10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2015

OR

¨ 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 001-36662

GREAT BASIN SCIENTIFIC, INC.

(Exact name of Registrant as specified in its Charter)

Delaware	83-0361454
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2441 South 3850 West Salt Lake City, UT	84120
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (801) 990-1055

Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $0.0001 Per Share; Common stock traded on the Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  ¨    NO  x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    YES  ¨    NO  x

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

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 definition 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	¨ (Do not check if a small reporting company)	Small reporting company	x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The NASDAQ Stock Market on June 30th, 2015, was $17.8 million.

The number of shares of Registrant’s Common Stock outstanding as of February 25, 2016 was 114,231,984.

Portions of the Registrant’s definitive proxy statement to be filed pursuant to Regulation 14A under the Securities Act of 1934, in connection with the Registrant’s 2016 Annual Meeting of Stockholders, are incorporated by reference into Part III of this report.

Table of Contents

		Page
PART I
Item 1.	Business		3
Item 1A.	Risk Factors		23
Item 1B.	Unresolved Staff Comments		51
Item 2.	Properties		51
Item 3.	Legal Proceedings		51
Item 4.	Mine Safety Disclosures		51
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		52
Item 6.	Selected Financial Data		58
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		59
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		71
Item 8.	Financial Statements and Supplementary Data		71
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		71
Item 9A.	Controls and Procedures		71
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		74
Item 11.	Executive Compensation		74
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		74
Item 13.	Certain Relationships and Related Transactions, and Director Independence		74
Item 14.	Principal Accounting Fees and Services		74
PART IV
Item 15.	Exhibits, Financial Statement Schedules		75
	Signatures		79
	Index to Financial Statements		F-1

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CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K contains forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the reasons described in “Item 1A. Risk Factors,” “Item 7. Management Discussion and Analysis of Financial Condition and Result of Operations,” and “Item 1. Business” sections. In some cases, you can identify these forward- looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words.

We have based these forward looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” and elsewhere in this 10-K, regarding, among other things:

• our expectation that for the foreseeable future, substantially all of our revenue will be derived from sales of our C. diff and Group B Strep diagnostic tests;

• our ability to expand our sales and marketing capabilities to increase demand for C. diff, Group B Strep and any other diagnostic tests we may develop and gain approval for;

• our ability to develop additional revenue opportunities, including new diagnostic tests;

• the timing of regulatory submissions;

• our ability to maintain regulatory approval of our current diagnostic test and to obtain and maintain regulatory approval for any other diagnostic test we may develop;

• approvals for clinical trials may be delayed or withheld by regulatory agencies;

• pre-clinical and clinical studies may not be successful or confirm earlier results or may not meet expectations, regulatory requirements or performance thresholds for commercial success;

• risks relating to the timing and costs of clinical trials and other expenses;

• management and employee operations and execution risks;

• loss of key personnel;

• competition in the markets we serve;

• our ability to manufacture our C. diff, Group B Strep and other diagnostic tests we may develop at sufficient volumes to meet customer needs;

• our ability to reduce the cost to manufacture our C. diff, Group B Strep and other diagnostic tests;

• risks related to market acceptance of diagnostic tests;

• intellectual property risks;

• assumptions regarding the size of the available market, benefits of our diagnostic tests, product pricing and timing of product launches;

• our ability to fund our working capital requirements;

• risks associated with the uncertainty of future financial results;

• risks related to our proposed Additional Reverse Stock Split;

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• risks related to our outstanding convertible notes and Series D warrants;

• risks associated with raising additional capital when needed and at reasonable terms; and

• risks associated with our reliance on third party suppliers and other organizations that provide goods and services to us.

These risks are not exhaustive. Other sections of this annual report on Form 10-K may include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward looking statements. You should read this annual report on Form 10-K with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. Except as required by law, we undertake no obligation to update publicly any forward looking statements for any reason after the date of this annual report on Form 10-K or to conform these statements to actual results or to changes in our expectations.

We qualify all of our forward looking statements by these cautionary statements

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PART I

ITEM 1. BUSINESS.

Overview

We are a molecular diagnostic testing company focused on the development and commercialization of our patented, molecular diagnostic platform designed to test for infectious disease, especially hospital-acquired infections. We believe that small to medium sized hospital laboratories, those under 400 beds, are in need of simpler and more affordable molecular diagnostic testing methods. We market a system that combines both affordability and ease-of-use, when compared to other commercially available molecular testing methods, which we believe will accelerate the adoption of molecular testing in small to medium sized hospitals. Our system includes an analyzer, which we provide for our customers’ use without charge in the United States, and a diagnostic cartridge, which we sell to our customers. For purposes of this 10-K, we use the term “assay(s)” to describe our existing diagnostic test product as well as our diagnostic test products under development. Our testing platform has the capability to identify up to 64 individual targets at one time. If the assay identifies one to three targets, we refer to them as low-plex tests, or tests, and if they identify four or more targets we refer to them as multi-plex panels, or panels.

We currently have two commercially available tests, our first for clostridium difficile, or C. diff, which received clearance from the Food and Drug Administration, or FDA, in April 2012 and our second for Group B Strep, which received clearance from the FDA in April 2015 and launched commercially in June 2015. We filed 510(k) applications for two of our tests in the second half of 2015, Staph ID/R and STEC, each of which is currently under review by the FDA. Our customers consist of hospitals, clinics, laboratories and other healthcare providers in the United States, the European Union and New Zealand.

Molecular diagnostic testing generally reduces test time from days to hours compared to culture methods, and typically provides much more accurate results than non-molecular rapid assays. Culture testing utilizes a sample taken from a patient, which is incubated in a culture medium; the operator waits for the microorganisms, if there are any, to grow until they are in large enough quantities to be detected. This method can take days and in some cases requires highly trained laboratory technicians to perform the tests and interpret the results. The accuracy of culture-based methods has been shown to be lower than that of molecular-based approaches. For example, in a multi-arm, multicenter clinical study using our C. diff test, we increased detection sensitivity nearly 20% as compared to the culture-based arm. Molecular testing methods, like our system, utilize technologies to multiply the DNA from a small sample until it can be detected by an automated, visual system. A key difference between our system and other molecular systems is our use of a low-cost, but highly sensitive, semiconductor chip based detection system. This allows us to utilize existing components, for example digital camera components, to provide visual evidence of the result. This provides more accurate answers generally in hours and can be operated by technicians with less extensive training than is required for culture testing. We believe these advantages can lead to shortened hospital stays and improved patient outcomes, resulting in reduced costs for hospitals that implement molecular testing in their labs. We believe this improvement in the time to result and the quality of those results has led to a fast-growing market for molecular diagnostic systems at hospitals. We believe our system is well positioned to meet this need and attract new customers. As of December 31, 2015, we had 207 customers worldwide (186 in the United States and 21 in the rest of the world), who use an aggregate of 428 of our analyzers.

For additional information about our products, see “—Our Assay Menu” below.

Our operations to date have been funded primarily through sales of capital stock, convertible notes, sale- leaseback transactions and cash from operations. We expect to incur increasing expenses over the next several years to develop additional diagnostic tests and to expand our sales and marketing infrastructure, our manufacturing capacity and our research and development activities.

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Our Strategy

Our goal is to become the leading provider of sample-to-result, multiplex and low-plex molecular diagnostic testing in infectious disease by leveraging the strengths of our affordable diagnostic testing platform. We intend to expand the use of our platform by targeting small to medium sized hospitals in the United States with fewer than 400 beds. We believe that our low-cost platform will be attractive to these hospitals in particular, which may not otherwise have sufficient resources to justify the purchase of a molecular diagnostic sample-to-result solution. To achieve this objective, we intend to do the following:

• Leverage our Low-Cost Platform to Penetrate the Small and Medium Sized Hospital Market. We provide our customers with our analyzer at no cost and sell them the disposable, single-use diagnostic cartridges. This allows us to avoid the long sales cycle inherent in selling capital equipment and expand into hospitals that previously could not afford to implement a molecular diagnostic platform.

• Accelerate the Growth of our U.S. Customer Base. We intend to expand our sales force to target small to medium hospitals in the United States. We anticipate that increasing our number of customers will drive sales of our diagnostic cartridges. We expect these sales will generate the majority of our revenue for the foreseeable future.

• Expand our Menu of Molecular Diagnostic Assays. We intend to expand our assay menu to include additional assays for our platform that we believe will satisfy growing medical needs and present attractive commercial opportunities. For example, in 2014 we completed the clinical trials and filed the 510(k) application for our second test for Group B Strep, and in April 2015 we received FDA clearance for our Group B Strep test. We also filed two 510(k) applications in the second half of 2015, one for Staph ID/R and one for Shiga toxin producing E. coli. We also have a pipeline of assays in late stage product development, including pre-surgical screening, food-borne pathogens, candida, pertussis and CT/NG.

• Reduce our Cost of Sales through Automation and Volume Purchasing. We manufacture our proprietary diagnostic cartridges and analyzers at our headquarters in Salt Lake City, Utah. We currently hand-build our diagnostic cartridges and purchase materials at higher per unit cost due to low purchase volumes. We believe that investment in automation of portions of the manufacturing and assembly process and volume purchase pricing will significantly improve our gross margins and enhance our ability to provide a low cost solution to customers.

The Great Basin Platform

Our platform, which employs a combination of proprietary and patented technology, consists of a bench top analyzer with a touch screen (or, in early models, a laptop computer) into which our self-contained, single-use diagnostic cartridges are inserted. We believe that our platform is user friendly and intuitive and provides the hospital with the ability to perform molecular diagnostic assays in an efficient and cost-effective manner.

The Analyzer	The Diagnostic Cartridge	The User Placing the Diagnostic Cartridge into the Analyzer

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Once a patient specimen is received in the lab, a technician will typically perform no more than three to five steps of sample preparation before placing the sample in our disposable diagnostic cartridge and inserting it in the analyzer where the assay is run without further technician intervention. Our two FDA-cleared assays, C. diff test and Group B Strep, were rated by Clinical Laboratory Improvement Amendments of 1988, or CLIA, as moderately complex, which typically eliminates the need for highly-trained and expensive molecular technicians to run the assays, bringing additional cost benefit to our customers. We expect our future assays to be rated moderately complex or meet CLIA waiver criteria, which is reserved for assays that are simple and are judged by the FDA to present a low risk for erroneous results.

Our platform provides accurate results in 45 to 115 minutes depending on the assays. The speed of our assays allows for early diagnosis and treatment, which we believe can lead to better patient outcomes and reduced cost to the hospital.

We believe that our platform and related assays offer small-to-medium sized hospitals the following benefits:

• Ease of Use. Our platform is a sample-to-result system. Sample preparation can be completed in three to five steps that typically take no more than five minutes. Once the diagnostic cartridge is placed in the analyzer, the technician does not need to monitor the assay and can complete other unrelated tasks. The assay is complete in 45 to 115 minutes depending on the assay.

• Cost Savings. We believe that our pricing strategy makes it possible for many small-to-medium sized hospitals that have cost constraints to adopt molecular testing. We provide the customer the use of our analyzer for no upfront charge, while we retain ownership. We then sell our assays to the hospital at a cost that we believe is similar to or less expensive than other molecular diagnostic solutions. This reduces the up-front cost for the customer, minimizes customer approval processes and accelerates adoption of our platform.

• Versatile Platform with the Capability to Deliver a Broad Assay Menu. We believe our platform has broad potential application across a number of areas in molecular diagnostic testing for infectious disease, including the detection of pathogens from whole blood samples. The same analyzer can be utilized for all of our planned future assays.

• Low-cost Low-plex tests. We believe our platform, including our low-cost chip detection and our single-use diagnostic cartridge, has a cost structure that will allow us to compete effectively in the market for low-plex tests with 1-3 answers like C. diff or Pre-surgical and MRSA screening. We expect our low-plex tests like C. diff to drive system placements as hospitals convert from traditional testing methods.

• Ability to Multiplex. Our platform has the technical ability to analyze up to 64 distinct targets in a single diagnostic panel, including controls. We refer to any test of more than four targets as a multi-plex panel. We believe that this capability will allow hospitals to test for multiple possible causes of an individual patient’s symptoms in a one-step detection process. This capability will reduce the time required for a laboratory to perform a diagnostic analysis that involves testing for multiple infectious disease pathogens. Without our platform, similar testing would require the hospital to run multiple, separate molecular or non-molecular diagnostic assays. Although our C. diff test currently detects a single pathogen, referred to as a low-plex test, two of our tests in development, Staph Identification and Resistance (ID/R) panel and the food borne pathogen panel, will utilize the multiplexing technology. We recently filed a 510(k) application for our Staph ID/R panel.

Our Molecular Testing Process

In our molecular testing process, a clinician places a clinical specimen—processed or unprocessed—into the diagnostic cartridge (such as stool or blood), caps the cartridge and then places the diagnostic cartridge into the analyzer. The assay routine is initiated in the analyzer and starts a simple automated process. Within the instrument, mechanical valves are present to control the flow of fluid through the cartridge and to pierce the blister packs containing the required buffers, solutions and reagents to perform the selected assay. Low cost,

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reliable heaters are present for assay processing. Imaging occurs with a compact digital camera placed over a window in the cartridge above the chip. Proprietary software interprets the image and provides a clinical result to the laboratory.

The disposable diagnostic cartridge contains—in blister packs or freeze dried pellets—all of the reagents required to run the applicable assay. The three steps of a molecular assay (sample preparation, amplification, and detection) are performed in chambers present on the cartridge. All waste is collected in a chamber that is part of the diagnostic cartridge, significantly reducing the risk of lab contamination. After the assay is completed and the result is obtained, the diagnostic cartridge is disposed of with the hospital’s other medical waste.

To simplify processing within the analyzer, fluids are moved within the diagnostic cartridge through relatively large channels by exploiting pressure differences. Proprietary features have been designed into the diagnostic cartridge to allow for bubble-free fluid movement and sensor design permits accurate and precise volumetric delivery.

Our Assay Menu

We have received FDA clearance and a CE mark for two assays, C. diff and Group B Strep. We began marketing the C. diff test in Europe in the first quarter of 2012 and in the United States in the fourth quarter of 2012. We received clearance from the FDA in April 2015 for our second diagnostic test for Group B Strep and launched this test commercially in June 2015. We filed a 510(k) application for our Staph ID/R trial in the third quarter of 2015 and our Shiga toxin producing E. coli in the fourth quarter of 2015. We also have three other diagnostic assays in the late stages of product development: (i) a Staphylococcus aureus Pre-Surgical screening test, (ii) Stool Bacterial Pathogenic panel, and (iii) Candida Blood Infections panel. We also have a pipeline of assays in an early stage of development, including chlamydia/gonorrhea, respiratory testing, and sepsis (blood infection) panels.

Our Commercial Tests:

C. diff Test

C. diff infections are often life-threatening and can create a significant financial burden for hospitals. As a hospital-acquired infection, costs associated with the care of patients with C. diff are not covered by insurance or Medicaid/Medicare. An independent peer reviewed paper, published in the American Journal of Infection Control in 2012, highlights a significant reduction in C. diff infection rates when a hospital switched from culture to molecular testing—reducing cost and improving patient outcomes.

Our C. diff test is a rapid medical diagnostic test for the detection of C. diff, a gram-positive bacteria that causes severe diarrhea and other intestinal disorders. The test detects the presence of the C. diff toxin B gene, or tcdB gene, in the pathogenicity locus, or PaLOC region of C. diff, present in all known toxigenic strains, to diagnose the toxin in a patient’s stool. The test requires minimal sample preparation and can deliver results in under 90 minutes. A swab from loose stool is placed into transfer solution and a portion of this solution is placed into the diagnostic cartridge. The diagnostic cartridge is then placed into the analyzer.

Group B Strep Test

Group B streptococcus, or Group B Strep, is a bacterium that colonizes in the warm moist areas of many humans. Harmless to healthy adults, it can be transmitted to a newborn during childbirth and is the single largest cause of meningitis in newborn infants. For this reason nearly every pregnant woman in the United States is tested for Group B Strep in the late third trimester. Historically this test was done by culture, but based on the recent introduction and sales of other Group B Strep molecular diagnostic tests, we believe labs are switching to molecular testing.

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Our Group B Strep test is designed to detect Group B Strep from an anal/vaginal swab taken from a pregnant woman. Hospitals can use our test to identify Group B Strep colonization in pregnant women, who can then be treated with antibiotics to reduce the risk of transmission to the baby, reducing the risk of development of sepsis in the newborn. We received clearance from the FDA in April 2015 for our Group B Strep test and launched it commercially in June 2015.

Our Assays Under Review with the FDA

Staphylococcus Identification and Resistance Blood Infection Panel

Staphylococcus aureus is a major cause of hospital and community-acquired infections and is associated with high rates of morbidity and mortality. Methicillin-resistant Staphylococcus aureus, or MRSA, is a potentially life-threatening infection that most frequently occurs in the hospital setting. Rapid diagnosis of Staph blood infections has been shown, in a report published in Clinical Practice in 2010, to save up to approximately $7,000 per patient and shorten length of hospital stay by 6.2 days.

Our Staph ID/R panel is designed to be a multiplex panel to (i) identify species of Staphylococcus infections based on the detection of highly discriminatory and specific DNA sequences within a bacterial replication gene, (ii) detect the mecA gene, which confers drug resistance, directly from positive blood cultures and (iii) provide information on the antibiotic resistance profile of the bacteria. This test is designed to produce a result in less than one hour. Our Staph ID/R panel is designed to provide over 99% positive predictive value, or PPV, after only two blood draws, accelerating time to patient diagnosis and appropriate treatment.

With existing Staphylococcus tests, nearly one third of all positive blood cultures are not true infections, and result from contamination during the blood draw. On the other hand, in our study of 99 single-pathogen clinical samples, our test demonstrated 99% accuracy in identifying different Staphylococcus species. Our Staph ID/R panel’s increased ability to distinguish true infections from false positives is due to its ability to differentiate among seven species of Staphylococcus, and as a result, to distinguish between true infection and contaminants. We filed a 510(k) application for our Staph ID/R panel in August 2015.

Shiga Toxin Producing E.Coli (STEC) Test

Escherichia coli (E. coli) bacteria normally live in the intestines of healthy people and animals. Most varieties of E. coli are harmless or cause relatively brief diarrhea, but a few strains, such as E. coli O157:H7, can cause severe abdominal cramps, bloody diarrhea and vomiting.

Our STEC Test is designed to be a rapid test that identifies Shiga toxin produced by E. coli, including E. coli O157:H7 which is the most serious type of E. coli contracted from contaminated food. We filed a 510(k) application for our STEC test in October 2015.

Our Assays in Development

Staphyloccocus aureus Pre-Surgical Nasal Screen

Staphyloccocus aureus (SA) often colonizes the nasal passages and other warm moist areas in healthy humans. Harmless in most circumstances, the colonization represents real risk to patients undergoing surgery. In fact studies have shown the relative risk of post-surgical infection is up to eight and a half times greater in carriers of SA than in non-carriers.

We expect that our SA nasal screening test will be a rapid test for the presence of SA in the nasal passages of a pre-surgical patient. If approved, we believe that hospitals will be able to use our test to identify pre-surgical patients who are SA carriers and treat those patients with topical antibiotics, which has been shown in multiple peer-reviewed studies to significantly reduce the risk of post-surgical infection.

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Stool Bacterial Pathogenic Panel

According to the Agency for Healthcare Research and Quality, there were nearly five million U.S. hospital visits in 2010 for gastrointestinal distress that suggested food-borne illness. In 2010, inpatient costs attributable to patients suffering from gastrointestinal infections cost the healthcare system nearly $1.8 billion. One of the challenges faced by physicians assessing a patient with symptoms of gastrointestinal infection is determining the underlying cause.

