March 31, 2012 and 2013, respectively.

Commission Agreement with Hitachi Chemical Co., Ltd.

On July 26, 2007, the Company entered into a collaboration agreement with Hitachi, a leading diagnostics manufacturer in Japan. Under the terms of this agreement, Hitachi used the Company's proprietary and patented techniques to extract genetic information from FFPE tissue samples collected in Southeast Asia, Australia and New Zealand. As part of this collaboration agreement, the Company provides Hitachi with the technical information and assistance necessary to perform the testing services. Hitachi is responsible for expenses related to the cost of laboratory equipment and modification to the laboratory facilities, as well as the cost of reagents. The Southeast Asian countries covered under this agreement include Japan, North Korea, South Korea, Taiwan, Mongolia, Pakistan, Bangladesh, Sri Lanka, Nepal, Singapore, Malaysia, Indonesia, Brunei, Thailand, Myanmar, Laos, Cambodia, Vietnam and the Philippines (the "Territory").

The collaboration agreement had an initial term expiring on June 30, 2010, with an automatic renewal for one year at the end of the original period under the same terms and conditions. Pursuant to the agreement, Hitachi performed certain testing services and received a percentage of the revenue collected from the Company's clients in the Territory, which totaled $85,920 and $0 for the three months ended March 31, 2012 and 2013, respectively. These amounts were recorded as cost of revenue in the consolidated statement of operations and comprehensive loss. Due to the closing of Hitachi's applicable facility in the Territory, the Company and Hitachi agreed to terminate this agreement effective September 30, 2012.

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies [Abstract]

Schedule of Future Minimum Lease Payments under Noncancelable Operating Leases

Future minimum lease payments by year and in the aggregate, under the Company's noncancelable operating leases for facilities, equipment and software as a service, consist of the following at March 31, 2013:

Years Ending December 31,	Unaudited
2013	$	428,190
2014		95,084
2015		95,084
2016		13,271
Total	$	631,629

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Basis of Consolidation

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Response Genetics, Ltd., a Scottish corporation (the "Subsidiary"), which was incorporated in November 2006. The Subsidiary had no employees or active operations in 2012. All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassification

Reclassification

Certain reclassifications have been made to prior period amounts to conform to current period presentation of gross profit in the statement of operations. These reclassifications did not have an impact on the Company's financial condition as of December 31, 2012 nor statement of operations for the period ended March 31, 2012.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity date of three months or less from the date of purchase to be cash equivalents. The carrying value of cash equivalents approximates fair value due to the short-term nature and liquidity of these instruments. The Company's cash equivalents are comprised of cash on hand, deposits in banks and money market investments.

Accounts Receivable

Accounts Receivable

Pharmaceutical Accounts Receivable

The Company invoices its clients as specimens are processed and any other contractual obligations are met. The Company's contracts with clients typically require payment within 45 days of the date of invoice. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its clients to make required payments. The Company specifically analyzes accounts receivable and historical bad debts, client credit, current economic trends and changes in client payment trends when evaluating the adequacy of the allowance for doubtful accounts. Account balances are charged-off against the allowance when it is probable the receivable will not be recovered. To date, the Company's pharmaceutical customers have primarily been large pharmaceutical companies. As a result, bad debts from pharmaceutical accounts receivable to date have been minimal. Pharmaceutical company accounts receivable as of December 31, 2012 and March 31, 2013 were $2,549,665 and $1,917,601, respectively.  There were no allowances for doubtful accounts recorded against these pharmaceutical accounts receivable at December 31, 2012 and March 31, 2013.

ResponseDX^® Accounts Receivable

ResponseDX^® accounts receivable are recorded from two primary payors: (1) Medicare and (2) third party payros such as commercial insurance and private payors or self-pay ("Private Payors").  ResponseDX^® accounts receivable are recorded at established billing rates less an estimated billing adjustment, based on reporting models utilizing historical cash collection percentages and updated for current effective reimbursement factors.  Management performs ongoing valuations of accounts receivable balances based on management's evaluation of historical collection experience and industry trends.  Based on the historical experience for our Medicare and Private Payor accounts, management has determined, based on a detailed analysis, that accounts receivable associated with certain billings are unlikely to be collected. Therefore, the Company has recorded an allowance for doubtful accounts of $991,990 and $1,048,864 as of December 31, 2012 and March 31, 2013. The Company's bad debt expense for the three months ended March 31, 2012 and 2013 was $178,065 and $468,463, respectively.

ResponseDX^® accounts receivable as of December 31, 2012 and March 31, 2013, consisted of the following:

	December 31, 2012			March 31, 2013
				(Unaudited)
Net Medicare receivable	$	890,936		$	1,449,049
Net Private Payor receivable		2,924,412			2,951,765
		3,815,348			4,400,814
Allowance for doubtful accounts		(991,990	)		(1,048,864	)
Total	$	2,823,358		$	3,351,950

Property and Equipment

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the double declining balance and straight-line methods over the estimated useful lives of the assets. The Company has determined the estimated useful lives of its property and equipment, as follows:

Laboratory equipment	5 to 7 years
Furniture and Equipment	3 to 7 years
Leasehold Improvements	Shorter of the useful life (5 to 7 years) or the lease term

Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the related accounts and the resulting gain or loss is reflected in the statements of operations. The Company has capitalized costs related to the development of database software (see Note 3). The portion of this database placed into service is amortized in accordance with ASC 350-40, Internal-Use Software. The amortization period is five years using the straight-line method.

Revenue Recognition

Revenue Recognition

Pharmaceutical Revenue

Revenues that are derived from testing services provided to pharmaceutical companies are recognized on a contract specific basis pursuant to the terms of the related agreements. Revenue is recognized in accordance with ASC 605, Revenue Recognition, which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured.