We expect that our Stool Bacterial Pathogenic panel will detect the main causes of food poisoning. If approved, we believe that hospitals will be able to use our panel to identify the causative pathogen of food poisoning and provide appropriate treatment quickly, improving patient outcomes. Additionally, the results may be used to aid public health agencies to track causes of food poisoning outbreaks.

Candida Blood Infections Panel

According to the United States Center for Disease Control there are 46,000 Candida blood infections annually in the U.S. Candida infections, although rare, have mortality rates as high as 40% if not diagnosed quickly. Our candida panel is a multiplex panel that will be designed to identify five species of Candida directly from positive blood cultures. We expect to complete product development and begin a clinical trial on our Candida panel in second half of 2016.

Pertussis

Pertussis, also known as whooping cough, is a highly contagious respiratory disease caused by the bacterium Bordetella pertussis. In 2012, there were over 48,000 cases reported in the United States and over 16 million worldwide. We expect to complete the pre-clinical development of our Pertussis test in the first half of 2016.

Chlamydia tracomatis / Neisseria gonorrhoeae.

According to the CDC, there are over 1.4 million new reported CT infections each year however, it is estimated that there are over 2.8 million infections in the U.S. CT can cause cervicitis in women and urethritis and proctitis in both men and women. Chlamydial infections in women can lead to serious consequences including pelvic inflammatory disease (PID), tubal factor infertility, ectopic pregnancy, and chronic pelvic pain. Gonorrhea is a very common infectious disease. CDC estimates that approximately 820,000 new gonorrheal infections occur in the United States each year, and that less than half of these infections are detected and reported to CDC. CDC estimates that 570,000 of them were among young people 15-24 years of age. In 2013, 333,004 cases of gonorrhea were reported to CDC. We expect to complete the pre-clinical development of our CT/NG test in the second half of 2016.

Our Technology

Our proprietary and patented technology is based on detection of DNA targets on a coated silicon chip with results visible to the naked eye. DNA naturally forms a double-stranded structure, with each strand binding with high affinity and selectivity to a complementary strand. Our technology can detect DNA target strands of interest by attaching complementary strands of DNA to the chip surface, called capture probes, using our proprietary technology and processes. The capture probe can thereby immobilize the DNA target of interest. In order for the DNA target to be detected, it is labeled with biotin, a small molecule which can be used to create a signal in the diagnostic test. Biotin, immobilized onto the chip surface via DNA target hybridization to the DNA probe, will bind to a molecule which recognizes biotin and is conjugated to a signal generating enzyme, horseradish peroxidase, or HRP. Immobilized HRP can be reacted with a complex mixture to create a large colored product which deposits on the chip surface. This deposit causes the color of the chip surface to change. This color change is readily apparent to the naked eye as a dot in the vicinity of the DNA probe. In order to create tests with

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appropriate sensitivity for the given clinical indication, we can either amplify the quantity of DNA targets of interest or amplify the biotin-based signal. Each of these amplification approaches also serve to label DNA target(s) of interest with biotin.

Our Technology: Detection of On-chip Helicase Dependent Amplification (HDA) Reactions

Within the cartridge three distinct processes occur: sample processing, amplification, and detection. During sample processing, the specimen is treated to remove clinical matrices such as blood or feces that may interfere with assay results and is treated to break open cells to release potential DNA targets. Next, the sample is subjected to target amplification to create billions of copies of target DNA to improve assay sensitivity and to label each target with biotin. Finally, detection is triggered by hybridization of the biotin-labeled target DNA with capture probes on the chip surface. The chip is currently configured to hold as many as 64 probes, including controls, each of which can be configured to detect a different target DNA, enabling highly multiplexed testing. If signal amplification is used, a proprietary polymer is added to the detection reaction, which converts each target DNA associated biotin into 80 additional biotins to improve detection sensitivity. All waste generated from the assay is stored in a self-contained waste chamber which significantly reduces contamination risk.

Target Amplification. Helicase-dependent amplification, or HDA, is a process that utilizes an enzyme, helicase, to unwind double-stranded DNA to create two single strands through isothermal, or single temperature, amplification. Once this DNA is single-stranded, complementary DNA primers, which are short pieces of DNA that are complementary to the DNA target, can hybridize. Through the action of an enzyme, DNA polymerase, the DNA primers grow, or extend, to create a complementary strand of the DNA target, creating double-stranded DNA again. This process can be repeated and the degree of copying, or amplification, is exponential, so that billions of copies can be created. HDA is a method already commercially available for detection of DNA targets, however, it is a mistake-prone process. DNA primers can incorrectly hybridize to non-target DNA at lower temperatures and be copied, creating so-called primer artifacts, which leads to tests that are slow and poorly sensitive.

Our patented target amplification approach, termed blocked primer-mediated, helicase-dependent amplification, or bpHDA, utilizes blocked primers to enhance test speed and sensitivity. Blocked primers are DNA primers that contain a block at lower temperatures, where most incorrect hybridization events occur, preventing extension of the DNA primers or copying of the DNA target. As the temperature is raised, incorrect hybridization events are not stable and fall apart, but hybridization of DNA primers to complementary DNA targets is still very strong and an enzyme, RNase H, becomes active which can remove the block in blocked primers hybridized to DNA targets only. As a result, the accuracy of the process is dramatically improved, leading to faster and more sensitive tests. In order to label the DNA target for detection, each DNA primer has a biotin molecule attached to one end.

Our platform is also capable of performing polymerase chain reaction, or PCR, which is a widely used method of DNA amplification. Our Group B Strep test is our first commercial test to utilize PCR.

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Signal Amplification. Our patented signal amplification approach, which we refer to as AMPED, utilizes a bridging molecule to connect the biotin label on each DNA target to a polymer containing 80 biotins, thereby amplifying the signal up to 80 times in our diagnostic tests. The AMPED polymer works in the presence of blood, mucus, and feces typically present in clinical samples, thereby simplifying sample processing. The AMPED signal amplification process takes approximately 20 to 30 minutes and is a more rapid approach for detection of DNA targets than target DNA amplification, which typically takes 45 to 120 minutes. The patented AMPED polymer is highly water soluble and stable and displays low non-specific binding properties, which are critical requirements for highly specific signal amplification approaches.

Based on papers published in peer-reviewed journals, we believe our AMPED detector to be among the most sensitive in the industry with a proven limit of detection of 20,000 DNA molecules. We believe this limit of detection will be more than adequate for us to develop assays focused on the nascent “direct from whole blood” market which we believe has the potential to be exceptionally disruptive by eliminating the need for culturing blood prior to testing. Currently patients suspected of having a blood infection (sepsis) have their blood drawn. That sample is then cultured for a day before testing, but published studies consistently show that treatment within 12 hours of symptoms has significant clinical benefit. Direct from whole blood testing has the potential to eliminate the need for culture, speeding diagnosis to under 12 hours, thus potentially improving patient morbidity and mortality.

Diagnostic Cartridges. Our patent-pending diagnostic cartridges are self-contained devices specifically configured for a given diagnostic assay. The diagnostic cartridge is injection molded and includes features such as reaction chambers, a waste chamber, and channels to direct the movement of fluids. The diagnostic cartridge also contains a coated silicon detection chip consisting of an array of up to 64 DNA probes, including controls. Integrated into the diagnostic cartridge are lance devices for the reagent blister packs and stirring devices. Reaction chambers and fluid channels are covered with a clear thermoplastic to form liquid-tight features. All of the reagents necessary to perform the assay are stored within blister packs affixed to the cartridge, other than the target amplification reagents, which are stored as a freeze-dried pellet. The diagnostic cartridge utilizes patent-pending methods for controlling the flow of fluid and managing air to prevent bubbles. The diagnostic cartridge also contains bar coded information related to the test, including the cartridge lot number and expiration date.

Analyzer. The analyzer is an on-demand system controlled by an external touch screen or laptop. Each analyzer contains a module into which individual diagnostic cartridges are placed. Once a diagnostic cartridge has been loaded with a clinical specimen, the cartridge is inserted into the analyzer. The cartridge is then advanced onto a platform allowing access from above and below. The analyzer has three main sub-platforms to execute the diagnostic test: reagent flow control, thermal control, and the optical imaging platforms. To control reagent flow and delivery, valve actuators, which control fluid movements, and lance actuators, which lance blister packs, are located below the cartridge. Motors for mixing reactions and stepper motors, which serve to flatten blister packs and drive fluid into reagent channels, are located above the cartridge. Optical sensors located adjacent to the fluidic paths in the cartridge are used to determine fluidic movements. Compression valves are used to isolate regions of the cartridge for individual steps of the diagnostic assay. Multiple resistive heaters with thermocouple feedback are used to control temperature for each of the steps of the process. Once the test is complete a digital camera captures the resulting visible features. Processing and filtering techniques and multiple custom algorithms are used to determine test results, which are displayed on the touch screen or printed automatically.

The touch screen controls each analyzer, provides power and analyzes and stores data. Technicians can load patient identification numbers and reagent lot codes by using the included bar code scanner or the touch screen.

Advantages of Our Technology

Low Cost Design. Our technology was designed to use injection molded parts and filled blister packs can be produced in high volumes at relatively low cost. Production of the coated silicon chip uses existing semi-conductor processes and capital equipment. Our isothermal target amplification uses a relatively inexpensive

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heater which does not need to actively manage heat with coolers and fans. A low cost digital camera captures the visible results. Our proprietary DNA probe chemistry enables us to produce assays at relatively low cost.

Easy to Perform On-demand Testing. Our technology uses a sample-to-result approach. The customer loads a liquid clinical specimen into the diagnostic cartridge, closes it, inserts it into the analyzer and enters patient information to initiate each assay. The results are automatically generated with no user interpretation or intervention required. Hands-on time is less than 10 minutes for our C. diff test and we expect hands-on time to be generally less than 5 minutes for assays under development. Additionally, on-demand testing allows the technician to test samples as they come into the laboratory. Finally, the presence of comprehensive built-in controls means that the technician is not required to test external control samples to assure the quality of assay results. This allows laboratories to be more efficient with limited resources.

High Performance Assay Results. Our technology is capable of highly specific and sensitive detection of nucleic acids. For target DNA from multiple pathogen types, we can routinely detect fewer than three organisms using our bpHDA target amplification approach and have detected the identity of as few as 100 organisms using our AMPED signal amplification approach. Because the speed of bpHDA is only limited by the speed of the enzymes, we have demonstrated the ability to detect target DNA in less than 20 minutes of amplification time.

High Content Panels. Each of the 64 capture probes in our cartridge act independently to produce highly specific and sensitive detection for a given DNA target. The chip is optimized so that changes as small as a single base in DNA target sequence can be readily detected, allowing for detection of clinically meaningful mutations in DNA target samples. Our bpHDA technology is highly specific, allowing for simultaneous amplification of multiple DNA targets. The AMPED approach can be used to directly detect clinical specimens, thereby eliminating typical limitations of multiplexing. We expect the combination of highly multiplexed amplification and detection will allow for information-rich, multi-target panel results that allow clinicians to both rule-out and rule-in causes of disease. We believe this approach will lower testing costs and speed up the time to appropriate patient treatment, improving patient outcomes.

Ease of Development of New Assays. Early diagnostic test prototypes can be developed using our standard 96 well plates capable of processing 96 samples in a single experiment, rather than processing individual samples in the analyzer. We believe that this capability allows us to more easily develop and optimize new assays before transferring the design to the instrumented platform. Additionally, well-established software tools enable us to design and develop DNA probes and primers. The flexibility of the cartridge design allows for utilization of an efficient, low-cost approach for sample processing.

License Agreements

BioHelix. We hold non-exclusive licenses to key technologies from BioHelix related to isothermal amplification of nucleic acid targets, utilizing helicase-dependent amplification, or HDA. The term of this license agreement extends until the expiration of all the patents associated with the licensed patent rights, or until such time as we elect to terminate with 30 days’ notice. This license is limited to the fields of human diagnostic testing utilizing our solid chip surface detection and contains diligence and U.S. preference provisions. To date, these technologies have resulted in three issued U.S. patents, one issued European patent and one pending international patent family. In addition, these technologies may include related technologies that BioHelix may develop in the future. The BioHelix technologies are the basis of our nucleic acid amplification approach. In May of 2013, Quidel Corporation, a competitor of ours, purchased BioHelix. We pay a royalty fee for the licensing of this technology based on a percentage of our “Net Sales” of assays using these technologies (as defined in the license agreement).

IDT. In August 2010, we entered into a license agreement with Integrated DNA Technologies, or IDT, related to the use of blocked primers in combination with HDA. The term of this license agreement extends until the expiration of all the patents associated with the licensed patent rights, or until such time as we elect to terminate

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with 90 days’ notice. The license is exclusive to the fields of amplification utilizing HDA and detection of diagnostic targets in human in-vitro diagnostic testing, but is non-exclusive to all oncology and human papilloma virus targets or markers. These technologies have resulted in four pending U.S. patent applications and one issued European patent. We pay a royalty fee for the license of this technology based on a percentage of our “Net Sales” of products using these technologies (as defined in the license agreement).

Pursuant to the terms of these license agreements, we pay royalty fees in the aggregate equal to 14% of our worldwide “Net Sales” of those products that use these technologies (as defined and adjusted pursuant to the terms of the applicable license agreements). Our C. diff product is our only commercial product that uses these technologies. Our products under review by the FDA and all of our products under development do not use these technologies and will not be subject to royalty fees.

Market Opportunity

We believe the global market for molecular diagnostic testing is approximately $5.0 billion per year and will experience a growth rate of approximately 12% per year over the course of the next several years based on research published by outside market research firms. We believe our proprietary sample-to-result platform is best suited to address a subset of this market, including hospital-acquired infections and other infectious diseases.

• C. diff. According to the Agency for Healthcare Research and Quality, there are 347,000 cases of C. diff annually in the United States;

• Group B Strep. According to the CDC, there were 4.0 million live births in the United States in 2012 and nearly every pregnant woman in the United States is tested for Group B Strep in the late third trimester;

• Staphylococcus Identification and Resistance Panel. According to a market survey, there are 4.2 million positive blood cultures each year in the United States;

• Shiga Toxin Producing E. coli. According to the Agency for Healthcare Research and Quality, there were nearly five million U.S. Hospital visits in 2010 for gastrointestinal distress that suggested food-borne illness and each of these patients could potentially be tested for STEC;

• Staph Aureus Pre-Surgical Screening. According to the CDC, there were 51.4 million in-patient and outpatient surgeries in the United States in 2010. These surgeries represent the primary market for our SA Pre-Surgical Nasal Screen test, as every surgical patient could potentially be tested; and

• Stool Bacterial Pathogenic Panel. According to the Agency for Healthcare Research and Quality, there were nearly five million U.S. hospital visits in 2010 for gastrointestinal distress that suggested food-borne illness and each of these patients could potentially be tested for food borne pathogens.

We anticipate that the market for the molecular diagnostic assays on which we are focused will increase significantly over the next several years. We believe that many factors are driving growth of this market, particularly the accelerating adoption of molecular testing inside the hospital micro-biology lab. Based on published research we believe that fewer than half of all hospitals are currently using molecular testing for their infectious disease testing. More importantly, we believe that a far smaller fraction of all testing done in hospital labs is molecular. We believe that as molecular testing becomes more cost effective, its advantages of faster time to result and higher sensitivity relative to legacy testing methods will lead more and more hospitals to convert to molecular testing.

Our diagnostic tests are currently sold in the United States, Europe and New Zealand. We currently utilize a direct sales and support team in the United States and in certain key European countries and New Zealand utilize distributors, which we expect will be augmented by marketing partners and distributors in other strategic areas as we expand internationally.

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According to the US Center for Disease Control, in 2011 there were approximately 5,700 hospitals in the United States, approximately 4,900 of which are under 400 beds and which we refer to as small to medium sized hospitals. According to outside research, fewer than half of those smaller hospitals have made the switch to molecular methods for diagnosing infectious disease. Based on our competitors’ public statements and published independent reports, we believe that 20% of small-to-medium sized hospitals have a sample to result molecular system. We believe these hospitals are excellent candidates for our molecular diagnostic systems. We believe that our platform will enable these hospitals—many of which could not previously afford more expensive or complex molecular diagnostic testing platforms—to modernize their laboratory testing and provide better patient care at an affordable cost.

As of December 31, 2015, we have 21 sites in evaluation or scheduled to begin an evaluation in the first quarter of 2016. During the evaluation period, potential customers utilize our platform alongside their current testing method (molecular or non-molecular) and at the end of the evaluation period determine if they are interested in switching to our platform, as evidenced by the purchase of our assays on a recurring basis, or by remaining with their current testing method. Our recent customer and evaluation history is as follows:

	U.S. Customers		Active Evaluations (1)		Scheduled Evaluation
Third Quarter 2014		80		4		1
Fourth Quarter 2014		84		15		28
First Quarter 2015		101		27		25
Second Quarter 2015		115		12		37
Third Quarter 2015		143		13		51
Fourth Quarter 2015		186		11		20
January 31, 2016		201		8		13

(1) In process at the end of the quarter or month

Research and Development

As of December 31, 2015 we had 36 employees focused on research and development. Our research and development expenditures were approximately $8.5 million, and $4.6 million for the year ended December 31, 2015 and 2014, respectively. The increase in research and development expenses from 2014 to 2015 was primarily due to our focus on growing our diagnostic assay pipeline and continuation of two clinical trials and the 510(k) regulatory filings for our STEC and Staph ID/R products. In the future we expect our research and development expenses to continue to increase as we allocate additional resources to developing and obtaining regulatory approval for assays under development. We will also allocate research and development resources to improve our product reliability and enhance our diagnostic cartridge manufacturing process.

In addition to the two assays we have cleared, the two assays under review with the FDA or the six assays in late stage development. Our product offerings will include low-plex tests, multi-plex panels and direct from whole blood tests or panels.

Our molecular assay for Group B Strep is a class II device for which we received FDA clearance in April 2015. The molecular test detects Group B Strep from rectal/vaginal swabs obtained from pregnant women and incubated overnight in culture medium. The study was performed at three U.S. hospital laboratories: Indiana University School of Medicine; Medical College of Wisconsin; and Tricore Laboratories. Each site tested approximately 250 growth positive LIM broths (750-800 total samples). Each tested sample was compared to a gold standard culture-based method.

We anticipate that our molecular panel for Staphylococcus blood infections, Staph ID/R, will be a class II device requiring a 510(k) clearance. To support the submission we are running a multi-center study at three to four U.S. hospital laboratories, Tricore Laboratories, Indiana University Health, ARUP and Primary Children’s Medical

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Center, Salt Lake City. The four sites collectively tested approximately 785 samples. Each sample will be compared to two culture reference methods as required by the FDA, an automated biochemical method for species identification and cefoxitin disk diffusion for mecA gene detection. The study design was reviewed by the FDA in their pre-Submission process.

We anticipate that our molecular assay for Shiga toxin producing E. coli, STEC, will be a class II device requiring a 510(k) clearance. To support the submission we are running a multi-center study at five U.S. hospital laboratories, Tricore Laboratories, Medical College of Wisconsin, Laboratory Alliance of Central New York, Children’s Hospital LA and Primary Children’s Medical Center, Salt Lake City. The five sites collectively tested approximately 1,115 samples. Each sample will be compared to three different reference methods, an FDA approved broth/EIA test to detect Shiga toxin, a validated DNA sequencing method also to detect Shiga toxin, and a plate culture/latex agglutination test to detect serotype O157. The study design was reviewed by the FDA in their pre-submission process.

Manufacturing

We manufacture our proprietary diagnostic cartridges and analyzers in Salt Lake City, Utah. We currently hand-build our diagnostic cartridges and purchase materials at higher per unit cost due to lower purchase volumes. We believe that investment in automation of portions of our manufacturing and assembly process and volume purchase pricing will significantly improve our gross margins and enhance our ability to provide a low cost solution to customers. We perform reagent formulation, diagnostic cartridge manufacturing and packaging of final components and diagnostic cartridges in accordance with applicable guidelines for medical device manufacturing. We currently lease approximately 33,000 square feet of manufacturing space, which we believe will be adequate to meet our manufacturing needs for the foreseeable future. The lease expires in April 2016 and has two options, each for a three year renewal term. We also rely on third party suppliers, including sole source suppliers in certain instances, for certain reagents used in our products and much of the disposable component molding for our test cartridges.