Revenues are recorded on an accrual basis as the contractual obligations are completed and as a set of assays is processed through the Company's laboratory under a specified contractual protocol and are recorded on the date the tests are completed. Certain contracts have minimum assay requirements that, if not met, result in payments that are due upon the completion of the designated period. In these cases, revenues are recognized when the end of the specified contract period is reached.

On occasion, the Company may enter into a contract that requires the client to provide an advance payment for specimens that will be processed at a later date. In these cases, the Company records this advance as deferred revenue and recognizes the revenue as the specimens are processed or at the end of the contract period, as appropriate.

The Company recorded revenue from pharmaceutical clients of $1,029,842 and $2,441,693 for the three months ended March 31, 2012 and 2013, respectively.

ResponseDX^® Revenue

Revenues that are derived from ResponseDX^® testing services are recognized in accordance with ASC 605, Revenue Recognition , which requires that four basic criteria be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. We record revenues when our tests have confirmed results which is evidence that the services have been performed.

Revenues are recorded on an accrual basis as the contractual obligations are completed and as a set of assays is processed through our laboratory under a specified contractual protocol.

ResponseDX^® Private Payor and Medicare revenues are recorded at established billing rates less an estimated billing adjustment, based on reporting models utilizing historical cash collection percentages and updated for current effective reimbursement factors. The Company's Medicare provider number allows it to invoice and collect from Medicare. The Company's invoicing to Medicare is primarily based on amounts allowed by Medicare for the service provided as defined by Common Procedural Terminology ("CPT").

The following details ResponseDX^® revenue for the three months ended March 31, 2012 and 2013:

	Three Months
	Ended March 31,
	(Unaudited)
	2012		2013
Net Medicare revenue	$	1,460,318	$	1,344,215
Private Payor revenue		1,485,643		1,838,283
Other		5,841		-
Net ResponseDX ® revenue	$	2,951,802	$	3,182,498

Cost-Containment Measures

Both government and private pay sources have instituted cost-containment measures designed to limit payments made to providers of health care services, which include diagnostic test providers such as the Company, and there can be no assurance that future measures designed to limit payments made to providers will not adversely affect the Company.

Regulatory Matters

A portion of the Company's revenues are derived from Medicare reimbursement. Laws and regulations governing Medicare programs are complex and subject to change and to interpretation, and the Company may be adversely affected by future changes in the applicable laws and regulations and governmental investigations, lawsuits or private actions which include mandatory damages, fines, penalties, criminal charges, loss or suspension of licenses and/or suspension or exclusion from Medicare and certain other governmental programs. The Company believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing.

Medicare reimbursement rates are subject to regulatory changes and government funding restrictions. In January 2013, the initial 2013 annual Medicare fee schedule update was announced which included proposed changes to Medicare reimbursement rates that significantly reduced the reimbursement rates for certain of the testing services we provide. The Company is participating with other impacted organizations to provide guidance to the local Medicare Administrative Contractor ("MAC") that may result in adjustments to the proposed reimbursement rates to better reflect the value of the services being performed. As a result of this guidance, the local MAC updated certain pricing on or about April 3, 2013 which reflected an increase in many of the tests originally priced in January 2013. It is anticipated that continued guidance provided to Medicare and the local MAC by impacted organizations will result in additional fee increases during 2013. If, however, the current level of reduction in reimbursement rates is adopted as is, it may have a material adverse effect on the Company's operations.

As a result of these Current Procedural Terminology ("CPT") code changes and Medicare price changes, we have experienced a departure from our normal reimbursement patterns with Medicare and other payors. Specifically, we have experienced delays in certain reimbursements for services and an increase in initial denials of claims for certain services provided. Accordingly, we revaluated the assumptions employed in our model for estimating revenue to be recognized for ResponseDX^® testing. We view the code and price changes described above as affecting only the assumptions we used in pricing our services. The nature of the testing we provide, the evidence we gather to establish the credit worthiness of our payors and the delivery method of our services have not changed from prior periods, and there are no indicators that these assumptions require change.

We performed an analysis that considered our historical patterns of revenue by payor in conjunction with the fluctuations we experienced in the quarter ended March 31, 2013 to arrive at the revenue recorded for the quarter. We believe that the changes in CPT codes and pricing that are causing confusion and erratic payment experience in the payor community will take some time to resolve. The time needed for resolution will depend upon the local MAC releasing additional pricing changes and potentially, revisions to previously revised prices, and upon the private payor community adopting the new CPT codes and some level of revised pricing. Accordingly, our revenue recognition estimates could be materially affected in future periods as pricing and payments patterns change and develop, and we may be materially affected by future or retroactive price changes.

Cost of Revenue

Cost of Revenue

Cost of revenue represents the cost of materials, direct labor, royalties, costs associated with processing tissue specimens including pathological review, staining, microdissection, paraffin extraction, reverse transcription polymerase chain reaction, fluorescence in situ hybridization ("FISH"), quality control analyses, license fees and delivery charges necessary to render an individualized test result. Costs associated with performing tests are recorded as the tests are processed.

License Fees

License Fees

The Company licenses technology for the extraction of RNA and DNA from FFPE tumor specimens from the University of Southern California ("USC") in exchange for royalty fees on revenue generated by use of the technology. These royalties are calculated as a fixed percentage of revenue that we generate from use of the technology licensed from USC. Total license fees expensed in cost of revenue under the license agreement with USC were $56,502 and $104,105 for the three months ended March 31, 2012 and 2013, respectively. We also maintain a non-exclusive license to use Roche Molecular Systems, Inc.'s ("Roche") PCR, homogenous PCR, and reverse transcription PCR processes. We pay Roche a fixed percentage royalty fee for revenue that we generate through use of this technology. Royalties expensed in cost of revenue under the Roche agreement totaled $63,468 and $90,145 for the three months ended March 31, 2012 and 2013, respectively.

We are subject to potentially significant variations in royalties recorded in any period. While the amount paid is based on a fixed percentage from revenues of specific tests pursuant to terms set forth in the agreements with USC and Roche, the amount due is calculated based on the revenue we recognize using the respective licensed technology. As discussed above, this revenue can vary from period to period as it is dependent on the timing of the specimens submitted by our clients for testing.

Research and Development

Research and Development

The Company expenses costs associated with research and development activities as incurred. Research and development costs are expensed as incurred and classified as research and development costs. Certain costs such as lab supplies and reagents that cannot be specifically identified are allocated based on the number of samples processed in total by the lab and R&D departments in total. Research and development costs include employee costs (salaries, payroll taxes, benefits, and travel), equipment depreciation and warranties and maintenance, laboratory supplies, primers and probes, reagents, patent costs and occupancy costs.

Line of Credit

Line of Credit

On July 14, 2011, the Company entered into a line of credit agreement with Silicon Valley Bank (the "Bank"). The agreement has been amended most recently on March 7, 2013. The line of credit is collateralized by the Company's pharmaceutical and Medicare receivables. The amended maximum amount that can be borrowed from the credit line is $2,000,000. As of March 31, 2013, the amount the Company can draw from the loan was equal to the lesser of (i) the Company's calculated borrowing base, which was 80% of certain of the Company's accounts receivable, or (ii) the amount available under the credit line. Prior to the line of credit's first amendment on December 14, 2011, the Bank issued letters of credit up to a maximum amount of $500,000. Any issued letters of credit reduced the amount available to borrow under the line of credit on a dollar for dollar basis. As of March 31, 2013, the interest fees associated with this line of credit were set at the prime rate plus 1%. For the period ended March 31, 2013, the rate being charged to the Company was 5%. As needed from time to time, the Company may draw on this line of credit for use for general corporate purposes. As of December 31, 2012 and March 31, 2013, the Company has drawn $1,000,000 against the line of credit and no letters of credit were outstanding. The line of credit is subject to various financial covenants and, as of March 31, 2013, the Company was in compliance with these covenants. However, prior to the most recent amendment on March 7, 2013, the Company was not in compliance with certain covenants. The September 28, 2012 amendment provided forbearance for the failure to comply with these certain covenants through November 30, 2012, and modified the covenants to include a requirement that the Company maintain account balances at the Bank totaling a minimum of $4,000,000 during the covered forbearance period. The December 6, 2012 amendment to the agreement extended the forbearance for the failure to comply with these certain covenants and the requirement for the Company to maintain account balances at the Bank totaling a minimum of $4,000,000 through December 31, 2012. In addition, pursuant to the March 7, 2013 amendment, the Bank waived the Company's existing breach of financial covenants under the credit agreement and the parties restructured the line of credit to provide that, among other things: (i) the revolving line of credit's maturity date was extended to March 7, 2015, (ii) the fee for the unused portion of the revolving line of credit was reduced from 0.375% to 0.250% per annum of the average unused portion of the revolving line of credit, (iii) the Company must continue to meet certain reporting requirements including providing financial statements and a certificate of compliance with the terms and conditions of the credit agreement by an authorized officer to the Bank within 45 days of the last day of each calendar quarter, provided that if the Company has less than $4,000,000 in its account at the Bank at any time during such calendar quarter, the Company must provide the financial statements and the certificate of compliance within 30 days of the end of such calendar quarter and providing a monthly report on revenues realized from private payors, (iv) the financial covenants were amended and restated to require the Company to maintain a ratio of quick assets to current liabilities of 1:50 to 1:00 and meet certain specified minimum adjusted earnings before interest, taxes, depreciation and amortization requirements as defined in the amendment and measured on a monthly basis and (v) the Bank is granted certain additional inspection of books, records and collateral rights.

As of December 31, 2012, the line of credit under the credit agreement was classified as a current liability of the Company on the accompanying balance sheet as the line of credit had a maturity date less than one year from December 31, 2012. As of March 31, 2013, the maturity date of the line of credit has been extended to March 7, 2015 and therefore the line of credit is classified as a non-current liability.

From time to time, the Company's calculated borrowing base under its Bank line of credit may decrease to a level where the Company is in an over-advance position in which case the Company will be required to repay any outstanding amounts greater than the calculated borrowing base for such covered period back to the Bank immediately. The Company will be able to draw down on the credit line again with respect to such paid back amount once the Company is in compliance with the borrowing base requirement.

Income Taxes

Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

ASC 740, Income Taxes, clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of December 31, 2012 and March 31, 2013, the Company does not have a liability for unrecognized tax benefits. The Company recognizes interest and penalties associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the balance sheet. For the periods ended March 31, 2012 and 2013, interest and penalties totaling $0 and $107, respectively, were recorded in the Consolidated Statement of Operations.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Stock Compensation, Share-Based Payment. Stock-based compensation expense for all stock-based compensation awards granted is based on the grant-date fair value estimated in accordance with the provisions of ASC 718.  The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option vesting period. As further described in Note 7, certain awards granted to Thomas Bologna, the Company's Chairman and Chief Executive Officer, were recognized based on an accelerated vesting basis triggered by market conditions rather than a straight-line basis.

The Company accounts for equity instruments issued to non-employees in accordance with ASC 505, Equity. Under ASC 505, stock option awards issued to non-employees are measured at fair value using the Black-Scholes option-pricing model and recognized pursuant to a performance model.

Management Estimates

Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates in these consolidated financial statements have been made for revenue, allowances for doubtful accounts, impairment of long-lived assets, depreciation of property and equipment and stock-based compensation. Actual results could differ materially from those estimates.