We have implemented a quality management platform designed to comply with FDA regulations and ISO standards governing diagnostic medical device products. These regulations carefully control the design, manufacture, testing and release of diagnostic testing products, as well as raw material receipt and control. We also have controlled methods for the consistent manufacturing of our proprietary diagnostic cartridge, and analyzers at our facility.

Sales and Marketing

Our current sales and marketing strategy is to expand the installed base and utilization of our platform and diagnostic assays. Our C. diff test is sold in the United States through a nine person direct sales force and a technical specialist service organization of four, which is supported by a centralized team of marketing, customer support, and technical support personnel.

Our sales representatives typically have experience in molecular diagnostic testing and a network of hospital contacts within their respective territories. We utilize our representatives’ knowledge along with market research databases to target and qualify our customers. We execute a variety of sales campaigns and strategies to meet the buying criteria of the different customer segments we serve. To support our expanding molecular assay menu and the anticipated growth in our customer base, we continue to make investments in these customer facing organizations.

In the United States, our sales cycle typically includes customer evaluations, a decision to use our platform and then validations of our platform and the C. diff test. Upon successful validation the evaluating entity becomes a customer. This process has taken between 25 and 64 days from the time we install the analyzer at the evaluation site and has been decreasing. We believe that the sales cycle has been reduced over time due to higher market acceptance of molecular testing for infectious diseases and improvement we have made to the selling process.

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For example, for our customers that run the C. diff test, from initial commercialization through the end of 2014, the sales cycle was 61 days, during the first half of 2015 the sales cycle was 64 days and during the second half of 2015 was 30 days.

The analyzer is provided to the customer for their use with our assay but we retain ownership and control of the analyzer; we refer to our relationship with our customers as a vending machine model (or modified razor / razor blade). The customer buys our proprietary diagnostic cartridge from us and utilizes one disposable test cartridge each time they run an assay. Our revenue from U.S. customers is derived solely from the sales of assays.

We refer to the percentage of customers that elect to switch to our platform and purchase our diagnostic tests after receiving and evaluating our platform as our “win rate”. This is a metric that we use to determine our sales efficiency and our market acceptance. Our win rate calculation is determined without any minimum or recurring purchase threshold. Our win rates over various periods since we launched our C. diff product commercially are as follows:

	Number of Evaluations		Win Rate
Full Year 2013		86		69	%
Full Year 2014		49		76	%
Full Year 2015		133		86	%
Since Commercial Launch		272		79	%

We offer our C. diff test and our platform for sale in the European Union and New Zealand through a network of distributors. Unlike the U.S. market, we sell the platform and assay to the distributor, who then sells them directly to the customer.

Customers

In the 12 month period that ended on December 31, 2015, one customer, Vista Clinical Lab, represented 7.4% of our total revenue. For the year ended December 31, 2014 one customer, Vista Clinical Lab, represented 10.9% of our total revenue. No other customers accounted for more than 10% of our total revenue during these periods.

We define customers in terms of the number of customer sites actively reporting results using our platform. As of January 31, 2016, we had 222 customers worldwide (201 in the United States and 21 in the rest of the world), who use an aggregate of 453 analyzers.

Our U.S. customers represented approximately 98% of our total revenue for the 12 months ended December 31, 2015 and approximately 97% of our total revenue in 2014. We do not enter into sales agreements with our U.S. customers and sell our products using purchase orders. We enter into distribution agreements with distribution partners for sales outside the U.S.

Competition

We primarily compete with other molecular diagnostic testing manufacturers, such as Cepheid, Meridian Bioscience, Inc., Nanosphere, Inc., Qiagen NV, Roche Diagnostics, Quidel Corporation, bioMerieux (which recently acquired Biofire Diagnostics, Inc.), T2 Biosystems, Becton, Dickinson and Company, GenMark Diagnostics, Inc., Hologic and others. We believe that we compete primarily on the basis of our platform’s speed, accuracy, ease of use and relatively low cost. We believe that the approval of additional assays will make our solution more attractive to our customers and prospective customers.

Many of our competitors have substantially greater financial, technical, research and other resources and larger, more established marketing, sales and distribution organizations than we do. Many of our competitors also offer broader product lines and have greater brand recognition than we do. Moreover, our existing and new competitors may make rapid technological developments that may result in our technologies and products becoming obsolete before we recover the expenses incurred to develop them or before they generate significant revenue.

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Intellectual Property, Proprietary Technology

We integrate capabilities in platform design, development, production and DNA amplification technologies, along with design, development and manufacture of primers, probes, dyes, quenchers and other individual reagent components. We have and are continuing to develop our own proprietary intellectual property along with licensing specific third-party technologies.

We have an issued patent covering bpHDA, which is used in our C. diff test. bpHDA, or Blocked Primer Helicase Dependent Amplification, is our patented technology creating “target-dependent hot start” functionality in HDA amplification reactions. bpHDA utilizes a blocked primer technology such that amplification is not activated until the target analyte of interest is bound to the blocked primer at an elevated temperature used for HDA amplification, wherein the block is removed by a highly specific enzyme, allowing for amplification to proceed. We believe this approach significantly improves assay speed and limits of sensitivity such that single cells present in clinical specimens may be amplified to detectable levels in as few as 17 minutes. Multiplex product development is also simplified, allowing for more complex assays in a single reaction with up to four unique primer sets demonstrated to work since December 31, 2014.

(BP)-HDA: Great Basin Proprietary Hot Start Amplification Technology

We also have an issued patent for our amplification method in the presence of the coated silicon chip, a method which we intend to use in each of our assays. We also have an issued patent for the AMPED signal amplification method, which we intend to utilize in assays currently under development. The issued patents described above were issued in the United States and each expires in 2029. Our issued patents are pending in Europe and Canada as well. All current maintenance fees payable regarding these issued patents have been paid.

Our competitive success will be affected in part by our continued ability to obtain and maintain patent protection for our inventions, technologies and discoveries, including intellectual property that includes technologies that we license. We have patents covering technologies of our own and have licensed technologies from others. Our pending patent applications may lack priority over applications submitted by third parties or may not result in the issuance of patents. Even if issued, our patents may not be sufficiently broad to provide protection against competitors with similar technologies and may be challenged, invalidated or circumvented.

In addition to patents, we rely on a combination of trade secrets, copyright and trademark laws, nondisclosure agreements, licenses and other contractual provisions and technical measures to maintain and develop our

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competitive position with respect to intellectual property. Nevertheless, these measures may not be adequate to safeguard the technology underlying our products. For example, employees, consultants and others who participate in the development of our products may breach their agreements with us regarding our intellectual property, and we may not have adequate remedies for the breach. We also may not be able to effectively protect our intellectual property rights in some foreign countries, as many countries do not offer the same level of legal protection for intellectual property as the United States. Furthermore, for a variety of reasons, we may decide not to file for patent, copyright or trademark protection outside of the United States. Our trade secrets could become known through other unforeseen means. Notwithstanding our efforts to protect our intellectual property, our competitors may independently develop similar or alternative technologies or products that are equal or superior to our technology. Our competitors may also develop similar products without infringing on any of our intellectual property rights or design around our proprietary technologies. Furthermore, any efforts to enforce our proprietary rights could result in disputes and legal proceedings that could be costly and divert attention from our business. We could also be subject to third-party claims that we require additional licenses for our products, and such claims could interfere with our business. If our products infringe the intellectual property rights of others, we could face costly litigation, which could cause us to pay substantial damages and limit our ability to sell some or all of our products. Even if our products were determined not to infringe the intellectual property rights of others, we could incur substantial costs in defending any such claims.

We hold non-exclusive licenses to key technologies from BioHelix related to isothermal amplification of nucleic acid targets, utilizing helicase-dependent amplification, or HDA. This license is limited to the fields of human diagnostic testing utilizing our solid chip surface detection and contains diligence and U.S. preference provisions. To date, these technologies have resulted in three issued U.S. patents, one issued European patent and one pending international patent family. Additionally, these technologies may include related technologies that BioHelix may develop in the future. The BioHelix technologies are the basis of our DNA amplification approach. In August 2010, we entered into a license agreement with Integrated DNA Technologies, or IDT, related to the use of blocked primers. The license is exclusive to the fields of amplification utilizing HDA and detection of diagnostic targets in human in-vitro diagnostics, but is non-exclusive to all oncology and human papilloma virus targets or markers. These technologies have resulted in three pending U.S. patent applications and one issued European patent.

Government Regulation

The design, development, manufacture, testing and sale of our molecular diagnostic assays are subject to regulation by numerous governmental authorities, principally the FDA, and corresponding state and foreign regulatory agencies.

Regulation by the FDA

In the United States, the FDCA, FDA regulations and other federal and state statutes and regulations govern, among other things, medical device design and development, pre-clinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance. The FDA regulates the design, manufacturing, servicing, sale and distribution of medical devices, including molecular diagnostic test kits and instrumentation platforms. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending applications, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

Unless an exemption applies, each medical device we wish to distribute commercially in the United States will require marketing authorization from the FDA prior to distribution. The two primary types of FDA marketing authorization required applicable to a device are premarket notification, also called 510(k) clearance, and premarket approval, also called PMA. The type of marketing authorization required is generally linked to the

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classification of the device. The FDA classifies medical devices into one of three classes (Class I, II or III) based on the degree of risk the FDA determines to be associated with a device and the level of regulatory control deemed necessary to ensure the device’s safety and effectiveness. Devices requiring fewer controls because they are deemed to pose lower risk are placed in Class I. Class I devices are deemed to pose the least risk and are subject only to general controls applicable to all devices, such as requirements for device labeling and adherence to the FDA’s current Good Manufacturing Practices and Quality Platform Requirements, as reflected in its QSR. Class II devices are intermediate risk devices that are subject to general controls and may also be subject to special controls such as performance standards, product-specific guidance documents, special labeling requirements, patient registries or post-market surveillance. Class III devices are high risk devices for which insufficient information exists to assure safety and effectiveness solely through general or special controls. Class III devices include life-sustaining, life-supporting or implantable devices, devices of substantial importance in preventing impairment of human health, or which present a potential, unreasonable risk of illness or injury.

Most Class I devices and some Class II devices are exempted by regulation from FDA’s premarket review requirement and can be commercialized without prior authorization from the FDA. Some Class I devices that have not been so exempted and most Class II devices are eligible for marketing through the 510(k) clearance process. By contrast, devices placed in Class III generally require PMA or 510(k) de novo clearance prior to commercial marketing. We anticipate that our molecular assays for Staphylococcus blood infections, Shiga toxin producing E. coli, and Staph ID/R will each be a Class II device requiring a 510(k) clearance.

510(k) Clearance

To obtain 510(k) clearance for a medical device, an applicant must submit a premarket notification to the FDA demonstrating that the device is “substantially equivalent” to a device legally marketed in the United States that is not subject to PMA, commonly known as the “predicate device.” A device is substantially equivalent if, with respect to the predicate device, it has the same intended use and has either (i) the same technological characteristics or (ii) different technological characteristics and the information submitted demonstrates that the device is as safe and effective as a legally marketed device and does not raise different questions of safety or effectiveness. Demonstration of substantial equivalence may require clinical data. Although completion of the 510(k) review process is targeted for 90 days, these reviews typically take longer (e.g., up to 12 months or more) due to stoppage of the FDA review clock to address requests for additional information. Payment of a user fee is required for the FDA to initiate review of a 510(k) submission.

After a device has received 510(k) clearance for a specific intended use, any change or modification that significantly affects its safety or effectiveness, such as a significant change in the design, materials, method of manufacture or intended use, may require a new 510(k) clearance or PMA. The determination as to whether or not a modification could significantly affect the device’s safety or effectiveness is initially left to the manufacturer using available FDA guidance; however, the FDA may review this determination to evaluate the regulatory status of the modified product at any time and may require the manufacturer to cease marketing and recall the modified device until 510(k) clearance or PMA is obtained. The manufacturer may also be subject to significant regulatory fines or penalties.

Before submitting a medical device for 510(k) clearance, a series of studies (e.g., method comparison, precision, reproducibility, interference and stability studies) must be conducted to characterize the performance of the test.

In addition, clinical studies may be required to validate these performance characteristics in a clinical setting as well as to ensure that the intended users can perform the test successfully.

Although clinical investigations of most devices are subject to the investigational device exemption, or IDE, requirements, clinical investigations of molecular diagnostic tests, including our assays and assays under development, are generally exempt from the IDE requirements. Thus, clinical investigations by intended users for intended uses of our assays generally do not require the FDA’s prior approval, provided the clinical evaluation testing is non-invasive, does not require an invasive sampling procedure that presents a significant

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risk, does not intentionally introduce energy into the subject and is not used as a diagnostic procedure without confirmation by another medically established test or procedure. In addition, products must be appropriately labeled per FDA regulations to reflect the intended use of the product (e.g., for research use only or for investigational use only) and distribution controls must be established to assure that such products are distributed for those specified purposes.

PMA Applications

PMA applications must be supported by valid scientific evidence, which typically requires extensive performance data, including technical, pre-clinical, clinical and stability data, to demonstrate the safety and effectiveness of the device. A PMA application must also include a complete description of the device and its components, a detailed description of the methods, facilities and controls used to manufacture the device, and the proposed labeling. Payment of a user fee is required for FDA to initiate review of a PMA application.

During the PMA application review period, the FDA may request additional information or clarification of information provided in the application. In addition, the FDA will conduct a pre-approval inspection of the manufacturing facility or facilities to ensure compliance with the QSR, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures.

Although FDA review of an initial PMA application is required by statute to take between six to ten months, these reviews typically take longer (e.g., up to 2 years) due to stoppage of the FDA review clock to address requests for additional information. The FDA can delay, limit or deny approval of a PMA application for many reasons, including:

• if it is not demonstrated that there is reasonable assurance that the device is safe or effective under the conditions of use prescribed, recommended or suggested in the proposed labeling;

• if the data from pre-clinical studies and clinical trials may be insufficient to support approval; and

• if the manufacturing process, methods, controls or facilities used for the manufacture, processing, packing or installation of the device do not meet applicable requirements.

If the FDA evaluations of both the PMA application and the manufacturing facilities are favorable, the FDA will either issue an approval letter or an approvable letter, which may contain conditions that must be met in order to secure final approval of the PMA application. If the FDA’s evaluation of the PMA application or manufacturing facilities is not favorable, the FDA will deny approval of the application or issue a “not approvable” letter. A “not approvable” letter will outline the deficiencies in the application and, where practical, will identify what is necessary to make the application approvable. The FDA may also determine that additional studies (pre-clinical and/or clinical studies) are necessary, in which case the PMA may be delayed for several months or years while these studies are conducted and the subsequent amendment to the PMA application is submitted. Once granted, approval of the PMA application may be withdrawn by the FDA if compliance with post-approval requirements, conditions of approval or other regulatory standards are not maintained or problems are identified following initial marketing.

Post-approval modifications to the manufacturing process, labeling, device specifications, materials or design of a Class III device may require approval of a PMA supplement. PMA supplements require submission of technical data to support implementation of the proposed change to the Class III device. Payment of a user fee is required for FDA to initiate review of a PMA supplement.

Regulation after FDA Clearance or Approval

Any devices we manufacture or distribute pursuant to clearance or approval by the FDA are subject to comprehensive and continuing regulation by the FDA and certain state agencies. We are required to adhere to applicable regulations setting forth detailed GMP requirements, as set forth in the QSR, which includes testing,

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control and documentation requirements. Non-compliance with these standards can result in fines, injunctions, civil penalties, recalls or seizures of products, total or partial suspension of production, refusal of the government to grant 510(k) clearance or PMA of devices, withdrawal of marketing approvals and criminal prosecutions. We have designed and implemented quality platform processes within our manufacturing facilities in order to comply with FDA’s GMP requirements.

Because we are a medical device manufacturer, we must also comply with the FDA’s medical device reporting requirements whenever there is evidence that reasonably suggests that one of our products may have caused or contributed to a death or serious injury. We must also report any incident in which our product has malfunctioned if that malfunction would likely cause or contribute to a death or serious injury if it were to recur.

Labeling, advertising, and promotional activities are subject to scrutiny by the FDA and, in certain circumstances, by the Federal Trade Commission. Medical devices approved or cleared by the FDA may not be promoted for unapproved or uncleared uses, otherwise known as “off-label” promotion. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including substantial monetary penalties and criminal prosecution. We have implemented quality platform processes and advertising/promotional policies designed to comply with these requirements.

Our facilities are also subject to periodic inspection by the FDA and foreign regulatory agencies for, among other things, conformance to the FDA’s QSR and current Good Manufacturing Practice requirements, as well as applicable foreign or international standards. The results of these inspections can include inspectional observations, which are recorded on FDA Form 483, regarding potential violations of the FDCA and related laws, warning letters, or other forms of enforcement. On February 27, 2013, the FDA issued a Form 483 after inspecting our manufacturing facility in Salt Lake City, Utah. The Form 483 included 17 observations of non-compliance with FDA’s requirements. These observations included the material finding of the FDA’s inspection which were noted in the Form 483 were that we did not have appropriate environmental testing to ensure that our contamination controls were adequate and our design history file was not complete. The FDA’s observations listed on a Form 483 do not constitute a final determination that we were in violation of any law or regulation and in response to the Form 483 we took corrective actions to address all 17 observations, including revising manufacturing and quality procedures, training personnel, and reconfiguring our existing manufacturing facilities, and informed the FDA that all observations had been resolved in a final update letter on February 7, 2014. We received a letter from the FDA, dated July 22, 2014, informing us that the inspection is closed. We do not anticipate the FDA to take further action or provide further notice with regard to this matter.

International Regulations

International sales of medical devices are subject to foreign governmental regulations, which vary substantially from country to country. The time required to obtain certification or approval by a foreign country may be longer or shorter than that required for FDA approval, and the requirements may differ.

The European Union, or EU, which consists of 25 member countries, has adopted numerous directives and has promulgated voluntary standards regulating the design, manufacture, labeling, clinical trials and adverse event reporting for medical devices. Devices that comply with the requirements of relevant directives will be entitled to bear CE conformity marking, and, accordingly, can be commercially distributed throughout the member states of the European Union and other countries that comply with or mirror these directives. The method for assessing conformity varies depending upon the type and class of the product, but normally involves a combination of self-assessment by the manufacturer and a third-party assessment by a notified body, which is an independent and neutral institution appointed by a country to conduct the conformity assessment. This third-party assessment may consist of an audit of the manufacturer’s quality system and specific testing of the manufacturer’s device. Such an assessment in one country within the EU is required for a manufacturer to commercially distribute the product throughout the EU. In addition, compliance with voluntary harmonizing standards ISO 9001 and ISO 13845

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issued by the International Organization for Standards establishes the presumption of conformity with the essential requirements for a CE marking. In order to maintain CE Mark certification, we are subject to both announced and unannounced inspections by the notified body. Significant changes to the device or manufacturer’s quality system are also subject to approval by the notified body. Reporting of certain adverse events and product recalls to the national health authorities is required for compliance with the directive. Member states may also require registration of devices and translation of labeling into national languages.

Environmental Regulations

We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances. Some of these laws require us to obtain licenses or permits to conduct our operations. We have numerous policies and quality platform procedures in place to ensure compliance with these laws and to minimize the risk of occupational exposure to hazardous materials. We do not expect the operations of our products to produce significant quantities of hazardous or toxic waste or radiation that would require the use of extraordinary disposal practices. Although the costs to comply with these applicable laws and regulations have not been material, we cannot predict the impact on our business of new or amended laws or regulations or any changes in the way existing and future laws and regulations are interpreted or enforced, nor can we ensure we will be able to obtain or maintain any required licenses or permits.