Long-lived Assets

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates potential impairment by comparing the carrying amount of the asset with the estimated undiscounted future cash flows associated with the use of the asset and its eventual disposition. Should the review indicate that the assets cost is not recoverable, the carrying value of the asset would be reduced to its fair value, which is measured by future discounted cash flows. 

Foreign Currency Translation

Foreign Currency Translation

The financial position and results of operations of the Company's foreign subsidiary are determined using local currency as the functional currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each period-end. Statement of Operations amounts are translated at the average rate of exchange prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss in stockholders' equity (deficit).

Comprehensive Loss

Comprehensive Loss

The components of comprehensive loss are accumulated net loss and unrealized foreign currency translation adjustments for the three months ended March 31, 2012 and 2013.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Cash and cash equivalents are stated at cost, which approximates fair market value.  Cash equivalents consist of money market accounts, with fair values estimated based on quoted market prices. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies. For additional information see Note 12.

Advertising Costs

Advertising Costs

The Company markets its services through its advertising activities in trade publications and on the internet. Advertising costs are included in selling and marketing expenses on the statements of operations and are expensed as incurred.  Advertising costs for the three months ended March 31, 2012 and 2013 were $8,881 and $0, respectively.

Concentration of Credit Risk and Clients and Limited Suppliers

Concentration of Credit Risk and Clients and Limited Suppliers

Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. All of the Company's non-interest bearing cash balances were fully insured at December 31, 2012 due to a temporary federal program in effect from December 31, 2011 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning on January 1, 2013, federal insurance coverage reverted to $250,000 per depositor at each financial institution, and the Company's non-interest bearing cash balances again exceeded federally insured limits. There were no funds in interest-bearing accounts that exceeded the federally insured limits as of March 31, 2013. At March 31, 2013, $7,236 of cash was held outside of the United States and is uninsured.

Revenue sources that account for greater than 10 percent of total revenue are provided below.

	Three Months Ended March 31,
	2012					2013
	(Unaudited)					(Unaudited)
	Revenue		Percent of Total Revenue			Revenue		Percent of Total Revenue
Abbott Molecular, Inc.	$	32,466		1	%	$	910,182		15	%
GlaxoSmithKline LLC and GlaxoSmithKline Biologicals S.A.	$	719,087		18	%	$	1,356,384		23	%
Medicare, net of contractual allowances	$	1,460,318		37	%	$	1,376,900		23	%

Customers that account for greater than 10 percent of gross accounts receivable are provided below.

	As of December 31, 2012					As of March 31, 2013
	( Unaudited )					( Unaudited )
	Receivable Balance		Percent of Total Receivables			Receivable Balance		Percent of Total Receivables
Abbott Molecular, Inc.	$	377,296		5.9	%	$	697,622		10.5	%
GlaxoSmithKline LLC and GlaxoSmithKline Biologicals S.A.	$	1,691,144		26.6	%	$	712,477		10.8	%
Medicare, net of contractual allowances	$	890,936		14.0	%	$	1,449,049		22.9	%

Many of the supplies and reagents used in the Company's testing process are procured from a limited number of suppliers. Any supply interruption or an increase in demand beyond the suppliers' capabilities could have an adverse impact on the Company's business. Management believes it can identify alternative sources, if necessary, but it is possible such sources may not be identified in sufficient time to avoid an adverse impact on its business. Refer also to Note 6 for further discussion regarding these supply agreements. The Company purchases certain laboratory supplies and reagents primarily from two suppliers. Purchases from these two suppliers accounted for approximately 68% and 65% of the Company's reagent purchases for the three months ended March 31, 2012 and 2013, respectively.

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Segment Information

3 Months Ended

Mar. 31, 2013

Segment Information [Abstract]

Segment Information

10. Segment Information

The Company operates in a single reporting segment, with an operating facility in the United States.

The following enterprise wide disclosure was prepared on a basis consistent with the preparation of the consolidated financial statements.

The following tables contain certain financial information by geographic area:

	Three Months Ended March 31,
	2012		2013
	(Unaudited)		(Unaudited)
Revenue:
United States	$	3,095,909	$	4,153,172
Europe		641,610		1,361,249
Japan		244,125		109,770
	$	3,981,644	$	5,624,191

	December 31, 2012		March 31, 2013
			(Unaudited)
Long-lived assets:
United States	$	1,598,607	$	1,547,022

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Common Stock Warrants

3 Months Ended

Mar. 31, 2013

Common Stock Warrants [Abstract]

Common Stock Warrants

8. Common Stock Warrants

The Company issues warrants to purchase common shares of the Company either as compensation for services or as additional incentive for investors who may purchase common stock. The value of warrants issued for compensation is accounted for as a non-cash expense to the Company at the fair value of the warrants issued.

In June 2007, in conjunction with the initial public offering, the Company issued 100,000 warrants to purchase 100,000 shares of its common stock at an exercise price of $7.70 to the underwriters as part of the initial public offering which expired in June 2012. There were no warrants granted during the three months ended March 31, 2012 and 2013.

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes [Abstract]

Income Taxes

9. Income Taxes

Deferred income taxes result from temporary differences between income tax and financial reporting computed at the effective income tax rate. The Company has established a valuation allowance against its net deferred tax asset due to the uncertainty surrounding the realization of such asset. Management periodically evaluates the recoverability of the deferred tax assets. At such time it is determined that it is more likely than not that deferred tax assets are realizable, the valuation allowance will be reduced.

The Company files U.S. federal, U.S. state, and foreign tax returns. The Company's major tax jurisdictions are U.S. federal and the State of California. The Company is subject to tax examinations for the open years from 2003 through 2012.