Export Regulations

Medical devices that are legally marketed in the United States may be exported anywhere in the world without prior FDA notification or approval. Devices that have not been approved or cleared in the United States must follow the export provisions of the FDCA. Depending on which section of the FDCA we may export under, we may need to request an export permit letter or export certificate, or we may need to submit a simple notification. Export certificates may be requested by foreign customers or foreign governments to provide proof of the products’ status as regulated by the FDA. The export certificate is prepared by FDA and contains information about a product’s regulatory or marketing status in the United States.

Clinical Laboratory Improvement Amendments of 1988 (“CLIA”)

The use of our assays is also affected by CLIA, and related federal and state regulations, which provide for regulation of laboratory testing. Any customers using our assays for clinical use in the United States will be regulated under CLIA, which establishes quality standards for all laboratory testing to ensure the accuracy, reliability and timeliness of patient test results regardless of where the test was performed. In particular, these regulations mandate that clinical laboratories must be certified by the federal government or a federally approved accreditation agency, or must be located in a state that has been deemed exempt from CLIA requirements because the state has in effect laws that provide for requirements equal to or more stringent than CLIA requirements. Moreover, these laboratories must meet quality assurance, quality control and personnel standards, and they must undergo proficiency testing and inspections. The CLIA standards applicable to clinical laboratories are based on the complexity of the method of testing performed by the laboratory, which range from “waived” to “moderate complexity” to “high complexity.” We expect our future assays to all be rated moderately complex or meet the CLIA waiver criteria for tests that are simple and are judged by the FDA to process a low risk for erroneous results.

Foreign Government Regulation

Although it is not a current focus we intend to market our products in European and other select international markets in the future. The regulatory pre-market requirements for molecular devices vary from country to country. Some countries impose product standards, packaging requirements, labeling requirements and import restrictions on devices. Each country has its own tariff regulations, duties and tax requirements. Failure to comply with applicable foreign regulatory requirements may subject us to fines, suspension or withdrawal of

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regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. For products sold in the European Economic Area, we have self- declared a Declaration of Conformity under the relevant sections of the applicable European Community standards and other normative documents.

Fraud and Abuse Regulations

We are subject to numerous federal and state healthcare anti-fraud laws, including the federal anti-kickback statute and False Claims Act that are intended to reduce waste, fraud and abuse in the healthcare industry. These laws are broad and subject to evolving interpretations. They prohibit many arrangements and practices that are lawful in industries other than healthcare, including certain payments for consulting and other personal services, some discounting arrangements, the provision of gifts and business courtesies, the furnishing of free supplies and services, and waivers of payments. In addition, many states have enacted or are considering laws that limit arrangements between medical device manufacturers and physicians and other healthcare providers and require significant public disclosure concerning permitted arrangements. These laws are vigorously enforced against medical device manufacturers and have resulted in manufacturers paying significant fines and penalties and being subject to stringent corrective action plans and reporting obligations. We must—and do—operate our business within the requirements of these laws and, if we are ever accused of violating them, we could be forced to expend significant resources on investigation, remediation and monetary penalties.

Employees

As of December 31, 2015, we have 134 full-time employees located in Salt Lake City, Utah and other locations throughout the United States. We also contract for hire with approximately two outside consultants and contractors.

Available Information

We are required to file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other information with the SEC. We are subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements, and other information with the SEC. Copies of these materials, filed by us with the SEC, are available free of charge on our website at www.gbscience.com. These filings are available as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. You can also obtain copies of these materials by visiting the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549, by calling the SEC at 1-800-SEC-0330, or by accessing the SEC’s website at www.sec.gov. The information on, or that may be accessed through, these websites is not incorporated into this filing and should not be considered a part of this filing.

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ITEM 1A. RISK FACTORS.

An investment in our securities involves a high degree of risk. Before you invest in our securities, you should give careful consideration to the following risk factors, in addition to the other information included in this annual report, including our financial statements and related notes, before deciding whether to invest in our securities. The occurrence of any of the adverse developments described in the following risk factors could materially and adversely harm our business, financial condition, results of operations or prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Financial Position and Need for Additional Capital

We expect that we will need substantial additional funding to expand our commercialization efforts for our C. diff and Group B Strep assay and other new assays.

Molecular diagnostic development, which includes research and development, pre-clinical and human clinical trials, is a time-consuming and expensive process that takes years to complete. We expect that our expenses will increase substantially as we move new assays through human clinical trials, seek regulatory approvals, and pursue development of additional innovations. If we obtain marketing approval for the diagnostic tests that we develop, license, or acquire, we expect to incur significant commercialization expenses related to regulatory compliance requirements, sales and marketing, manufacturing and distribution. Net loss for the 12 months ended December 31, 2015 and 2014, was approximately $57.9 million and $21.7 million, respectively. As of December 31, 2015 and December 31, 2014, we had an accumulated deficit of $121.9 million and $64.0 million, respectively. As discussed in Note 3 to the audited financial statements, our recurring operating losses from operations and our need for additional sources of capital to fund our ongoing operations raise substantial doubt about our ability to continue as a going concern. We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase as we continue our development and commercialization of our platform and seek regulatory approval for additional assays. Accordingly, our ability to continue as a going concern depends on our ability to obtain additional financing to fund our operations and there can be no assurance that additional financing will be available to us or that such financing, if available, will be available on favorable terms. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

We expect that we will need additional funding to manufacturer analyzers to be used by potential customers during the sales evaluation phase.

Our potential customers evaluate the performance of our products through the use of analyzers that we manufacture and provide at no cost. Our ability to grow our customer base depends upon our ability to obtain additional financing to fund the manufacturing of analyzers to deliver to such potential customers.

Our inability to raise capital on acceptable terms in the future may cause us to delay, diminish, or curtail certain operational activities, including research and development activities, clinical trials, sales and marketing, and other operations, in order to reduce costs and sustain the business, and such inability would have a material adverse effect on our business and financial condition.

We expect capital outlays and operating expenditures to increase over the next several years as we work to expand our commercial activities, expand our development activities, conduct clinical trials, expand manufacturing operations and expand our infrastructure. We may need to raise additional capital to, among other things:

• fund clinical trials and pre-clinical trials for our assays under development as requested or required by regulatory agencies;

• sustain commercialization of our C. diff and Group B Strep assays and assays under development or review by the FDA;

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• expand and automate our manufacturing capabilities and reduce our cost of sales;

• increase our sales and marketing efforts to drive market adoption and address competitive developments;

• finance capital expenditures and our general and administrative expenses;

• develop new assays;

• maintain, expand and protect our intellectual property portfolio;

• add operational, financial and management information systems; and

• hire additional research and development, quality control, scientific, and general and administrative personnel.

Our present and future funding requirements will depend on many factors, including but not limited to:

• the progress and timing of our clinical trials;

• the level of research and development investment required to maintain and improve our technology position;

• the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, if any;

• our efforts to acquire or license complementary technologies or acquire complementary businesses;

• changes in product development plans needed to address any difficulties in commercialization or changing market conditions;

• competing technological and market developments;

• changes in regulatory policies or laws that may affect our operations; and

• changes in physician acceptance or medical society recommendations that may affect commercial efforts.

We may not be able to continue to operate as a going concern.

Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements. Our ability to continue as a going concern is contingent upon, among other factors, the release of restricted cash related to our convertible notes upon satisfaction of the conditions set forth in the terms of the convertible notes or obtaining alternate financing. We cannot provide any assurance that we will be able to raise additional capital. If we are unable to secure additional capital, we may be required to curtail our business plans and initiatives and take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations and meet our obligations.

Raising additional capital may cause dilution to our existing stockholders, and restrict our operations or require us to relinquish certain intellectual property rights.

We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances, licensing arrangements and grants. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders may be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt and receivables financings may be coupled with an equity component, such as warrants to purchase shares, which could also result in dilution of our existing stockholders’ ownership. The incurrence of indebtedness would result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to

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acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, or grant licenses on terms that are not favorable to us. A failure to obtain adequate funds may cause us to curtail certain operational activities, including research and development, regulatory trials, sales and marketing, and manufacturing operations, in order to reduce costs and sustain the business, and would have a material adverse effect on our business and financial condition.

Market and economic conditions may negatively impact our business, financial condition and share price.

Concerns over inflation, energy costs, geopolitical issues, the U.S. mortgage market and a declining real estate market, unstable global credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward, increased unemployment rates, and increased credit defaults in recent years. Our general business strategy may be adversely affected by any such economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and share price and could require us to delay or abandon development or commercialization plans. In addition, there is a risk that one or more of our current and future service providers, manufacturers, suppliers, hospitals and other medical facilities, our third party payors, and other partners could be negatively affected by these difficult economic times, which could adversely affect our ability to attain our operating goals on schedule and on budget or meet our business and financial objectives.

Our ability to use our net operating loss carryforwards is limited.

As of December 31, 2015, we had federal income tax net operating loss, or NOL, carryforwards of approximately $11.5 million and state income tax NOL carryforwards of approximately $8.2 million. These NOL carryforwards, if not previously used, will begin to expire in 2025. During 2015 we experienced a shift in our stock ownership within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, or under applicable state tax laws that currently subject our NOL carryforwards to an annual limitation. Accordingly, we were required to write off $23.2 million of net operating loss carryforwards. As a result, if we earn net taxable income in the future, the limitations on our ability to use our NOL carryforwards to reduce U.S. federal and state tax liabilities will result in increased future tax liability to us.

The design of our internal control over financial reporting is ineffective.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. The Company has performed an assessment of our internal control of financial reporting as required by section 404(a) of the Sarbanes Oxley Act. Since the Company is considered to be an “emerging growth company”, we are not required to obtain an attestation of our assessment from the auditors under section 404(b) of the Sarbanes Oxley Act.

In the prior year, we identified a material weakness in our system of internal control over financial reporting relating to processes and controls over properly identifying and accounting for transactions of a complex or non-routine nature. We made progress in this area in 2015. For example, we recognized the need to engage independent consultants to assist with accounting for certain complex transactions. However, due to the nature of our complex transactions, we could not complete the fair valuations in a timely manner. Accordingly, we believe the material weakness has not been fully remediated. In addition, while performing our assessment of internal control of financial reporting, management identified certain design deficiencies relating to segregation of duties,

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review and approval, and verification procedures, primarily resulting from the limited number of our accounting staff available to perform such procedures. Additionally, management identified certain design deficiencies to access over information systems. Based on the evaluation of our disclosure controls and procedures as of December 31, 2015, our chief executive officer and chief financial officer concluded that, as a result of material weaknesses in our internal control over financial reporting, our disclosure controls and procedures were not effective as of December 31, 2015.

Risks Related to Our Business and Industry

We have a limited commercial history upon which to base our prospects, have not generated profits and do not expect to generate profits for the foreseeable future. We may never achieve or sustain profitability.

We began operations in January 2005, and we have a limited operating history. We have not earned significant revenue to date and do not expect to earn significant revenue in the near future. We had a net loss of $57.9 million and $21.7 million in the twelve month period ending December 31, 2015 and the twelve month period ending December 31, 2014, respectively. Our accumulated deficit was $121.9 million and $64.0 million as of December 31, 2015 and December 31, 2014, respectively. Potential investors should be aware of the difficulties normally encountered by a new enterprise, many of which are beyond our control, including substantial risks and expenses in the course of developing new diagnostic tests, establishing or entering new markets, organizing operations and marketing procedures. The likelihood of our success must be considered in light of these risks, expenses, complications and delays, and the competitive environment in which we operate. There is, therefore, nothing at this time upon which to base an assumption that our business plan will prove successful, and we may not be able to generate significant revenue, raise additional capital or operate profitably. We will continue to encounter risks and difficulties frequently experienced by early commercial stage companies, including scaling up our infrastructure and headcount, and may encounter unforeseen expenses, difficulties or delays in connection with our growth. In addition, as a result of the start-up nature of our business, we can be expected to continue to sustain substantial operating expenses without generating sufficient revenues to cover expenditures. As discussed in Note 3 to the audited financial statements, our recurring operating losses from operations and our need for additional sources of capital to fund our ongoing operations raise substantial doubt about our ability to continue as a going concern. Any investment in our Company is therefore highly speculative and could result in the loss of your entire investment.

Our near-term success is dependent upon our ability to expand our customer base.

Our current customer base is composed of hospitals and testing laboratories that use our C. diff and Group B Strep assays. Our success will depend, in part, upon our ability to expand our customer base. Attracting new customers requires substantial time and expense. Any failure to expand our existing customer base would adversely affect our operating results. Many factors could affect the market acceptance and commercial success of our assays, including:

• our ability to convince our potential customers of the advantages and economic value of our analyzers and assays over competing technologies and diagnostic assays;

• the breadth of our assay menu relative to competitors;

• changes to policies, procedures or currently accepted best practices in clinical diagnostics;

• the extent and success of our marketing and sales efforts;

• our ability to manufacture analyzers for use by potential customers during the sales evaluation phase; and

• our ability to manufacture our commercial diagnostic cartridges and meet demand in a timely fashion.

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If we cannot successfully develop, maintain, commercialize, or obtain regulatory approvals for new and existing diagnostic assays, our financial results will be harmed and our ability to compete will be harmed.

Our financial performance depends in part upon our ability to successfully develop and market new assays in a rapidly changing technological and economic environment, and to maintain and successfully commercialize previously cleared assays. If we fail to successfully introduce new assays or do not maintain approval for previously FDA-cleared assays, we could lose customers and market share. We could also lose market share if our competitors introduce new assays or technologies that render our assays less competitive or obsolete. In addition, delays in the introduction of new assays due to regulatory, developmental or other obstacles could negatively impact our revenue and market share, as well as our earnings. Factors that can influence our ability to introduce new assays, the timing associated with new product approvals and commercial success of these assays include:

• the scope of and progress made in our research and development activities;

• our ability to successfully initiate and complete clinical trial studies;

• timely expansion of our menu of assays;

• the results of clinical trials needed to support any regulatory approvals of our assays;

• our ability to obtain and maintain requisite FDA or other regulatory clearances or approvals for our assays on a timely basis;

• demand for the new assays we introduce;

• product offerings from our competitors; and

• the functionality of new assays that address market requirements and customer demands.

We are subject to many laws and governmental regulations and any adverse regulatory action may materially adversely affect our financial condition and business operations.

Our assays for C. diff, Group B Strep, Staph ID/R and STEC and any assays that we develop and commercialize in the future are subject to regulation by numerous government agencies, including the FDA and comparable foreign agencies. To varying degrees, each of these agencies requires us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of our assays. In particular, FDA regulations govern activities such as product development, product testing, product labeling, product storage, premarket clearance or approval, manufacturing, advertising, promotion, product sales, reporting of certain product failures and distribution. Our assays will require 510(k) clearance from the FDA prior to marketing. Clinical trials are required to support a 510(k) submission.

We may be unable to obtain marketing clearance for our assays in development. If such approval is obtained, it may:

• take a significant amount of time;

• require the expenditure of substantial resources;

• involve stringent clinical and pre-clinical testing;

• involve modifications, repairs, or replacements of our assays; and/or

• result in limitations on the proposed uses of our assays.

Our facilities are subject to periodic inspection by the FDA and foreign regulatory agencies and conformance to the FDA’s Quality System Regulation (the “QSR”) and current Good Manufacturing Practice requirements, as well as applicable foreign or international standards. The results of these inspections can include inspectional observations regarding potential violations of the Food, Drug and Cosmetic Act (the “FDCA”) and related laws, warning letters, restrictions on medical device sales and other forms of enforcement.

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Since 2009, the FDA has significantly increased its oversight of companies subject to its regulations, including medical device companies, by hiring new investigators and stepping up inspections of manufacturing facilities. The FDA has recently also significantly increased the number of warning letters issued to companies. If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could ban such medical devices, detain or seize adulterated or misbranded medical devices, order a recall, repair, replacement, or refund of such devices, refuse to grant pending pre-market approval applications or require certificates of foreign governments for exports, and/or require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health. The FDA may also impose operating restrictions on a company-wide basis, enjoin and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against our officers, employees or us. The FDA may also recommend prosecution to the U.S. Department of Justice. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively marketing and selling our diagnostic tests.

Foreign governmental regulations have become increasingly stringent and more common, and we may become subject to more rigorous regulation by foreign governmental authorities in the future. Penalties for a company’s non-compliance with foreign governmental regulation could be severe, including revocation or suspension of a company’s business license and criminal sanctions. Any domestic or foreign governmental law or regulation imposed in the future may have a material adverse effect on us.

Our current and potential customers in the United States and elsewhere may also be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

The life sciences industry is highly competitive and subject to rapid technological change. If our competitors and potential competitors develop superior assays and technologies, our competitive position and results of operations would suffer.

We face intense competition from a number of companies that offer assays in our target markets, many of which have substantially greater financial resources and larger, more established marketing, sales and service operations than we do. The life sciences industry is characterized by rapid and continuous technological innovation. We may need to develop new technologies for our existing product and our assays to be competitive. One or more of our current or future competitors could render our existing products or assays under development obsolete or uneconomical by technological advances. We may also encounter other problems in the process of delivering new assays to the marketplace, such as problems related to FDA clearance or regulations, design, development or manufacturing of such assays, and as a result we may be unsuccessful in selling such assays. Our future success depends on our ability to compete effectively against current technologies, as well as to respond effectively to technological advances by developing and marketing assays that are competitive in the continually changing technological landscape.

If our assays do not perform as expected or the reliability of the technology on which our assays are based is questioned, we could experience delayed or reduced market acceptance of our assays, increased costs and damage to our reputation.

Our success depends on the market’s confidence that we can provide reliable, high-quality analyzers and diagnostic cartridges. We believe that customers in our target markets are likely to be particularly sensitive to product defects and errors. Our reputation and the public image of our assays or technologies may be impaired if our assays fail to perform as expected or our assays are perceived as difficult to use. Despite quality control testing, defects or errors could occur in our assays or technologies.

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In the future, if our assays experience a material defect or error, this could result in loss or delay of revenues, delayed market acceptance, product recalls, damaged reputation, diversion of development resources, legal claims, increased insurance costs or increased service and warranty costs, any of which could harm our business. Such defects or errors could also prompt us to amend certain warning labels or narrow the scope of the use of our assays, either of which could hinder our success in the market. Even after any underlying concerns or problems are resolved, any widespread concerns regarding our technology or any manufacturing defects or performance errors in our assays could result in lost revenue, delayed market acceptance, damaged reputation, increased service and warranty costs and claims against us.

If our international distributor relationships are not successful, our ability to market and sell our assays will be harmed and our financial performance will be adversely affected.

Outside of the United States, we depend on relationships with distributors for the marketing and sales of our assays in various geographic regions, and we have a limited ability to influence their efforts. Relying on distributors for our sales and marketing could harm our business for various reasons, including:

• agreements with distributors may terminate prematurely due to disagreements or may result in litigation between the partners;

• our distributors may not devote sufficient resources to the sale of our assays;

• our distributors may be unsuccessful in marketing our assays; and

• we may not be able to negotiate future distributor agreements on acceptable terms.

If any of our products, or the malfunctioning of our products, causes or contributes to a death or a serious injury, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.

Under the FDA medical device reporting regulations, medical device manufacturers are required to report to the FDA information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device were to recur. If we fail to report these events to the FDA within the required timeframes, or at all, FDA could take enforcement action against us. Any such adverse event involving our assays could also result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.