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Sale of Common Stock

3 Months Ended

Mar. 31, 2013

Sale of Common Stock [Abstract]

Sale of Common Stock

11. Sale of Common Stock

Common stock classified outside of stockholders' equity (deficit)

March 2010 Private Placement

On March 5, 2010, the Company entered into a purchase agreement with certain affiliates of and funds managed by Lansdowne Partners Limited Partnership ("Lansdowne"), Greenway Capital Partners and Paragon Associates for the private placement of 3,005,349 newly-issued shares of the Company's common stock at a per share price of $1.31.  The closing of the sale of the shares occurred on March 5, 2010.  In connection with the acquisition of the shares, the purchasers were granted certain preemptive rights permitting them to maintain their percentage ownership interests in connection with future issuances of the Company's capital stock, subject to various exceptions and limitations.  Lansdowne participated in the private placement by electing to exercise the preemptive rights granted to it pursuant to the purchase agreement by and between the Company and Lansdowne, dated July 22, 2009. Net proceeds received from this financing were approximately $3,879,403.

In connection with the private placement, the Company also entered into a registration rights agreement, dated March 5, 2010, with the purchasers pursuant to which it agreed to file, within 45 days of the closing of the private placement, a registration statement with the SEC to register the shares for resale, which registration statement was required to become effective within 120 days following the closing.  The Company also granted certain "piggyback" registration rights to the purchasers which are triggered if the Company proposes to file a registration statement for its own account or the account of one or more shareholders until the earlier of the sale of all of the shares or the shares becoming eligible for sale under Rule 144(b)(1) without restriction.

Pursuant to the registration rights agreement, dated March 5, 2010, the Company filed a registration statement with the SEC to register the 3,005,349 shares sold to Lansdowne, Greenway and Paragon for resale, which became effective on May 19, 2010 and which registration statement remained effective as of March 31, 2013.

Under the registration rights agreements with the purchasers, the Company is obligated to use commercially reasonable efforts to (i) cause the registration statement described above to remain continuously effective and (ii) to maintain the listing of the Company's common stock on NASDAQ or other exchanges, as defined, for a period that will terminate on the earlier of March 5, 2013 or the date on which the purchasers have sold all shares of common stock.  The Company is also required to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Exchange Act of 1934, as amended (the "Exchange Act").  In the event the Company fails to satisfy its obligations under the registration rights agreements, the Company would be in breach of said agreements, in which event, the purchases would be entitled to pursue all rights and remedies at law or equity including an injunction or other equitable relief. These registration rights agreements do not provide an explicitly stated or defined penalty due upon a breach.  Because (i) the potential penalty for any breach of these registration rights agreement is not explicitly stated or defined, which prohibits the Company from applying the guidance of ASC 825-20-15, Registration Payment Arrangements and (ii) complying with all filing requirements under the Exchange Act as described above is not solely within the Company's control, the Company  is required to present the investment of approximately $3,879,403 in the Company's common stock as common stock outside of stockholders' equity in the accompanying consolidated balance sheet under ASC 480-10-S99-3, Classification and Measurement of Redeemable Securities.

On January 18, 2012, the Company removed the restrictions on 3,658,676 shares purchased by Lansdowne, of which 600,769 related to this offering, and reclassified the shares to common stock from common stock classified outside of equity (deficit). On March 5, 2013, the Company reclassified the remaining shares of common stock from this offering to common stock from common stock classified outside of equity (deficit). Therefore, as of December 31, 2012 and March 31, 2013, a total of $3,092,396 and $0 of common stock was classified outside of stockholders' equity (deficit), respectively.

February 2012 Private Placement

On February 2, 2012, the Company entered into purchase agreements with various investors (collectively, the "February Investors") for the private placement of an aggregate of 5,257,267 newly-issued shares of the Company's common stock (the "February Shares") at a purchase price of $1.50 per share (the "February 2012 Private Placement"). Net cash proceeds raised in the February 2012 Private Placement were approximately $7,822,000. The February Investors participating in the February 2012 Private Placement were various institutions and all officers and directors of the Company. The final closing of the February 2012 Private Placement (the "February Closing") occurred on February 2, 2012.

In connection with the February 2012 Private Placement, the Company also entered into registration rights agreements, each dated February 2, 2012, with the February Investors pursuant to which the Company agreed to file, within 90 days of the February Closing, a registration statement with the SEC to register the February Shares for resale, which registration statement was required to become effective within 180 days following the February Closing. The Company also granted the February Investors certain "piggyback" registration rights, which are triggered if the Company proposes to file a registration statement for its own account or the account of one or more shareholders until the earlier of the sale of all of the February Shares or the February Shares becoming eligible for sale under Rule 144(b)(1) without restriction.

Pursuant to the registration rights agreements dated February 2, 2012, the Company filed a registration statement with the SEC on April 30, 2012, to register the February Shares for resale. This registration statement became effective on May 17, 2012 and remained effective as of March 31, 2013.

Under the registration rights agreements with the February Investors, the Company is obligated to use commercially reasonable efforts to (i) cause the registration statement described above to remain continuously effective and (ii) to maintain the listing of the Company's common stock on NASDAQ or other exchanges, as defined, for a period that will terminate on the earlier of February 2, 2013, the date on which the February Investors have sold all covered registrable securities or the date on which there are no longer any covered registrable securities outstanding.  The Company is also required to file with the SEC in a timely manner all reports and other documents required of the Company required of the Company under the Exchange Act.  In the event the Company fails to satisfy its obligations under the registration rights agreements, the Company would be in breach of said agreements, in which event, the February Investors would be entitled to pursue all rights and remedies at law or equity including an injunction or other equitable relief. These registration rights agreements do not provide an explicitly stated or defined penalty due upon a breach.  Because (i) the potential penalty for any breach of these registration rights agreement is not explicitly stated or defined, which prohibits the Company from applying the guidance of ASC 825-20-15, Registration Payment Arrangements and (ii) complying with all filing requirements under the Exchange Act as described above is not solely within the Company's control, the Company was required to present the investment of approximately $7,885,900 in the Company's common stock as common stock outside of stockholders' equity in the accompanying consolidated balance sheet under ASC 480-10-S99-3, Classification and Measurement of Redeemable Securities.