Our assays may in the future be subject to product recalls. A recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, including a third-country authority, or the discovery of serious safety issues with our products, could have a significant adverse impact on us.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be based on an FDA finding that there is reasonable probability that the device would cause serious injury or death. In addition, foreign governmental bodies have the authority to require the recall of our products in the event of material deficiencies or defects in design or manufacture. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated. A government-mandated or voluntary recall by us or one of our international distributors could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our assays would divert managerial and financial resources and have an adverse effect on our reputation, results of operations and financial condition, which could impair our

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ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands. We may also be subject to liability claims, be required to bear other costs, or take other actions that may have a negative impact on our future sales and our ability to generate profits. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA or another third-country competent authority. We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the FDA or another third-country competent authority. If the FDA disagrees with our determinations, it could require us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect our sales. In addition, the FDA could take enforcement action for failing to report the recalls when they occur.

We are also required to follow detailed recordkeeping requirements for all Company-initiated medical device corrections and removals. In addition, in December 2012, the FDA issued a draft guidance intended to assist the FDA and industry in distinguishing medical device recalls from product enhancements. Per the guidance, if any change or group of changes to a device that addresses a violation of the FDCA, that change would generally constitute a medical device recall and require submission of a recall report to the FDA.

If we become subject to claims relating to improper handling, storage or disposal of hazardous materials, we could incur significant cost and time to comply.

Our research and development processes involve the controlled storage, use and disposal of hazardous materials, including biological hazardous materials. We are subject to foreign, federal, state and local regulations governing the use, manufacture, storage, handling and disposal of materials and waste products. We may incur significant costs complying with both existing and future environmental laws and regulations. In particular, we are subject to regulation by the Occupational Safety and Health Administration, or OSHA, and the Environmental Protection Agency, or EPA, and to regulation under the Toxic Substances Control Act and the Resource Conservation and Recovery Act in the United States. OSHA or the EPA may adopt additional regulations in the future that may affect our research and development programs. The risk of accidental contamination or injury from hazardous materials cannot be eliminated completely. In the event of an accident, we could be held liable for any damages that result, and any liability could exceed the limits or fall outside the coverage of our workers’ compensation insurance. We may not be able to maintain insurance on acceptable terms, if at all.

Our diagnostic cartridges have not been manufactured on a high volume scale and are subject to unforeseen scale-up risks.

Although we have developed a process to manufacture diagnostic cartridges for our current volume of sales, there can be no assurance that we can manufacture our diagnostic cartridges at a scale that is adequate for our future commercial needs. We may face significant or unforeseen difficulties in manufacturing our diagnostic cartridges, including but not limited to:

• technical issues relating to manufacturing components of our diagnostic cartridges on a high volume commercial scale at reasonable cost, and in a reasonable time frame;

• difficulty meeting demand or timing requirements for orders due to excessive costs or lack of capacity for part or all of an operation or process;

• lack of skilled labor or unexpected increases in labor costs needed to produce or maintain our analyzers or perform certain required operations;

• changes in government regulations or in quality or other requirements that lead to additional manufacturing costs or an inability to supply product in a timely manner, if at all; and

• increases in raw material or component supply cost or an inability to obtain supplies of certain critical supplies needed to complete our manufacturing processes.

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These and other difficulties may only become apparent when scaling up to the manufacturing process of our diagnostic cartridges to a more substantive commercial scale. If our diagnostic cartridges cannot be manufactured in sufficient commercial quantities or manufacturing is delayed, our future prospects could be significantly impacted and our financial prospects would be materially harmed.

We or our suppliers may experience development or manufacturing problems or delays that could limit the growth of our revenue or increase our losses.

We may encounter unforeseen situations in the manufacturing of our diagnostic cartridges that could result in delays or shortfalls in our production. Our suppliers may also face similar delays or shortfalls. In addition, our or our suppliers’ production processes may have to change to accommodate any significant future expansion of our manufacturing capacity, which may increase our or our suppliers’ manufacturing costs, delay production of our diagnostic cartridges, reduce our product gross margin and adversely impact our business. If we are unable to satisfy demand for our diagnostic cartridges by successfully manufacturing and shipping our diagnostic cartridges in a timely manner, our revenue could be impaired, market acceptance for our assays could be adversely affected and our customers might instead purchase our competitors’ assays. In addition, developing manufacturing procedures for assays under development may require developing specific production processes for those assays. Developing such processes could be time consuming and any unexpected difficulty in doing so can delay the introduction of a product.

We are dependent on single source suppliers for some of the components and materials used in our assays, and supply chain interruptions could negatively impact our operations and financial performance.

Our assays are manufactured by us and we obtain supplies from a limited number of suppliers. In some cases, critical components required to manufacture our assays may only be available from a sole supplier or limited number of suppliers, any of whom would be difficult to replace. The supply of any of our manufacturing materials may be interrupted because of poor vendor performance or other events outside our control, which may require us, among other things, to identify alternate vendors and result in lost sales and increased expenses. Even if the manufacturing materials that we source are available from other parties, the time and effort involved in validating the new supplies and obtaining any necessary regulatory approvals for substitutes could impede our ability to replace such components in a timely manner or at all.

We expect to rely on third parties to conduct studies of our assays under development that will be required by the FDA or other regulatory authorities and those third parties may not perform satisfactorily.

We do not have the ability to independently conduct the field trial studies or other studies that may be required to obtain FDA and other regulatory clearances or approvals for our assays. Accordingly, we expect to rely on third parties, such as independent testing laboratories and hospitals, to conduct such studies. Our reliance on these third parties will reduce our control over these activities. These third-party contractors may not complete activities on schedule or conduct studies in accordance with regulatory requirements or our study design. We cannot control whether they devote sufficient time, skill and resources to our studies. Our reliance on third parties that we do not control will not relieve us of any applicable requirement to prepare, and ensure compliance with, various procedures required under good clinical practices. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of the data they obtain is compromised due to their failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our studies may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for additional assays.

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Any clinical trials that we may conduct may not begin on time, or at all, may not be completed on schedule, or at all, or may be more expensive than we expect, which could prevent or delay regulatory approval of our assays or impair our financial position.

The commencement or completion of any clinical trials that we may conduct may be delayed or halted for numerous reasons, including, but not limited to, the following:

• the FDA or other regulatory authorities suspend or place on hold a clinical trial, or do not approve a clinical trial protocol or a clinical trial;

• the data and safety monitoring committee or applicable hospital institutional ethics review board recommends that a trial be placed on hold or suspended;

• fewer patients meet our clinical study criteria and our enrollment rate is lower than we expected;

• clinical trial sites decide not to participate or cease participation in a clinical trial;

• third-party clinical investigators do not perform our clinical trials on schedule or consistent with the clinical trial protocol and good clinical practices, or other third-party organizations do not perform data collection and analysis in a timely or accurate manner;

• we fail regulatory inspections of our manufacturing facilities requiring us to undertake corrective action or suspend or terminate our clinical trials;

• interim results of the clinical trial are inconclusive or negative;

• pre-clinical or clinical data are interpreted by third parties in unanticipated ways; or

• our trial design is inadequate to demonstrate safety and/or efficacy.

Our clinical trial costs will increase if we have material delays in those trials or if we need to perform more or larger trials than planned. Adverse events during a clinical trial could cause us to repeat a trial, terminate a trial or cancel an entire program. Should our clinical development plan be delayed, this could have a material adverse effect on our operations and financial condition.

Product liability claims could adversely impact our financial condition and our earnings and impair our reputation.

Our business exposes us to potential product liability risks that are inherent in the design, manufacture and marketing of medical devices. Device failures, manufacturing defects, design flaws, or inadequate disclosure of product-related risks or product-related information with respect to our assays could result in an unsafe condition regarding, injury to, or death of, a patient. The occurrence of such a problem could result in product liability claims or a recall of, or safety alert relating to, one or more of our assays. Product liability claims or product recalls in the future, regardless of their ultimate outcome, could have a material adverse effect on our business and reputation and on our ability to attract and retain customers for our assays.

Healthcare policy changes, including U.S. healthcare reform legislation signed in 2010, may have a material adverse effect on us.

In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010, or PPACA, were signed into law. The legislation imposes a 2.3% excise tax on medical device manufacturers. This significant tax burden on our industry could have a material, negative impact on our results of operations and our cash flows. Other elements of this legislation, such as comparative effectiveness research, an independent payment advisory board, payment system reforms, including shared savings pilots, and other provisions, could meaningfully change the way healthcare is developed and delivered, and may materially impact numerous aspects of our business.

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Adverse changes in reimbursement policies and procedures by payors may impact our ability to market and sell our assays that are subject to reimbursement.

Healthcare costs have risen significantly over the past decade, and there have been and continue to be proposals by legislators, regulators and third-party payors to decrease costs. Third-party payors are increasingly challenging the prices charged for medical products and services and instituting cost containment measures to control or significantly influence the purchase of medical products and services. For example, the PPACA, among other things, reduced and/or limited Medicare reimbursement to certain providers. The Budget Control Act of 2011, as amended by subsequent legislation, further reduces Medicare’s payments to providers by 2 percent through fiscal year 2024. These reductions may reduce providers’ revenues or profits, which could affect their ability to purchase new technologies. Furthermore, the healthcare industry in the United States has experienced a trend toward cost containment as government and private insurers seek to control healthcare costs by imposing lower payment rates and negotiating reduced contract rates with service providers. Legislation could be adopted in the future that limits payments for our products from governmental payors. In addition, commercial payors such as insurance companies, could adopt similar policies that limit reimbursement for medical device manufacturers’ products. Therefore, we cannot be certain that those of our assays that will be subject to reimbursement will be reimbursed at a cost-effective level. We face similar risks relating to adverse changes in reimbursement procedures and policies in other countries where we market or intend to market our assays. Reimbursement and healthcare payment systems vary significantly among international markets. Our inability to obtain international reimbursement approval, or any adverse changes in the reimbursement policies of foreign payors, could negatively affect our ability to sell our assays and have a material adverse effect on our business and financial condition.

Consolidation in the healthcare industry could have an adverse effect on our revenues and results of operations.

Many healthcare industry companies, including healthcare systems, are consolidating to create new companies with greater market power. As the healthcare industry consolidates, competition to provide goods and services to industry participants will become more intense. These industry participants may try to use their market power to negotiate price concessions or reductions for diagnostic tests. If we are forced to reduce our prices because of consolidation in the healthcare industry, our projected revenues would decrease and our earnings, financial condition, and/or cash flows would suffer.

If we or our distributors do not comply with the U.S. federal and state fraud and abuse laws, including anti-kickback laws for any products approved in the U.S., or with similar foreign laws where we market our products, we could face significant liability.

There are numerous United States federal and state laws pertaining to healthcare fraud and abuse, including anti-kickback laws, false claims, and physician transparency laws. Our relationships with physicians and surgeons, hospitals and our independent distributors are subject to scrutiny under these laws. Violations of these laws are punishable by criminal and civil sanctions, including significant fines, damages and monetary penalties and in some instances, imprisonment and exclusion from participation in federal and state healthcare programs, including the Medicare, Medicaid and Veterans Administration health programs.

Healthcare fraud and abuse regulations are complex, and even minor irregularities can potentially give rise to claims that a statute or prohibition has been violated. The laws that may affect our ability to operate include:

• the federal healthcare program Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward the purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any good or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

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• federal civil False Claims Act prohibits, among other things, knowingly presenting, or causing to be presented, claims for payment of government funds that are false or fraudulent or knowingly making, using or causing to be made or used a false record or statement material to an obligation to pay money to the government or knowingly concealing or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government;

• the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology and Clinical Health Act of 2009, which, among other things, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

• HIPAA also created federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services;

• the Federal Trade Commission Act and similar laws regulating advertisement and consumer protections;

• the federal Foreign Corrupt Practices Act of 1997, which makes it illegal to offer or provide money or anything of value to officials of foreign governments, foreign political parties, or international organizations with the intent to obtain or retain business or seek a business advantage; and

• state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians. Some states, such as California, Massachusetts, Nevada, and Vermont mandate implementation of commercial compliance programs and/or impose restrictions on device manufacturer marketing practices and tracking and reporting of gifts, compensation and other remuneration to physicians.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from federal healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. To enforce compliance with the federal laws, the U.S. Department of Justice, or DOJ, has recently increased its scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations can be time and resource consuming and can divert management’s attention from the business. In addition, settlements with the DOJ or other law enforcement agencies have forced healthcare providers to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any violations of these laws, or any action against us for violation of these laws, even if we successfully defend against it, could have a material adverse effect on our reputation, business and financial condition.

Many foreign countries have enacted similar laws addressing fraud and abuse in the healthcare sector. The shifting commercial compliance environment and the need to build and maintain robust and expandable systems to comply with different compliance requirements in multiple jurisdictions increases the possibility that we may run afoul of one or more of the requirements.

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The implementation of the reporting and disclosure obligations of the Physician Payments Sunshine Act/Open Payments provisions of the Health Care Reform Law could adversely affect our business upon commercialization of our product in the U.S.

The federal Physician Payments Sunshine Act, being implemented as the Open Payments Program, requires device manufacturers to engage in extensive tracking of payments and other transfers of value made to physicians and teaching hospitals, as well as physician ownership and investment interests, and public reporting of such data to the Centers for Medicare and Medicaid Services annually. Although we have and expect to continue to have substantially compliant programs and controls in place to comply with the Physician Payments Sunshine Act requirements and similar state and foreign laws, our compliance with the Physician Payments Sunshine Act and similar state and foreign transparency laws imposes additional costs on us. Additionally, failure to comply with the Physician Payment Sunshine Act or similar state or foreign laws may subject us to monetary penalties.

Our ability to compete depends on our ability to attract and retain talented employees.

Our future success depends on our ability to identify, attract, train, integrate and retain highly qualified technical, development, sales and marketing, managerial and administrative personnel. Competition for highly skilled individuals is extremely intense and we face difficulty identifying and hiring qualified personnel in many areas of our business. We may not be able to hire and retain such personnel at compensation levels consistent with our existing compensation and salary structure. Many of the companies with which we compete for hiring experienced employees have greater resources than we have. If we fail to identify, attract, train, integrate and retain highly qualified and motivated personnel, our reputation could suffer and our business, financial condition and results of operations could be adversely affected.

Our future success also depends on the continued service and performance of our senior management team. The replacement of members of our senior management team likely would involve significant time and costs, and the loss of any these individuals may delay or prevent the achievement of our business objectives.

Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition and results of operations.

We are subject to income taxes as well as non-income based taxes in both the United States and various foreign jurisdictions. Changes in existing tax laws, treaties, regulations or policies or the interpretation or enforcement thereof, or the enactment or adoption of new tax laws, treaties, regulations or policies could materially impact our effective tax rate.

If we do not achieve, sustain or successfully manage our anticipated growth, our business and prospects will be harmed.

If we are unable to obtain or sustain adequate revenue growth, our financial results could suffer. Furthermore, significant growth will place strains on our management and our operational and financial systems and processes and our operating costs may escalate even faster than planned. If we cannot effectively manage our expanding operations and our costs, we may not be able to grow effectively or we may grow at a slower pace. Additionally, if we do not successfully forecast the timing of regulatory authorization for our additional tests, marketing and subsequent demand for our diagnostic tests or manage our anticipated expenses accordingly, our operating results will be harmed.

Our revenue, results of operations and cash flows may suffer upon the loss of a significant customer.

We have one large customer that generates a significant amount of our revenue. Our largest customer accounted for 7.4% of our revenue for the twelve months ended December 31, 2015. The loss of any significant customer or a significant reduction in the amount of product ordered by any such customer would adversely affect our revenue, results of operations, and cash flows.

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Other companies or institutions have commercial assays or may develop and market novel or improved methods for infectious disease diagnostics, which may make our diagnostic platform less competitive or obsolete.

The market for diagnostics is large and established, and our competitors may possess significantly greater financial resources and have larger development and commercialization capabilities than we do. We may be unable to compete effectively against these competitors either because their diagnostic platforms are superior or because they may have more expertise, experience, financial resources or stronger business relationships.

Demand for our assays depends in part on the operating budgets and hospital-acquired infection rates of our customers, a reduction in which could limit demand for our assays and adversely affect our business.

In the near term, we expect that our revenue will be derived primarily from sales of our C. diff and Group B Strep assays to hospitals. The demand for our assays will depend in part upon the prevalence of C. diff and Group B Strep at the hospitals of these customers and impacted by other factors beyond our control, such as:

• global macroeconomic conditions;

• total bed days;

• changes in the regulatory environment;

• differences in budgetary cycles;

• market-driven pressures to consolidate operations and reduce costs; and

• market acceptance of new technologies.

Our operating results may fluctuate due to reductions and delays in expenditures by our customers. Any decrease in our customers’ budgets or expenditures, or in the size, scope or frequency of operating expenditures, could materially and adversely affect our business, operating results and financial condition.

New technologies, techniques or assays could emerge that might offer better combinations of price and performance than our current C. diff and Group B Strep assays or future assays and analyzers.

It is critical to our success that we anticipate changes in technology and customer requirements and to successfully introduce, on a timely and cost-effective basis, new, enhanced and competitive technologies that meet the needs of current and prospective customers. If we do not successfully innovate and introduce new technology into our product lines or manage the transitions to new product offerings, our revenues, results of operations and business will be adversely impacted. Competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements. We anticipate that we will face increased competition in the future as existing companies and competitors develop new or improved diagnostic tests and as new companies enter the market with new technologies.

Due to our fixed overhead costs and the depreciation of our analyzers at customer sites included in cost of sales and the costs associated with our current hand-build cartridge manufacturing process we have in the past experienced substantial negative gross margins. We will need to increase our sales volumes significantly and automate our cartridge manufacturing process in order to achieve profitability.

We had negative gross margins of 124.7% and 147.0% during the twelve months ended December 31, 2015 and 2014, respectively. The components of our cost of sales include cost of materials, supplies, labor for manufacturing, equipment and facility expenses associated with manufacturing. Facility expenses include allocated overhead comprised of rent, equipment depreciation and utilities. Due to our fixed overhead costs we will continue to experience negative gross margins unless and until we are able to significantly increase our sales volume. In addition, we currently hand-build our diagnostic cartridges. We are working to automate portions of

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our manufacturing and assembly process, which we believe will reduce our cartridge manufacturing costs. However, there is no assurance that we will be successful in automating our manufacturing process, and our failure to do so will materially limit our ability to reduce our cost of sales in the future.

If we experience a significant disruption in our information technology systems or if we fail to implement new systems and software successfully, our business could be adversely affected.

We depend on information systems to manufacture products, process orders, manage inventory, process shipments to customers and respond to customer inquiries. If we were to experience a prolonged disruption in the information technology systems that involve our interactions with customers and suppliers, it could result in the loss of sales and customers, which could adversely affect our business.

Risks Related to Intellectual Property

The extent to which we can protect our business and technologies through intellectual property rights that we own, acquire or license is uncertain.

We employ a variety of proprietary and patented technologies and methods in connection with the assays that we sell or are developing. We license some of these technologies from third parties. We cannot provide any assurance that the intellectual property rights that we own or license provide effective protection from competitive threats or that we would prevail in any litigation in which our intellectual property rights are challenged. In addition, we may not be successful in obtaining new proprietary or patented technologies or methods in the future, whether through acquiring ownership or through licenses from third parties.

Our currently pending or future patent applications may not result in issued patents, and we cannot predict how long it may take for a patent to issue on any of our pending patent applications, assuming a patent does issue.

Other parties may challenge patents issued or exclusively licensed to us, or courts or administrative agencies may hold our patents or the patents we license on an exclusive basis to be invalid or unenforceable. We may not be successful in defending challenges made against our patents and other intellectual property rights. Any third-party challenge to any of our patents could result in the unenforceability or invalidity of some or all of the claims of such patents and could be time consuming and expensive.

The extent to which the patent rights of life sciences companies effectively protect their diagnostic tests and technologies is often highly uncertain and involves complex legal and factual questions for which important legal principles remain unresolved.

No consistent policy regarding the proper scope of allowable claims of patents held by life sciences companies has emerged to date in the United States. Various courts, including the U.S. Supreme Court, have rendered decisions that impact the scope of patentability of certain inventions or discoveries relating to diagnostic tests or genomic diagnostic testing. These decisions generally stand for the proposition that inventions that recite laws of nature are not themselves patentable unless they have sufficient additional features that provide practical assurance that the processes are genuine inventive applications of those laws rather than patent drafting efforts designed to monopolize a law of nature itself. What constitutes a “sufficient” additional feature for this purpose is uncertain. Although we do not generally rely on gene sequence patents, this evolving case law in the United States may adversely impact our ability to obtain new patents and may facilitate third-party challenges to our existing owned and exclusively licensed patents.

We cannot predict the breadth of claims that may be allowed or enforced in patents we own or in those to which we have exclusive license rights. For example:

• the inventor(s) named in one or more of our patents or patent applications might not have been the first to have made the relevant invention;

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• the inventor (or his assignee) might not have been the first to file a patent application for the claimed invention;

• others may independently develop similar or alternative diagnostic tests and technologies or may successfully replicate our product and technologies;

• it is possible that the patents we own or in which have exclusive license rights may not provide us with any competitive advantages or may be challenged by third parties and found to be invalid or unenforceable;

• any patents we obtain or exclusively license may expire before, or within a limited time period after, the assays and services relating to such patents are commercialized;

• we may not develop or acquire additional proprietary assays and technologies that are patentable; and

• others may acquire patents that could be asserted against us in a manner that could have an adverse effect on our business.

Changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property rights.

On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art, may affect patent litigation and switch the U.S. patent system from a “first-to-invent” system to a “first-to-file” system. Under a first-to-file system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. The U.S. Patent and Trademark Office, or USPTO, recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, including the first-to-file provisions in particular, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our owned and licensed patent applications and the enforcement or defense of issued patents that we own or license, all of which could have a material adverse effect on our business and financial condition.

Patent applications in the United States and many foreign jurisdictions are not published until at least eighteen months after filing and it is possible for a patent application filed in the United States to be maintained in secrecy until a patent issues on the application. In addition, publications in the scientific literature often lag behind actual discoveries. We therefore cannot be certain that others have not filed patent applications that cover inventions that are the subject of pending applications that we own or exclusively license or that we were the first to invent the technology (if filed prior to the Leahy-Smith Act) or first to file (if filed after the Leahy-Smith Act). Our competitors may have filed, and may in the future file, patent applications covering technology that is similar to or the same as our technology. Any such patent application may have priority over patent applications that we own and, if a patent issues on such patent application, we could be required to obtain a license to such patent in order to carry on our business. If another party has filed a U.S. patent application covering an invention that is similar to, or the same as, an invention that we own, we may have to participate in an interference or other proceeding in the USPTO or a court to determine priority of invention in the United States, for applications and patents made prior to the enactment of the Leahy-Smith Act. For applications and patents made following the enactment of the Leahy-Smith Act, we may have to participate in a derivation proceeding to resolve disputes relating to inventorship. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in our inability to obtain or retain any U.S. patent rights with respect to such invention.

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In addition, the laws of foreign jurisdictions may not protect our rights to the same extent as the laws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does. Publications of discoveries in scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions. Moreover, the USPTO might require that the term of a patent issuing from a pending patent application be disclaimed and limited to the term of another patent that is commonly owned or names a common inventor. As a result, the issuance, scope, validity, term, enforceability and commercial value of our patent rights are highly uncertain.

The patent prosecution process is expensive and time-consuming, is highly uncertain and involves complex legal and factual questions. Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary technology and product candidates. We seek to protect our proprietary position by filing in the United States and in certain foreign jurisdictions patent applications related to our novel technologies and product candidates that are important to our business.

The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. In addition, we may not pursue or obtain patent protection in all major markets. Moreover, in some circumstances, we may not have the right to control the preparation, filing or prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties. In some circumstances, our licensors may have the right to enforce the licensed patents without our involvement or consent, or to decide not to enforce or to allow us to enforce the licensed patents. Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. If any of our licensors fail to maintain such patents, or lose rights to those patents, the rights that we have licensed may be reduced or eliminated and our right to develop and commercialize any of our product candidates that are the subject of such licensed rights could be adversely affected.

Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. In particular, during prosecution of any patent application, the issuance of any patents based on the application may depend upon our ability to generate additional nonclinical or clinical data that support the patentability of our proposed claims. We may not be able to generate sufficient additional data on a timely basis, or at all. Moreover, changes in either the patent laws or interpretation of the patent laws in the United States or other countries may diminish the value of our patents or narrow the scope of our patent protection.

Moreover, we may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings or other patent office proceedings or litigation, in the United States or elsewhere, challenging our patent rights or the patent rights of others. An adverse determination in any such submission or proceeding could reduce the scope of, or invalidate, our patent rights; allow third parties to commercialize our technology or products and compete directly with us, without payment to us; or result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our owned and licensed patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

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Obtaining and maintaining our patent protection depends upon compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent prosecution process and following the issuance of a patent. There are situations in which noncompliance with these requirements can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case if our patent were in force.

Our intellectual property rights may not be sufficient to protect our competitive position and to prevent others from manufacturing, using or selling competing assays.

The scope of our owned and exclusively licensed intellectual property rights may not be sufficient to prevent others from manufacturing, using or selling competing assays. Competitors could purchase our product and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our protected technology or develop their own competitive technologies and thereby avoid infringing our intellectual property rights. If our intellectual property is not sufficient to effectively prevent our competitors from developing and selling similar diagnostic tests, our competitive position and our business could be adversely affected.

Our platform depends on certain technologies that are licensed to us. We do not control these technologies and any loss of our rights to them could prevent us from manufacturing our assays.

We rely on licenses to various proprietary technologies that are material to our business, including the development of certain future assays. We have entered into non-exclusive licenses with Biohelix Corp., or Biohelix, a subsidiary of Quidel Corporation and a license with Integrated DNA Technologies, Inc. that has certain exclusive and non-exclusive fields. Our rights to use these technologies will be subject to the continuation of and our compliance with the terms of those licenses.

We may become involved in disputes relating to our intellectual property rights, and may need to resort to litigation in order to defend and enforce our intellectual property rights.

Extensive litigation regarding patents and other intellectual property rights has been common in the medical diagnostic testing industry. Litigation may be necessary to assert infringement claims, protect trade secrets or know-how and determine the enforceability, scope and validity of certain proprietary rights. Litigation may even be necessary to resolve disputes of inventorship or ownership of proprietary rights. The defense and prosecution of intellectual property lawsuits, USPTO interference or derivation proceedings and related legal and administrative proceedings (e.g., a re-examination) in the United States and internationally involve complex legal and factual questions. As a result, such proceedings are costly and time consuming to pursue, and their outcome is uncertain.

Even if we prevail in such a proceeding in which we assert our intellectual property rights against third parties, the remedy we obtain may not be commercially meaningful or adequately compensate us for any damages we may have suffered. If we do not prevail in such a proceeding, our patents could potentially be declared to be invalid, unenforceable or narrowed in scope, or we could otherwise lose valuable intellectual property rights. Similar proceedings involving the intellectual property we exclusively license could also have an impact on our business. Further, if any of our other owned or exclusively licensed patents are declared invalid, unenforceable or narrowed in scope, our competitive position could be adversely affected.

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We could face claims that our activities or the manufacture, use or sale of our assays infringe the intellectual property rights of others, which could cause us to pay damages or licensing fees and limit our ability to sell some or all of our assays and services.

Our research, development and commercialization activities may infringe or be claimed to infringe patents or other intellectual property rights owned by other parties of which we may be unaware because the relevant patent applications may have been filed but not yet published. Certain of our competitors and other companies have substantial patent portfolios, and may attempt to use patent litigation as a means to obtain a competitive advantage or to extract licensing revenue. In addition to patent infringement claims, we may also be subject to other claims relating to the violation of intellectual property rights, such as claims that we have misappropriated trade secrets or infringed third party trademarks. The risks of being involved in such litigation may also increase as we gain greater visibility as a public company and as we gain commercial acceptance of our diagnostic tests and move into new markets and applications for our assays.

Regardless of merit or outcome, our involvement in any litigation, interference or other administrative proceedings could cause us to incur substantial expense and could significantly divert the efforts of our technical and management personnel. Any public announcements related to litigation or interference proceedings initiated or threatened against us could cause our share price to decline. An adverse determination, or any actions we take or agreements we enter into in order to resolve or avoid disputes, may subject us to the loss of our proprietary position or to significant liabilities, or require us to seek licenses that may include substantial cost and ongoing royalties. Licenses may not be available from third parties, or may not be obtainable on satisfactory terms. An adverse determination or a failure to obtain necessary licenses may restrict or prevent us from manufacturing and selling our diagnostic tests and offering our services. These outcomes could materially harm our business, financial condition and results of operations.

We may not be able to adequately protect our intellectual property outside of the United States.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, and many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to medical devices, diagnostic testing and biotechnology, which could make it difficult for us to stop the infringement of our patents and for licensors, if they were to seek to do so, to stop infringement of patents that are licensed to us. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business. Additionally, prosecuting and maintaining intellectual property (particularly patent) rights are very costly endeavors, and for these and other reasons we may not pursue or obtain patent protection in all major markets. We do not know whether legal and government fees will increase substantially and therefore are unable to predict whether cost may factor into our global intellectual property strategy.

In addition to the risks associated with patent rights, the laws in some foreign jurisdictions may not provide protection for our trade secrets and other intellectual property. If our trade secrets or other intellectual property are misappropriated in foreign jurisdictions, we may be without adequate remedies to address these issues. Additionally, we also rely on confidentiality and assignment of invention agreements to protect our intellectual property in foreign jurisdictions. These agreements may provide for contractual remedies in the event of misappropriation, but we do not know to what extent, if any, these agreements, and any remedies for their breach, will be enforced by a foreign court. If our intellectual property is misappropriated or infringed upon and an adequate remedy is not available, our future prospects will likely diminish. The sale of diagnostic tests that infringe our intellectual property rights, particularly if such diagnostic tests are offered at a lower cost, could negatively impact our ability to achieve commercial success and may materially and adversely harm our business.

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Our failure to secure trademark registrations could adversely affect our business and our ability to market our assays and product candidates.

Our trademark applications in the United States and any other jurisdictions where we may file may not be allowed for registration, and our registered trademarks may not be maintained or enforced. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in the USPTO and in corresponding foreign agencies, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our applications and/or registrations, and our applications and/or registrations may not survive such proceedings. Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affect our business and our ability to market our diagnostic tests and product candidates.

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information, or the misappropriation of the intellectual property we regard as our own.

We rely on trade secrets to protect our proprietary know how and technological advances, particularly where we do not believe patent protection is appropriate or obtainable. Nevertheless, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants, third party contractors, third party collaborators and other advisors to protect our trade secrets and other proprietary information. These agreements generally require that the other party to the agreement keep confidential and not disclose to third parties all confidential information developed by us or made known to the other party by us during the course of the other party’s relationship with us. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Monitoring unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate. If we were to seek to pursue a claim that a third party had illegally obtained and was using our trade secrets, it would be expensive and time consuming, and the outcome would be unpredictable. Further, courts outside the United States may be less willing to protect trade secrets. In addition, others may independently discover our trade secrets and proprietary information and therefore be free to use such trade secrets and proprietary information. Costly and time consuming litigation could be necessary to enforce and determine the scope of our proprietary rights. In addition, our trade secrets and proprietary information may be misappropriated as a result of breaches of our electronic or physical security systems in which case we may have no legal recourse. Failure to obtain, or maintain, trade secret protection could enable competitors to use our proprietary information to develop assays that compete with our assays or cause additional, material adverse effects upon our competitive business position.

We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

As is common in our industry, we employ individuals who were previously employed at other companies in our industry or in related industries, including our competitors or potential competitors. We may be subject to claims that we or these employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

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Risks Related to Owning our Common Stock and Other Securities

The price of our common stock may fluctuate substantially.

The market price of our common stock has been and may continue to be subject to wide fluctuation in response to various factors, some of which are beyond our control. Some factors that may cause the market price of our common stock to fluctuate, in addition to the other risks mentioned in this “Risk Factors” section and elsewhere in this 10-K, are:

• sales of our common stock by our stockholders, executives, and directors;

• volatility and limitations in trading volumes of our shares of common stock or units;

• fluctuations in our results of operations;

• our ability to enter new markets;

• actual or unanticipated fluctuations in our annual and quarterly financial results;

• our ability to obtain financings to continue and expand our commercial activities, expand our manufacturing operations, conduct and complete research and development activities including, but not limited to, our human clinical trials, and other business activities;

• our ability to secure resources and the necessary personnel to continue and expand our commercial activities, develop additional assays, conduct clinical trials and gain approval for our additional assays on our desired schedule;

• commencement, enrollment or results of our clinical trials of our assays or any future clinical trials we may conduct;

• changes in the development status of our assays;

• any delays or adverse developments or perceived adverse developments with respect to the FDA’s review of our planned clinical trials;

• any delay in our submission for studies or test approvals or adverse regulatory decisions, including failure to receive regulatory approval for our assays;

• our announcements or our competitors’ announcements regarding new assays, enhancements, significant contracts, acquisitions or strategic investments;

• unanticipated safety concerns related to our assays;

• failures to meet external expectations or management guidance;

• changes in our capital structure or dividend policy, including as a result of future issuances of securities and sales of large blocks of common stock by our stockholders;

• our cash position;

• announcements and events surrounding financing efforts, including debt and equity securities;

• our inability to enter into new markets or develop new assays;

• reputational issues;

• competition from existing technologies and assays or new technologies and assays that may emerge;

• announcements of acquisitions, partnerships, collaborations, joint ventures, new assays, capital commitments, or other events by us or our competitors;

• changes in general economic, political and market conditions in any of the regions in which we conduct our business;

• changes in industry conditions or perceptions;

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• changes in valuations of similar companies or groups of companies;

• analyst research reports, recommendations and changes in recommendations, price targets and withdrawals of coverage;

• departures and additions of key personnel;

• disputes and litigations related to intellectual properties, proprietary rights and contractual obligations;

• changes in applicable laws, rules, regulations, or accounting practices and other dynamics;

• announcements or actions taken by our principal stockholders; and

• other events or factors, many of which may be out of our control.

In addition, if any of the market for stocks in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition and results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.

Certain of our outstanding warrants have anti-dilution provisions triggered by the issuance of shares of common stock and securities exercisable for shares of our common stock at prices below the then current exercise prices for such warrants, including the recent issuance of securities under our public offering of units pursuant to a Registration Statement on Form S-1 (File No. 333-207761), pursuant to which the exercise price of such warrants will be adjusted downward and could make it more likely that such warrants are exercised and dilute our current stockholders.

The exercise price for each of the Class A Warrants, Class B Warrants, Series D warrants, the Series E warrants and Subordination Warrants is subject to adjustment in the event we issue common stock or securities convertible into common stock at a price lower than the then-current exercise price. The exercise price of the Series B Warrants is subject to adjustment in the event we issue common stock or securities convertible into common stock at a price lower than the current market price.

If we issue shares of common stock or securities exercisable or convertible for shares of common stock that trigger these provisions, then the exercise price for these warrants will be reduced according to their provisions, in most cases, to the per share price of the triggering transaction. This includes the issuance of units under our public offering of securities pursuant to a Registration Statement on Form S-1 (File No. 333-207761) which reset the exercise price of the Class A Warrants, Class B Warrants, Series D Warrants and Subordination Warrants to $0.16 per share. A reduction in the exercise price of these warrants will make it more likely that they are exercised resulting in further dilution to our then current stockholders.

If we issue shares of common stock or securities exercisable or convertible for shares of common stock that trigger these provisions, then the exercise price for these warrants will be reduced according to their provisions, in most cases, to the per share price of the triggering transaction. A reduction in the exercise price of these warrants will make it more likely that they are exercised resulting in further dilution to our then current stockholders.

Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.

We expect that significant additional capital will be needed in the future to continue our planned operations, including expanding research and development, funding clinical trials, purchasing of capital equipment, hiring new personnel, commercializing our diagnostic tests, and continuing activities as an operating public company. To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial

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dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.

“Penny stock” rules may make buying or selling our securities difficult, which may make our stock less liquid and make it harder for investors to buy and sell our securities.

If at any time in the future our shares of common stock are not listed for trading by NASDAQ and begin to trade on an over-the-counter market such as the Over-the-Counter Bulletin Board or any quotation system maintained by OTC Markets, Inc., trading in our securities will be subject to the SEC’s “penny stock” rules and it is anticipated that trading in our securities will continue to be subject to the penny stock rules for the foreseeable future. The Securities and Exchange Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends our securities to persons other than prior customers and accredited investors must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by these requirements may discourage broker-dealers from recommending transactions in our securities, which could severely limit the liquidity of our securities and consequently adversely affect the market price for our securities.

We have received a delisting notice from The NASDAQ Stock Market. Our common stock may be involuntarily delisted from trading on The NASDAQ Capital Market if we fail to regain compliance with the minimum closing bid price requirement of $1.00 per share and the minimum value of listed securities of $35 million. A delisting of our common stock is likely to reduce the liquidity of our common stock and may inhibit or preclude our ability to raise additional financing and may also materially and adversely impact our credit terms with our vendors.

The quantitative listing standards of The NASDAQ Stock Market, or NASDAQ, require, among other things, that listed companies maintain a minimum closing bid price of $1.00 per share and maintain a minimum value of listed securities of $35 million. We failed to satisfy these thresholds for 30 consecutive trading days and on October 14, 2015, we received a letter from NASDAQ indicating our deficiencies and that we have been provided an initial period of 180 calendar days, or until April 11, 2016, in which to regain compliance.

If we do not regain compliance with the minimum bid price requirement within the 180-day grace period, we may be eligible to receive an additional 180-day grace period; provided that we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, including the minimum market value of listed securities of $35 million and we provide written notice of our intention to cure the bid price deficiency during the second 180-day grace period, by effecting a reverse stock split, if necessary. This additional 180-day grace period does not apply to our deficiency regarding the minimum value of listed securities.

If we do not regain compliance, the NASDAQ staff will provide written notice that our common stock is subject to delisting. Given the increased market volatility, the challenging environment in our industry and our lack of liquidity, we may be unable to regain compliance with the closing bid price requirement and minimum value of listed securities within the 180-day grace period. A delisting of our common stock is likely to reduce the liquidity of our common stock and may inhibit or preclude our ability to raise additional financing and may make it difficult for our stockholders to sell any securities if they desire or need to sell them.

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We do not intend to pay cash dividends on our shares of common stock so any returns will be limited to the value of our shares.

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the increase, if any, of our share price.

We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Investors may find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission.

We have elected to use the extended transition periods for complying with new or revised accounting standards.

We have elected to use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transaction period provided in Section 7(a)(2)(B). As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

We may be at risk of securities class action litigation.

We may be at risk of securities class action litigation. This risk is especially relevant for us due to our dependence on positive clinical trial outcomes and regulatory approvals of our diagnostic tests. In the past, life science companies have experienced significant stock price volatility, particularly when associated with binary events such as clinical trials and product approvals. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business and results in a decline in the market price of our common stock.

Our management is required to devote substantial time to compliance initiatives.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a newly formed entity. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the Securities and Exchange Commission and NASDAQ, have imposed various new requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Our management and other personnel devote a substantial amount of time to these new

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compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time consuming and costly. We expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar coverage.

Provisions of our Seventh Amended and Restated Certificate of Incorporation, as amended, our Amended and Restated Bylaws and Delaware law could make an acquisition of our Company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove the current members of our board of directors and management.