As of March 31, 2013, the Company has reclassified all of the February Shares to common stock from common stock classified outside of equity (deficit). Therefore, as of December 31, 2012 and March 31, 2013, a total of $3,183,328 and $0 of common stock was classified outside of stockholders' equity (deficit), respectively.

September 2012 Private Placement

On September 13, 2012, the Company entered into a purchase agreement (the "Purchase Agreement") with Glaxo Group Limited, an affiliate of GSK (the "GSK Investor") and two existing investors, Swiftcurrent Partners, L.P. and Swiftcurrent Offshore, Ltd. (collectively with the GSK Investor, the "September Investors") for the private placement of an aggregate of 8,000,000 newly-issued shares of the Company's common stock (the "September Shares") at a purchase price of $1.10 per share (the "September 2012 Private Placement"). The Company raised gross cash proceeds of $8,800,000 in the September 2012 Private Placement, which closed on September 13, 2012 (the "Closing").

Pursuant to the Purchase Agreement, for so long as the GSK Investor or its affiliates own at least 50% of the September Shares it purchased pursuant to the Purchase Agreement, the GSK Investor has the right to designate one non-voting board observer (the "Board Observer"). The Board Observer, if appointed, has the right to attend all meetings of the Board of Directors of the Company and to receive all board meeting materials, subject to certain restrictions set forth in the Purchase Agreement. As of the date hereof, the GSK Investor has not exercised its right to designate the Board Observer.

In connection with the September 2012 Private Placement, the Company also entered into a registration rights agreement, dated September 13, 2012 (the "September Registration Rights Agreement"), with the September Investors pursuant to which the Company agreed to file, within 45 days of the Closing, a registration statement with the SEC to register the September Shares for resale, which registration statement was required to become effective within 180 days following the Closing. The Company also granted the September Investors certain "piggyback" registration rights, which are triggered if the Company proposes to file a registration statement for its own account or the account of one or more stockholders until the earlier of the sale of all of the September Shares or the September Shares becoming eligible for sale under Rule 144(b)(1) without restriction.

Under the September Registration Rights Agreement, the Company is obligated to use commercially reasonable efforts to cause a registration statement to become effective and to remain continuously effective and to maintain the listing of the covered common stock on NASDAQ or other exchanges, as defined, for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, (ii) the date on which there are no longer any Registrable Securities outstanding or (iii) three years from the date of filing of such Registration Statement (the " Effectiveness Period ") and advise each September Investor in writing when the Effectiveness Period has expired. "Registrable Securities" means (i) the September Shares and (ii) shares of capital stock or any other securities issued or issuable with respect to or in exchange for the September Shares; provided, that, a security shall cease to be a Registrable Security with respect to a September Investor upon (A) sale by such September Investor pursuant to a registration statement or Rule 144 under the Securities Act of 1933, or (B) such security becoming eligible for sale by such September Investor without restriction pursuant to Rule 144(b)(1).   In the event the Company fails to satisfy its obligations under the September Registration Rights Agreement, the Company would be in breach of such agreement, in which event, the September Investors would be entitled to pursue all rights and remedies at law or equity including an injunction or other equitable relief. The September Registration Rights Agreement does not provide an explicitly stated or defined penalty due upon a breach.  Because the potential penalty for any breach of these registration rights agreement is not explicitly stated or defined, which prohibits the Company from applying the guidance of ASC 825-20-15, Registration Payment Arrangements , the Company was required to present the investment of approximately $8,800,000 in the Company's common stock as common stock outside of stockholders' equity in the accompanying consolidated balance sheet under ASC 480-10-S99-3, Classification and Measurement of Redeemable Securities.

Pursuant to the September Registration Rights Agreement, the Company filed a registration statement with the SEC on October 26, 2012, to register the September Shares for resale. This registration statement became effective on November 13, 2012 and remained effective as of March 31, 2013.

As of December 31, 2012, the Company has removed the restriction on 3,000,000 of the 8,000,000 September Shares and reclassified the shares to common stock from common stock classified outside of stockholders' equity (deficit). Therefore, as of December 31, 2012 and March 31, 2013, a total of $5,500,000 of common stock relating to the 5,000,000 remaining restricted September Shares was classified outside of stockholders' equity (deficit) related to this transaction.

Activity in common stock classified outside of stockholders' equity (deficit) was as follows:

	Number of Shares			Amount
Balance, December 31, 2012		9,561,847		$	11,775,724
Issuance of common stock classified outside of stockholders' equity (deficit)		-			-
Reclassificiation to stockholders' equity (deficit), excluding offering costs of $110,179 offset against paid-in capital		(4,561,847	)		(6,277,723	)
Balance, March 31, 2013 (unaudited)		5,000,000		$	5,500,000

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Summary of Significant Accounting Policies (Schedule of Customers that Account for Greater than 10 Percent of Accounts Receivable) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Receivable Balance	$ 5,269,551	$ 5,373,023
Abbott Molecular, Inc. [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Receivable Balance	697,622	377,296
Percent of Total Receivables	10.50%	5.90%
GlaxoSmithKline and GlaxoSmithKline Biologicals [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Receivable Balance	712,477	1,691,144
Percent of Total Receivables	10.80%	26.60%
Medicare [Member]
Health Care Organization, Receivable and Revenue Disclosures [Line Items]
Receivable Balance	$ 1,449,049	$ 890,936
Percent of Total Receivables	22.90%	14.00%

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Income Taxes (Details)	3 Months Ended
	Mar. 31, 2013
Income Taxes [Abstract]
Years subject to tax examination	2003 through 2012

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Property and Equipment and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2013

Property and Equipment and Intangible Assets [Abstract]

Schedule of Property and Equipment

Property and equipment and intangible assets consist of the following:

	December 31, 2012			March 31, 2013
				(Unaudited)
Laboratory equipment	$	3,315,812		$	3,379,883
Furniture and equipment		660,626			675,219
Leasehold improvements		305,059			307,809
		4,281,497			4,362,911
Less: Accumulated depreciation		(3,258,299	)		(3,371,013	)
Total property and equipment, net	$	1,023,198		$	991,898
Purchased software	$	562,699		$	567,099
Internally developed software		108,362			108,362
		671,061			675,461
Less: Accumulated amortization		(95,652	)		(120,337	)
Total intangible assets, net	$	575,409		$	555,124

Schedule of Capital Leased Assets

The Company leases certain equipment that is recorded as capital leases. This equipment is included in property and equipment on the accompanying balance sheet as of March 31, 2013 as follows:

	(Unaudited)
Equipment purchased under capital leases	$	451,234
Less: Accumulated amortization		(262,489	)
Equipment purchased under capital leases, net	$	188,745

Schedule of Future Minimum Lease Payments Under Capital Leases

Future minimum lease payments under capital leases as of March 31, 2013 are as follows:

Years ending December 31,	(Unaudited)
2013	$	130,641
2014		87,119
Total minimum lease payments		217,760
Less amount represented by interest		(14,389	)
Less current portion		(150,270	)
Capital lease obligation, net of current portion	$	53,101

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Sale of Common Stock (Tables)

3 Months Ended

Mar. 31, 2013

Sale of Common Stock [Abstract]

Schedule of Common Stock Classified Outside of Stockholders' Equity

Activity in common stock classified outside of stockholders' equity (deficit) was as follows:

	Number of Shares			Amount
Balance, December 31, 2012		9,561,847		$	11,775,724
Issuance of common stock classified outside of stockholders' equity (deficit)		-			-
Reclassificiation to stockholders' equity (deficit), excluding offering costs of $110,179 offset against paid-in capital		(4,561,847	)		(6,277,723	)
Balance, March 31, 2013 (unaudited)		5,000,000		$	5,500,000

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Stock Option Plans (Schedule of Awards to Mr. Bologna) (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option granted, number of common stock shares	95,000
Intrinsic Value	$ 14,606
Stock option granted, exercise price	$ 1.39
Options Exercisable	773,381
Remaining Contractual Term	8 years 2 months 27 days	8 years 3 months 26 days
Thomos Bologna [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Awards	270,000
Intrinsic Value	$ 32,400
Exercise Price
Options Exercisable
Remaining Contractual Term	8 years 8 months 12 days
Thomos Bologna [Member] | Stock Options [Member] | Period One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Date	Dec. 21, 2011
Stock option granted, number of common stock shares	600,000
Intrinsic Value	72,000
Stock option granted, exercise price	$ 1.20
Options Exercisable	250,000
Remaining Contractual Term	8 years 8 months 12 days
Thomos Bologna [Member] | Stock Options [Member] | Period Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Date	Dec. 21, 2011
Stock option granted, number of common stock shares	300,000
Intrinsic Value	$ 36,000
Stock option granted, exercise price	$ 1.20
Options Exercisable	300,000
Remaining Contractual Term	8 years 8 months 12 days

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Commitments and Contingencies (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Commitments and Contingencies Disclosure [Line Items]
Rent expense	$ 160,790	$ 181,334
Systems and Services [Member]
Long-term Purchase Commitment [Line Items]
Commitment term	36 months
Commitment amount	$ 20,000
California State [Member]
Commitments and Contingencies Disclosure [Line Items]
Operating leases, space	20,753
Operating lease expiration date	Jun. 30, 2013
Maryland [Member]
Commitments and Contingencies Disclosure [Line Items]
Operating leases, space	1,460
Operating lease expiration date	Jan. 31, 2013

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net loss	$ (824,304)	$ (3,124,589)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	137,399	109,174
Share-based compensation	105,324	325,008
Bad debt expense	468,463	255,925
Changes in operating assets and liabilities:
Accounts receivable	(364,991)	(307,700)
Prepaid expenses and other current assets	(477,748)	85,968
Accounts payable	(292,303)	373,637
Accrued expenses	378,951	(750,028)
Accrued royalties	194,250	(284,986)
Accrued payroll and related liabilities	277,718	(118,817)
Deferred revenue	(483,052)
Net cash used in operating activities	(880,293)	(3,436,408)
Cash flows from investing activities:
Purchases of property and equipment	(81,414)	(273,293)
Purchases of software	(4,400)
Net cash used in investing activities	(85,814)	(273,293)
Cash flows from financing activities:
Net proceeds from issuance of common stock		7,716,038
Capital lease payments	(39,208)	(35,560)
Net cash provided by financing activities	(39,208)	7,680,478
Effect of foreign exchange rates on cash and cash equivalents	(1,853)	(512)
Net increase (decrease) in cash and cash equivalents	(1,007,168)	3,970,265
Cash and cash equivalents:
Beginning of period	9,041,478	1,700,295
End of period	8,034,310	5,670,560
Cash paid during the period for:
Interest	$ 19,410	$ 23,177

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

5. Commitments and Contingencies

Operating Leases

The Company leases 20,753 square feet of office and laboratory space in Los Angeles, California, under a noncancelable operating lease that will expire on June 30, 2013. The Company is currently in negotiations to amend and extend this lease. However, there can be no assurance that the Company will be able to amend and extend the lease on terms acceptable to the Company. The Company also leased 1,460 square feet of space in Frederick, Maryland, where administrative functions were performed until July 31, 2012. The Company moved the administrative functions performed out of this office primarily to its Los Angeles facilities and closed the Maryland office on July 31, 2012. The lease for the Maryland office expired on January 31, 2013.