Certain provisions of our Seventh Amended and Restated Certificate of Incorporation, as amended, or our Certificate, and our Amended and Restated Bylaws (our “Bylaws”), could discourage, delay or prevent a merger, acquisition or other change of control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. Furthermore, these provisions could prevent or frustrate attempts by our stockholders to replace or remove members of our board of directors. These provisions also could limit the price that investors might be willing to pay in the future for our common stock, thereby depressing the market price of our common stock. Stockholders who wish to participate in these transactions may not have the opportunity to do so. These provisions:

• establish a classified board of directors, such that not all members of the board of directors may be elected at one time;

• authorize our board of directors to issue without stockholder approval up to 5,000,000 shares of preferred stock, the rights of which will be determined at the discretion of the board of directors that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors;

• require that stockholder actions must be effected at a duly called stockholder meeting or by written consent of the stockholders if such action has been earlier approved by the board of directors;

• establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that can be acted on at stockholder meetings;

• limit who may call stockholder meetings; and

• require the approval of the holders of at least sixty percent of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our Certificate and at least two-thirds of the outstanding voting stock to amend certain provisions of our Bylaws.

In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of the voting rights on our common stock, from merging or combining with us for a prescribed period of time.

Risks Associated with our Proposed Additional Reverse Stock Split

Our stockholders are being asked to approve a proposal to authorize our board of directors to effect an additional reverse stock split of our common stock. There are risks associated with a reverse stock split, if it is approved by the shareholders and then effected.

Our stockholders are being asked to approve a proposal to effect a reverse stock split of our issued and outstanding common stock, if our board of directors, in its discretion, determines to effect a reverse stock split, by a ratio of not less than 1-for-20 and not more than 1-for-35 at any time as determined by the board of directors, with the exact ratio to be set at a whole number within this range as determined by the board of directors in its sole discretion, referred to as the “Additional Reverse Stock Split.” If our stockholders approve such proposal, we expect to effect a 1-for-20 to 1-for-35 reverse stock split of our issued and outstanding

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common stock. However, the board of directors reserves the right to elect to abandon and not effect the Additional Reverse Stock Split if it determines, in its sole discretion, that effecting the Additional Reverse Stock Split is not in the best interests of our Company and our stockholders. If we implement the Additional Reverse Stock Split we will be subject to certain risks associated with it, including the following:

• We would have additional authorized shares of common stock that the board of directors could issue in future without stockholder approval, and such additional shares could be issued, among other purposes, in financing transactions or to resist or frustrate a third-party transaction that is favored by a majority of the independent stockholders. This could have ananti-takeover effect, in that additional shares could be issued, within the limits imposed by applicable law, in one or more transactions that could make a change in control or takeover of us more difficult.

• There can be no assurance that the Additional Reverse Stock Split, if completed, will achieve the benefits that we hope it will achieve. The total market capitalization of our common stock after the Additional Reverse Stock Split may be lower than the total market capitalization before the Additional Reverse Stock Split.

We intend to effect a 1-for-20 to 1-for-35 Additional Reverse Stock Split of our outstanding common stock after the date of this 10-K. However, the Additional Reverse Stock Split may not increase our stock price sufficiently and we may not be able to list our common stock on the NASDAQ Capital Market.

We expect that a 1-for-20 to 1-for-35 Additional Reverse Stock Split of our outstanding common stock will increase the market price of our common stock so that we will be able to meet the minimum bid price requirement of the Listing Rules of the NASDAQ Capital Market. However, the effect of a reverse stock split upon the market price of our common stock cannot be predicted with certainty, and the results of reverse stock splits by companies in similar circumstances have been varied. It is possible that the market price of our common stock following the Additional Reverse Stock Split will not permit us to be in compliance with the applicable minimum bid or price requirements. For example, although we effected a reverse stock split on December 11, 2015, it was not sufficient to permit us to maintain compliance with NASDAQ’s $1.00 minimum bid requirement. If we are unable meet the minimum bid or price requirements, we may be unable to list our shares on the NASDAQ Capital Market,

Even if the Additional Reverse Stock Split achieves the requisite increase in the market price of our common stock, we cannot assure you that we will be able to continue to comply with the minimum bid price requirement of the NASDAQ Capital Market.

Even if the Additional Reverse Stock Split achieves the requisite increase in the market price of our common stock to be in compliance with the minimum bid price of the NASDAQ Capital Market, or whichever exchange on which we list our common stock, there can be no assurance that the market price of our common stock following the Additional Reverse Stock Split will remain at the level required for continuing compliance with that requirement. It is not uncommon for the market price of a company’s common stock to decline in the period following a reverse stock split. If the market price of our common stock declines following the effectuation of the Additional Reverse Stock Split, the percentage decline may be greater than would occur in the absence of the Additional Reverse Stock Split. In any event, other factors unrelated to the number of shares of our common stock outstanding, such as negative financial or operational results, could adversely affect the market price of our common stock and jeopardize our ability to meet or maintain the minimum bid price requirement of whichever exchange on which our common stock is listed. For example, although we effected the Reverse Stock Split on December 11, 2015, it was not sufficient to permit us to maintain compliance with NASDAQ’s $1.00 minimum bid requirement. In addition to specific listing and maintenance standards, the NASDAQ Capital Market has broad discretionary authority over the initial and continued listing of securities, which it could exercise with respect to the listing of our common stock.

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Even if the Additional Reverse Stock Split increases the market price of our common stock, there can be no assurance that we will be able to comply with other continued listing standards of the NASDAQ Capital Market.

Even if the market price of our common stock increases sufficiently so that we comply with the minimum bid price requirement, we cannot assure you that we will be able to comply with the other standards that we are required to meet in order to maintain a listing of our common stock on the NASDAQ Capital Market. Even if we effect the Additional Reverse Stock Split, we may still be subject to delisting if we fail to meet the minimum value of listed securities requirement by April 11, 2016. Our failure to meet these requirements may result in our common stock being delisted from such exchange, irrespective of our compliance with the applicable minimum bid price requirement.

Risks Related to the Note Financing

Our obligations to the holders of our Notes are secured by a security interest in substantially all of our assets, so if we default on those obligations, the convertible note holders could foreclose on our assets.

Our obligations under the Notes and the transaction documents relating to the Notes are secured by a security interest in substantially all of our assets. As a result, if we default under our obligations under the Notes or the transaction documents, the holders of the Notes, acting through their appointed agent, could foreclose on their security interests and liquidate some or all of these assets, which would harm our business, financial condition and results of operations and could require us to reduce or cease operations.

The holders of the Notes have certain additional rights upon an event of default under the Notes which could harm our business, financial condition and results of operations and could require us to reduce or cease or operations.

Under the Notes, the holders have certain rights upon an event of default. Such rights include (i) the remaining principal amount of the Notes bearing interest at a rate of 10% per annum, (ii) during the event of default the conversion price being adjusted to the lowest of (a) the conversion price then in effect, (b) 75% of the lowest weighted average price of the common stock during the 30 consecutive trading day period ending on the trading day immediately preceding the date of the event of default conversion and (c) 75% of the weighted average price of the common stock on the date of the applicable event of default conversion, and (iii) the holder having the right to demand redemption of all or a portion of the Notes, as described below. At any time after certain notice requirements for an event of default are triggered, a holder of Notes may require us to redeem all or any portion of the Note by delivering written notice. Each portion of the Note subject to redemption would be redeemed by us in cash by wire transfer of immediately available funds at a price equal to the greater of (x) 125% of the conversion amount being redeemed and (y) the product of (A) the conversion amount being redeemed and (B) the quotient determined by dividing (I) the greatest closing price of the shares of common stock during the period beginning on the date immediately preceding such event of default and ending on the date the holder delivers the redemption notice, by (II) the lowest conversion price in effect during such period. We may not have sufficient funds to settle the redemption price and, as described above, this could trigger rights under the security interest granted to the holders and result in the foreclosure of their security interests and liquidation of some or all of our assets.

The exercise of any of these rights upon an event of default could substantially harm our financial condition and force us to reduce or cease operations.

As part of the Note Financing, we are required to repay the principal on the Notes in twelve (12) equal installments in cash or shares of common stock and we are required to issue shares upon the exercise of the Series D Warrants. The issuance of shares of our common stock issued pursuant to the Notes and related Series D Warrants, may result in significant dilution to our stockholders.

Our stockholders may experience significant dilution as a result of shares of our common stock issued pursuant to the Notes and related Series D Warrants. Under the Notes and related Series D Warrants, we are required to

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have reserved or have designated for future issuance a number of shares of common stock necessary to effect the conversion of the Notes and the exercise of the Series D Warrants, subject to potential future anti-dilution adjustments. Currently, that reservation amount is 85,000,000 shares of common stock and increases to 120,000,000 on April 1, 2016. The price at which the Company will convert the installment amounts into common stock is equal to the lowest of (i) the then prevailing conversion price, (ii) initially 80% of the arithmetic average and (ii) after nine months from closing, 85% of the arithmetic average, in each case of the lower of (i) the three lowest daily weighted average prices of the common stock during the twenty (20) consecutive trading day period ending on the trading day immediately preceding the installment date and (iii) the weighted average price of the common stock on the trading day immediately preceding the installment date, subject in all cases to a floor price of $0.20.

Conversions at the election of the holder are not subject to a floor price, and at the current conversion rate of $0.16 for such conversions, the $22.1 million in principal amount of Notes would be convertible into 138,125,000 shares of our common stock, representing 120.9% dilution to current stockholders based on 114,231,984 shares of common stock issued and outstanding on February 25, 2016. For conversions in relation to the amortization payments on the Notes, if all amortization payments are made at the conversion floor price of $0.20 per share, then we could potentially issue up to a maximum of approximately 110,500,000 shares of our common stock representing 96.7% dilution to current stockholders based on 114,231,984 shares of Common Stock issued and outstanding on February 25, 2016.

Further, we issued Series D Warrants issuable to acquire 16.6% of our issued and outstanding shares of common stock on a fully-diluted basis, which are subject to a one time reset on December 31, 2016 to 16.6% of our fully diluted shares of common stock on that date. Although we have the option to settle the principal payments on the Notes in cash and certain conversion and exercise restrictions are placed upon the holders of the Notes and Series D Warrants, the issuance of material amounts of common stock by us would cause our stockholders to experience significant dilution in their investment in our Company.

The Notes have anti-dilution provisions triggered by the issuance of shares of common stock and securities exercisable for shares of our common stock at prices below the then current conversion price for the Notes, including the recent issuance of units under our public offering of securities pursuant to a Registration Statement on Form S-1 (File No. 333-207761), pursuant to which the conversion price of the Notes will be adjusted downward and could make it more likely that such Notes are converted by the holders diluting our current stockholders and requiring that we reserve more shares for issuance under the Notes, which could create an authorized share failure under the terms of the Notes.

The conversion price of the Notes, currently $0.16, is subject to reduction upon us issuing shares of our common stock or securities exercisable or convertible for shares of our common stock at a per share price below the then current conversion price. In such case, the conversion price is reduced to be equal to the lowest per share price in the triggering issuance. This includes the units issued in our public offering of securities pursuant to a Registration Statement on Form S-1 (File No. 333-207761) which reset the conversion price to $0.16 per share. A reduction in the conversion price of the Notes will make it more likely that they are converted resulting in further dilution to our then current stockholders.

Further, we are required pursuant to the terms of the securities purchase agreement pursuant to which we issued the Notes and under the terms of the Notes to maintain 120,000,000 shares of common stock as an initial reserve amount for issuance of shares upon conversion of the Notes and exercise of the related Series D Warrants. Further, we are required to reserve any additional amount of shares of common stock above the initial reserve requirement as may be necessary to settle the conversion of all the outstanding Notes and exercise of all the outstanding Series D Warrants.

Pursuant to an amendment agreement to the securities purchase agreement, the Notes and the Series D Warrants, the amount of required initial reserve has been temporarily reduced to 85,000,000 shares of common stock until 11:59:59 pm New York time on March 31, 2016 and the amount of required reserve has been fixed to be no higher than the reduced initial reserve requirement also until 11:59:59 pm New York time on March 31, 2016.

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Thereafter, beginning at 12:00:00 am New York time on April 1, 2016, the provisions of the securities purchase agreement, Notes and Series D Warrants will revert to their initial provisions and the minimum number of shares we will be required to reserve pursuant to the Notes will revert to 120,000,000 shares of common stock.

Due to the expiration on April 1, 2016 of the above reductions in the required number of shares of common stock to be reserved by the Company, if the Company has not increased its authorized shares of common stock by April 1, 2016, including through the approval and implementation of the Additional Reverse Stock Split, then there will likely be an authorized share failure under the terms of the Notes and Series D Warrants. Upon occurrence of such authorized share failure the Company will have seventy-five (75) days to call a special meeting of stockholders to cure the authorized share failure. If the Company cannot cure the authorized share failure or is otherwise unable to issue shares of common stock upon conversion of the Notes or exercise of the Series D Warrants, the Company will be required to settle such obligations in cash amounts as calculated pursuant to the terms of those securities and the holder of the convertible notes will be entitled to require the Company to redeem all or any portion of the convertible notes.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None

ITEM 2. PROPERTIES.

Our current headquarters and manufacturing facility is located in Salt Lake City, Utah. As of February 1, 2015, we leased approximately 33,000 square feet of building space in Salt Lake City, Utah. We believe our existing facilities and equipment are in good operating condition and are suitable for the conduct of its business.

We have signed a lease for approximately 13,399 square feet of office space located at 420 E. South Temple, Suite 520, Salt Lake City, UT 84111 for use as our executive offices and labs. Base rent payments due under the lease are expected to be approximately $1,231,526 in the aggregate over the term of the lease of 65 months beginning on December 1, 2015. While the tenant improvements are being completed, we are leasing temporary office space in the same building on a monthly basis for base rent of $8,437 per month.

ITEM 3. LEGAL PROCEEDINGS.

We are not currently a party to any pending or threatened legal proceeding or government investigations.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our shares of common stock are currently quoted on The NASDAQ Capital Market under the symbol “GBSN”.

The following table sets forth the high and low prices of our common stock, as reported by The NASDAQ Capital Market since our initial public offering, for the periods indicated:

	2014
	High		Low
Fourth Quarter (October 9 to December 31, 2014)	$	544.80	$	127.20
	2015
	High		Low
First Quarter	$	253.20	$	88.80
Second Quarter	$	366.00	$	151.20
Third Quarter	$	192.00	$	3.00
Fourth Quarter	$	16.20	$	0.93
	2016
	High		Low
First Quarter (as of February 25, 2016)	$	0.95	$	0.11

As of February 25, 2016, there were approximately 509 stockholders of record of our common stock. This number excludes stockholders whose stock is held in nominee or street name by brokers.

On February 25, 2016, the closing price of our common stock was $0.19 per share. We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings and do not expect to pay cash dividends on our common stock for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors and will be dependent on a number of factors, including our earnings, capital requirements and overall financial condition.

Dividends

We have not paid any cash dividends on our equity security and our Board has no present intention of declaring any cash dividends. We are not prohibited from paying any dividends pursuant to any agreement or contract.

Purchases of Equity Securities by the Company and Affiliates

There were no purchases of our equity securities by us or any of our affiliates during the year ended December 31, 2015.

Unregistered Sales of Securities

All unregistered sales of equity securities during the period covered by this annual report on Form 10-K were previously disclosed in our current reports on Form 8-K or quarterly reports on Form 10-Q.

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Use of Proceeds

Use of Proceeds from Initial Public Offering

On October 8, 2014, the SEC declared effective our IPO registration statement on Form S-1 (File No. 333-197954) related to 1,150,000 shares of common stock and 1,150,000 Series A Warrants, which were sold in combinations of one share of common stock and one Series A Warrant at a public offering price of $7.00 per unit; however, as a result of the offering of units by the Company on February 25, 2015, the Series A Warrants were exercisable at an exercise price of $2.20 per share. Each Series A Warrant is exercisable for one share of common stock and one Series B Warrant. In addition, the managing underwriter, Dawson James Securities, Inc. exercised its option to purchase 172,500 Series A Warrants. The IPO commenced on October 8, 2014 and has not yet terminated in relation to the Series B Warrants covered under the IPO registration statement. As of October 15, 2015, the date the Series A Warrants expired, 1,074,082 Series A Warrants had been exercised, none of which were exercised on a cashless basis. The remaining 248,418 Series A Warrants outstanding expired without being exercised. No Series B Warrants have been exercised to date. We may receive additional proceeds if any of the Series B Warrants are exercised in the future.

The aggregate sale price for securities sold at the initial closing of the IPO is $8,050,000. The aggregate net proceeds received by the Company from the IPO was approximately $6.4 million after deducting total expenses of approximately $1,650,000, including approximately $644,000 in underwriting discounts and commissions and approximately $1,006,000 in other expenses payable by the Company. Since the initial closing of the IPO the Company has received $2.4 million in additional net proceeds from the exercise of Series A Warrants, for total net proceeds from the offering in the amount of $8.8 million.

None of the underwriting discounts and commissions or offering expenses were paid, directly or indirectly, to any of our directors or officers or their associates or to persons owning 10% or more of our common stock or to any of our affiliates.

As of December 31, 2015, all of the $8.8 million of total net proceeds from our IPO has been used. We had broad discretion in the use of the net proceeds from our IPO. The table below shows a comparison of the use of proceeds as disclosed in our IPO Prospectus with the actual usage of these net proceeds (in millions):

	Disclosed use of proceeds in our IPO prospectus		Actual use of proceeds		Difference over (under)
Research and development expenses	$	1.4	$	1.2	$	(0.2	)
Sales and marketing expenses		1.4		0.9		(0.5	)
Manufacture analyzers for customers		1.1		1.2		0.1
Automate manufacturing facility and increase capacity		0.2		0.5		0.3
General corporate purposes		4.7		5.0		0.3
Total net proceeds	$	8.8	$	8.8	$	—

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Equity Compensation Plan Information

The following table sets forth information as of December 31, 2015 relating to all of our equity compensation plans:

	Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a)	Weighted-average exercise price of outstanding options, warrants, and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	13,253	$170.40	45,049
Equity compensation plans not approved by security holders	Not applicable	Not applicable	Not applicable
TOTAL	13,253	$170.40	45,049

On December 11, 2015 we completed a one-for-sixty reverse stock split, and proportional adjustments were made to the number of securities to be issued upon exercise of outstanding options.

The Great Basin Scientific, Inc. 2014 Omnibus Incentive Plan

In connection with our IPO, we adopted our Omnibus Plan, which was approved by our board of directors and stockholders. Our stockholders also approved an amendment to our Omnibus Plan on June 2, 2015. The compensation committee of our board of directors (also referred to herein as the “committee”) has the authority to administer the Omnibus Plan and has full power and authority to determine when and to whom awards will be granted, and the type, amount, form of payment and other terms and conditions of each award, consistent with the provisions of the Omnibus Plan. Subject to the provisions of the Omnibus Plan, the committee may amend or waive the terms and conditions, or accelerate the exercisability, of an outstanding award. The committee has authority to interpret the Omnibus Plan and establish rules and regulations for the administration of the Omnibus Plan. In addition, the Omnibus Plan provides that our board of directors may generally exercise the powers of the committee at any time. Any employee, officer, non-employee directors, consultant, independent contractor or advisor providing services to us or any of our affiliate or any such person to whom an offer of employment or engagement with us or any of our affiliates is extended, who is selected by the committee, is eligible to receive awards under the Omnibus Plan.

The aggregate number of shares of common stock that may be issued under all stock-based awards made under the Omnibus Plan is 49,000 shares, which adjusts automatically on the first day of each fiscal quarter to an amount equal to the greater of (i) fifteen percent (15%) of the number of shares of common stock outstanding on the last day of the immediately preceding fiscal quarter or (ii) 49,000 shares, provided that this amount cannot exceed 500,000 shares. Any shares of our common stock subject to any award that is terminated or forfeited without delivery of any shares will be available for future awards under the Omnibus Plan. The shares of common stock issuable under the Omnibus Plan may be drawn from shares of authorized but unissued common stock or from shares of common stock that we acquire. No eligible person may be granted any stock options, stock appreciation rights or performance awards denominated in shares of our common stock, for more than 4,167 shares of our common stock in the aggregate in any calendar year.