Rent expense, which is classified in cost of revenue, general and administrative, and research and development expenses was $181,334 and $160,790 for the three months ended March 31, 2012 and 2013, respectively.

Future minimum lease payments by year and in the aggregate, under the Company's noncancelable operating leases for facilities, equipment and software as a service, consist of the following at March 31, 2013:

Years Ending December 31,	Unaudited
2013	$	428,190
2014		95,084
2015		95,084
2016		13,271
Total	$	631,629

Systems and Services Agreement

The Company entered into a systems and service agreement with Xifin, Inc. on December 21, 2011.  The term of this agreement is for 36 months, at a rate of $20,000 a month with automatic renewal for 12 months thereafter, unless termination notice is given by either party.  

Guarantees

The Company enters into indemnification provisions under its agreements with other counterparties in its ordinary course of business, typically with business partners, clients and landlords. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company's activities. These indemnification provisions generally survive termination of the underlying agreement. The Company reviews its exposure under these agreements no less than annually, or more frequently when events require. The Company believes the estimated fair value of these agreements is minimal as, historically, no payments have been made by the Company under these indemnification obligations. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2012 and March 31, 2013.

Legal Matters

The Company is, from time to time, involved in legal proceedings, regulatory actions, claims and litigation arising in the ordinary course of business. These matters are not expected to have a material adverse effect upon the Company's financial condition.

Employment Agreements

The Company has employment contracts with several individuals, which provide for annual base salaries and potential bonuses. These contracts contain certain change of control, termination and severance clauses that require the Company to make payments to certain of these employees if certain events occur as defined in their respective contracts.

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Measurements [Abstract]

Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis

As of December 31, 2012, the Company held certain assets that are required to be measured at fair value on a recurring basis, including its cash and cash equivalents. The fair value of these assets was determined using the following inputs in accordance with ASC 820 at December 31, 2012 and March 31, 2013:

	Fair Value Measurement as of December 31, 2012
	Total		Level 1		Level 2		Level 3
Description	$		$		$		$
Money market accounts (1)		10,000		10,000		-		-

	Fair Value Measurement as of March 31, 2013
	(Unaudited)
	Total		Level 1		Level 2		Level 3
Description	$		$		$		$
Money market accounts (1)		10,000		10,000		-		-

(1) Included in cash and cash equivalents on the accompanying consolidated balance sheet.

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Property and Equipment and Intangible Assets (Schedule of Future Minimum Lease Payments under Capital Leases) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Property and Equipment and Intangible Assets [Abstract]
2013	$ 130,641
2014	87,119
Total minimum lease payments	217,760
Less amount represented by interest	(14,389)
Less current portion	(150,270)	(158,669)
Capital lease obligation, net of current portion	$ 53,101	$ 83,910

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Schedule of ResponseDX Accounts Receivable

ResponseDX^® accounts receivable as of December 31, 2012 and March 31, 2013, consisted of the following:

	December 31, 2012			March 31, 2013
				(Unaudited)
Net Medicare receivable	$	890,936		$	1,449,049
Net Private Payor receivable		2,924,412			2,951,765
		3,815,348			4,400,814
Allowance for doubtful accounts		(991,990	)		(1,048,864	)
Total	$	2,823,358		$	3,351,950

Schedule of Estimated Useful Lives of Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the double declining balance and straight-line methods over the estimated useful lives of the assets. The Company has determined the estimated useful lives of its property and equipment, as follows:

Laboratory equipment	5 to 7 years
Furniture and Equipment	3 to 7 years
Leasehold Improvements	Shorter of the useful life (5 to 7 years) or the lease term

Schedule of ResponseDX Revenue

The following details ResponseDX^® revenue for the three months ended March 31, 2012 and 2013:

	Three Months
	Ended March 31,
	(Unaudited)
	2012		2013
Net Medicare revenue	$	1,460,318	$	1,344,215
Private Payor revenue		1,485,643		1,838,283
Other		5,841		-
Net ResponseDX ® revenue	$	2,951,802	$	3,182,498

Schedule of Revenue Sources that Account for Greater than 10 Percent of Total Revenue

Revenue sources that account for greater than 10 percent of total revenue are provided below.

	Three Months Ended March 31,
	2012					2013
	(Unaudited)					(Unaudited)
	Revenue		Percent of Total Revenue			Revenue		Percent of Total Revenue
Abbott Molecular, Inc.	$	32,466		1	%	$	910,182		15	%
GlaxoSmithKline LLC and GlaxoSmithKline Biologicals S.A.	$	719,087		18	%	$	1,356,384		23	%
Medicare, net of contractual allowances	$	1,460,318		37	%	$	1,376,900		23	%

Schedule of Customers that Account for Greater than 10 Percent of Accounts Receivable

Customers that account for greater than 10 percent of gross accounts receivable are provided below.

	As of December 31, 2012					As of March 31, 2013
	( Unaudited )					( Unaudited )
	Receivable Balance		Percent of Total Receivables			Receivable Balance		Percent of Total Receivables
Abbott Molecular, Inc.	$	377,296		5.9	%	$	697,622		10.5	%
GlaxoSmithKline LLC and GlaxoSmithKline Biologicals S.A.	$	1,691,144		26.6	%	$	712,477		10.8	%
Medicare, net of contractual allowances	$	890,936		14.0	%	$	1,449,049		22.9	%