If the committee or our board of directors determines that any dividend or other distribution (whether in the form of cash, shares of our common stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of our common stock or other securities, issuance of warrants or other rights to purchase shares of our

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common stock or other securities or other event identified by the committee as affecting shares of our common stock such that an adjustment is necessary or appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Omnibus Plan, then the committee or the board of directors shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of shares of common stock (or other securities or other property) that thereafter may be made the subject of awards, (ii) the number and type of shares of common stock (or other securities or other property) subject to outstanding awards, (iii) the purchase price or exercise price with respect to any award and (iv) the share limitations contained in the Omnibus Plan.

Under the Omnibus Plan, the committee is permitted and authorized to make the following grants to all eligible persons:

• Stock Options. The committee may grant stock options to any person eligible under the Omnibus Plan, including options intended to qualify as incentive stock options, as defined in Section 422 of the Code. The holder of an option will be entitled to purchase a number of shares of our common stock at a specified exercise price during a specified time period, all as determined by the committee. The exercise price of an option may not be less than 100% of the fair market value of our common stock on the date of grant, or in the case of incentive stock options, 110% of the fair market value of our common stock with respect to holders of more than 10% of our common stock. The fair market value of our common stock will be the closing sale price as quoted on The NASDAQ Capital Market on the date of grant. The Omnibus Plan permits payment of the exercise price to be made by cash, shares of our common stock, other securities, other awards or other property. The shares subject to each option will generally vest in one or more installments over a specified period of service measured from the grant date.

• Stock Appreciation Rights. The holder of a stock appreciation right (a “SAR”) is entitled to receive the excess of the fair market value (calculated as of the exercise date or, at the committee’s discretion, as of any time during a specified period before or after the exercise date) of a specified number of shares of our common stock over the grant price of the SAR, as determined by the committee, paid solely in shares of common stock. SARs vest and become exercisable in accordance with a vesting schedule established by the committee.

• Restricted Stock and Restricted Stock Units. The holder of restricted stock will own shares of our common stock subject to restrictions imposed by the committee (including, for example, restrictions on transferability or on the right to vote the restricted shares or to receive any dividends with respect to the shares) for a specified time period determined by the committee. The restrictions, if any, may lapse or be waived separately or collectively, in installments or otherwise, as the committee may determine. The holder of restricted stock units will have the right, subject to any restrictions imposed by the committee, to receive shares of our common stock at some future date determined by the committee.

• Performance Awards. Performance awards give participants the right to receive payments in cash, stock or property based solely upon the achievement of certain performance goals during a specified performance period. Subject to the terms of the Omnibus Plan, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any performance award granted, the amount of any payment or transfer to be made pursuant to any performance award and any other terms and conditions of any performance award is determined by the committee. No eligible person may be granted performance awards in excess of shares of our common stock (subject to adjustment in the event of a stock split or similar event) in the aggregate in any taxable year.

• Dividend Equivalents. The committee may grant dividend equivalents under which the participant is entitled to receive payments (in cash, shares of common stock, other securities, other awards or other property as determined in the discretion of the committee) equivalent to the amount of cash dividends paid by us to holders of shares of common stock with respect to a number of shares of common stock determined by the committee.

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• Other Stock Awards. The committee may grant such other awards that are denominated or payable in, valued in whole or in part by reference to, shares of our common stock, subject to terms and conditions determined by the committee and the Omnibus Plan limitations.

The term of awards will not be longer than ten years, or in the case of incentive stock options, longer than five years with respect to holders of more than 10% of our common stock. The committee may permit accelerated vesting of an award upon the occurrence of certain events, including a change in control, regardless of whether the award is assumed, substituted or otherwise continued in effect by the successor corporation. The acceleration of vesting in the event of a change in the ownership or control may be seen as an anti-takeover provision and may have the effect of discouraging a merger proposal, a takeover attempt or other efforts to gain control of us.

Awards under the Omnibus Plan may be subject to performance goals, including revenue, cash flow, gross profit, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, net earnings, earnings per share, margins (including one or more of gross, operating and net income margins), returns (including one or more of return on assets, equity, investment, capital, revenue and total stockholder return), stock price, economic value added, working capital, market share, cost reductions, workforce satisfaction and diversity goals, employee retention, customer satisfaction, completion of key projects and strategic plan development and implementation. The goals may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria.

Unless earlier discontinued or terminated by the board of directors, the Omnibus Plan will expire on the tenth anniversary of the Omnibus Plan’s effective date. No awards may be made after that date. However, unless otherwise expressly provided in the Omnibus Plan or an applicable award agreement, any award granted under the Omnibus Plan prior to expiration may extend beyond the end of such period through the award’s normal expiration date. Our board of directors may amend, suspend or terminate the Omnibus Plan at any time, provided that our board of directors will get stockholder approval when necessary to not violate the rules of The NASDAQ Capital Market, to increase the number of shares of common stock authorized under the Omnibus Plan, to reprice options or SARs, to permit the grant of options or SARs with an exercise price less than the fair market value of the common stock, to prevent the grant of options or SARs that would qualify under Section 162(m) of the Code or increase the maximum term permitted for options and SARs as specified in the Omnibus Plan. The committee may not amend an outstanding award in a manner that adversely affects the holder of the award without the holder’s consent.

The Great Basin Scientific, Inc. 2014 Stock Option Plan

The Great Basin Scientific, Inc. 2014 Stock Option Plan, which we refer to as the 2014 Stock Option Plan, was adopted by our board of directors on April 18, 2014 and approved by our stockholders on April 21, 2014 and became effective on April 18, 2014. The compensation committee of our board of directors has authority to administer the 2014 Stock Option Plan and will have full power and authority to determine when and to whom awards will be granted, and the type, amount, form of payment and other terms and conditions of each award, consistent with the provisions of the 2014 Stock Option Plan. Subject to the provisions of the 2014 Stock Option Plan, the compensation committee may amend or waive the terms and conditions, or accelerate the exercisability, of an outstanding award. The compensation committee has authority to interpret the 2014 Stock Option Plan and establish rules and regulations for the administration of the 2014 Stock Option Plan. In addition, our board of directors may generally exercise the powers of the compensation committee at any time. Any employee, officer, consultant, independent contractor or director providing services to us or any of our affiliates, who is selected by the compensation committee, is eligible to receive awards under the 2014 Stock Option Plan.

The aggregate number of shares of common stock that may be issued under all stock-based awards made under the 2014 Stock Option Plan is 12,500 shares. Any shares of common stock that are used by a participant as full or partial payment to us of the purchase price relating to an award, or in connection with the satisfaction of tax

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obligations relating to an award, shall again be available for granting awards (other than incentive stock options) under the 2014 Stock Option Plan. Additionally, shares of our common stock subject to any award that are terminated or forfeited without delivery of any shares will be available for future awards under the 2014 Stock Option Plan. The shares of common stock issuable under the 2014 Stock Option Plan may be drawn from shares of authorized but unissued common stock or from shares of common stock that we acquire. No eligible person may be granted any award or awards under the 2014 Stock Option Plan, the value of which award or awards is based solely on an increase in the value of shares of common stock after the date of grant of such award or awards, and which is intended to represent “qualified performance based compensation” with the meaning of Section 162(m) of Code, for more than shares of our common stock (subject to adjustment in the event of a stock split or similar corporate event), in the aggregate in any taxable year.

If the compensation committee determines that any dividend or other distribution (whether in the form of cash, shares of our common stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of our common stock or other securities, issuance of warrants or other rights to purchase shares of our common stock or other securities or other event identified by the compensation committee as affecting shares of our common stock such that an adjustment is necessary or appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the 2014 Stock Option Plan, then the compensation committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of shares of common stock (or other securities or other property) that thereafter may be made the subject of awards, (ii) the number and type of shares of common stock (or other securities or other property) subject to outstanding awards, (iii) the purchase price or exercise price with respect to any award and (iv) the share limitations contained in the 2014 Stock Option Plan.

Under our 2014 Stock Option Plan, the compensation committee is permitted and authorized to make the following grants to all eligible persons:

• Stock Options. The compensation committee may grant stock options to officers and other employees intended to qualify as incentive stock options, as defined in Section 422 of the Code, and may also grant options to employees, consultants, independent contractors and directors that do not qualify as incentive stock options. The holder of an option will be entitled to purchase a number of shares of our common stock at a specified exercise price during a specified time period, all as determined by the compensation committee. The exercise price of an option may not be less than 100% of the fair market value of our common stock on the date of grant, or in the case of incentive stock options, 110% of the fair market value of our common stock with respect to holders of more than 10% of our common stock. The fair market value of our common stock will be the closing sale price as quoted on The NASDAQ Capital Market on the date of grant. The 2014 Stock Option Plan permits payment of the exercise price to be made by cash, shares of our common stock, other securities, other awards or other property. The shares subject to each option will generally vest in one or more installments over a specified period of service measured from the grant date. No employee may be granted stock options to the extent the aggregate fair market value (determined as of the time each option is granted) of the common stock with respect to which any such options are exercisable would exceed $100,000.

• Stock Appreciation Rights. The holder of a SAR is entitled to receive the excess of the fair market value (calculated as of the exercise date or, at the compensation committee’s discretion, as of any time during a specified period before or after the exercise date) of a specified number of shares of our common stock over the grant price of the SAR, as determined by the compensation committee, paid solely in shares of common stock. SARs vest and become exercisable in accordance with a vesting schedule established by the compensation committee.

The term of awards will not be longer than ten years, or in the case of incentive stock options, longer than five years with respect to holders of more than 10% of our common stock. The compensation committee may permit accelerated vesting of an award upon the occurrence of certain events, including a change in control, regardless

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of whether the award is assumed, substituted or otherwise continued in effect by the successor corporation. The acceleration of vesting in the event of a change in the ownership or control may be seen as an anti-takeover provision and may have the effect of discouraging a merger proposal, a takeover attempt or other efforts to gain control of us.

Awards under the 2014 Stock Option Plan may be subject to performance goals, including revenue, cash flow, gross profit, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, net earnings, earnings per share, margins (including one or more of gross, operating and net income margins), returns (including one or more of return on assets, equity, investment, capital, revenue and total stockholder return), stock price, economic value added, working capital, market share, cost reductions, workforce satisfaction and diversity goals, employee retention, customer satisfaction, completion of key projects and strategic plan development and implementation. The goals may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria.

Unless earlier discontinued or terminated by the board of directors, the 2014 Stock Option Plan will expire on April 17, 2024. No awards may be made after that date. However, unless otherwise expressly provided in an applicable award agreement, any award granted under the 2014 Stock Option Plan prior to expiration may extend beyond the end of such period through the award’s normal expiration date. Our board of directors may amend, suspend or terminate the 2014 Stock Option Plan at any time, provided that our board of directors will get stockholder approval when necessary to not violate the rules of The NASDAQ Capital Market, to allow the grant of incentive stock options, to increase the number of shares of common stock authorized under the 2014 Stock Option Plan, to grant or reprice options or SARs with an exercise price less than the fair market value of the common stock, or to prevent the grant of options or SARs that would qualify under Section 162(m) of the Code. The compensation committee may not amend an outstanding award in a manner that adversely affects the holder of the award without the holder’s consent.

We do not intend to make any future stock options grants under the 2014 Stock Option Plan, as all future grants will be made pursuant to the Omnibus Plan.

ITEM 6. SELECTED FINANCIAL DATA.

As a smaller reporting company, we have elected not to provide the disclosure required by this item.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this annual report. Except for historical information contained herein, the following discussion and analysis contains forward-looking statements which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We discuss such risks, uncertainties and other factors throughout this report and specifically under Item 1A of Part I of this report, “Risk Factors”.

Overview of Our Business

We are a molecular diagnostic testing company. We are focused on improving patient care through the development and commercialization of our patented, low-cost, molecular diagnostic platform for testing for infectious disease, especially hospital- acquired infections. We believe our platform has the ability to transform molecular testing for infectious diseases at small to medium sized hospitals by providing an affordable solution that meets the rapidly evolving needs of patients and providers.

We believe there is a fast-growing market for molecular diagnostic systems being purchased by hospital microbiology labs to replace culture and other legacy testing formats. We believe our platform is well positioned to meet this need. Our platform provides results in 45 to 115 minutes depending on the test. Molecular testing generally reduces test time from days to hours, and provides more accurate results, which we believe leads to shortened hospital stays and improved patient outcomes, all of which leads to reduced cost for hospitals that implement molecular testing in their labs.

Our platform is an automated molecular diagnostic system, consisting of an analyzer and associated assay cartridge. Our platform utilizes a sample-to-result format, which means that once a patient specimen is received, it undergoes limited processing before it is placed in the analyzer where the assay is run without further technician intervention. This reduces assay complexity and eliminates the need for highly trained and expensive molecular technicians to run the tests. Our platform is designed to enable simple, rapid and cost-effective analysis of multiple pathogens from a single clinical sample, which will allow small to medium sized community hospitals that traditionally could not afford more expensive or complex molecular diagnostic testing platforms to modernize their laboratory testing and provide better patient care at an affordable cost.

In November 2012, we launched our first FDA-cleared test for C. diff, a bacteria that causes life-threatening gastrointestinal distress in hospital patients. We currently sell our diagnostic test cartridge in the United States through a direct sales force and we use distributors in the European Union and New Zealand. As of December 31, 2015, we had 207 customers worldwide (186 in the United States and 21 in the rest of the world), who use an aggregate of 428 of our analyzers. Our easy to use platform allows small to medium sized hospitals that we believe could not previously afford more expensive or complex molecular diagnostic systems to modernize their laboratory testing and provide better patient care at an affordable cost.

In addition to our C. diff assay, we have developed a Group B Strep assay for which we received FDA clearance in April 2015 and launched commercially in June 2015. We also filed two 510(k) applications in the second half of 2015, one for Staph ID/R and one for Shiga toxin producing E. coli. Additionally, we have five other assays in various stages of product development: (i) a pre-surgical nasal screen for Staphylococcus aureus, or SA, (ii) a food borne pathogen panel, (iii) a panel for candida blood infections (iv) a test for pertussis and, (v) a test for CT/NG.

Since inception, we have incurred net losses from operations each year and we expect to continue to incur losses for the foreseeable future. Our losses attributable to operations for the fiscal year ending December 31, 2015 and 2014 were approximately $57.9 million and $21.7 million, respectively. As of December 31, 2015, we had an accumulated deficit of $121.9 million.

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Financial Operations Overview

Revenue

We derive our revenue from the sale of single use assays sold through our dedicated sales force in the United States, and in the European Union and New Zealand through a network of distributors. Revenue is recognized when all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the products has occurred; (3) the selling price of the product is fixed or determinable; and (4) collectability of that price is reasonably assured. Change in title to the product and recognition of revenue from sales of the assays occurs at the time of shipment.

We believe our revenue from the sale of our assays will increase as we expand our sales and marketing efforts and as we introduce new assays into the market. We expect that our revenue will continue to be primarily attributable to sales of our assays in the United States.

Our material increases in revenues since the inception of our business have been attributable to increases in the volume of goods being sold as a result of increases in the number of customers. As of December 31, 2015, we have two commercial products, our C. diff assay and our Group B Strep assay. The average price has not materially changed since their commercial releases.

Cost of Sales

The components of our cost of sales include cost of materials, supplies, labor for manufacturing and support personnel, equipment and facility expenses associated with manufacturing. We depreciate the cost of each analyzer that is at a customer site over a period of 5 years on a straight line basis and include that cost in cost of sales. We perform all of our manufacturing activities at our facility located in Salt Lake City, Utah. Facility expenses include allocated overhead comprised of rent, equipment depreciation and utilities. We expect our cost of sales in absolute dollars to increase, as the number of diagnostic cartridges we manufacture increases. However, we also expect that as assay volumes increase we will realize manufacturing efficiencies, which would result in a decrease in our cost of sales as a percentage of revenue. We also license certain technologies for our C. diff assay, which are described in the section of this annual report on Form 10-K titled “Business—License Agreements.” Pursuant to the terms of these license agreements, we pay royalty fees in the aggregate equal to 14% of our worldwide “Net Sales” of those products that use these technologies (as defined and adjusted pursuant to the terms of the applicable license agreements).

Research and Development

All research and development costs, including those funded by third parties, are expensed as incurred. Research and development costs consist of engineering, product development, clinical trials, test-part manufacturing, testing, developing and validating the manufacturing process, manufacturing, facility and regulatory-related costs. Research and development costs also include employee cash compensation, employee and non-employee stock-based compensation, supplies and materials, consultant services, and travel related to research activities.

In 2015 we incurred additional research and development costs as we continued to develop new assays and as we advanced the development of our product candidates, including our Group B Strep, Staph ID/R and shiga toxin producing e. coli assays. In particular, we conducted clinical trials for the Staph ID/R and shiga toxin producing e.coli product candidates, which increased our research and development expenses. Additionally, we have five other assays in various stages of product development: (i) a pre-surgical nasal screen for Staphylococcus aureus, or SA, (ii) a food borne pathogen panel, (iii) a panel for candida blood infections (iv) a test for pertussis and, (v) a test for CT/NG. We plan to continue the development of these products and conduct clinical trials in 2016, which will increase our research and development expenses.

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Sales and Marketing

Sales and marketing expenses primarily consist of salaries, benefits and other related costs, including stock-based compensation, for personnel employed in sales, marketing, and training. In addition, our sales and marketing expenses include commissions and bonuses paid to our sales representatives, generally based on the number of new customers obtained and other objectives attained.

We expect our sales and marketing expenses to continue to increase as we introduce new assays, such as our Staph ID/R assays and, shiga toxin producing e.coli assays, if approved, and seek to enhance our commercial infrastructure, including increasing our sales force and marketing efforts. Additionally, we expect our commissions to continue to increase in absolute terms over time but to decline as a percentage of revenue.

General and Administrative Expenses

General and administrative expenses primarily consist of salaries, benefits and other related costs, including stock-based compensation, for certain members of our executive team and other personnel employed in finance, legal, compliance, administrative, information technology, customer service, executive and human resource departments. General and administrative expenses include allocated facility expenses, related travel expenses and professional fees for accounting and legal services.

We expect our general and administrative expenses will increase due to costs associated with our public and private funding efforts as we continue to raise capital for our business needs. Our expenses related to compliance with the rules and regulations of the Securities and Exchange Commission and the NASDAQ Capital Market as well as investor relations activities and other administrative and professional services will continue to increase as we grow our business.

Gain or Loss on Sale of Assets

Analyzers used outside the United States are sold to the customer and the sale is accounted for as a sale of fixed assets. For these limited situations, management has elected to sell the fixed asset analyzers as opposed to placing them with international customers (thereby not retaining title over the analyzers) as it would be impractical to retain ownership due to, among other reasons, the Company lacking the necessary personnel needed to service international customers, the need to comply with the additional laws and regulations of countries outside the United States to which the Company is not currently subject, and the added costs to recover, reconfigure, ship and redeploy fixed asset analyzers that have been used internationally. A corresponding loss on the sale of assets is recorded for the difference in the sales price from the cost of the analyzers. Other fixed assets of the Company are sold from time to time after the usefulness has ended. A corresponding gain or loss on the sale of other assets is recorded for the difference in the sales price from the cost of the asset.

Interest Income and Other Income

Interest income and other income primarily consist of interest earned on our cash.

Interest Expense

Interest expense consists of interest on capital leases, notes payable, letters of credit as well as the amortization of debt discounts. In certain debt transactions that have components required to be measured at fair value, the excess of the fair value over the proceeds received is recorded as an interest expense.

Loss on Extinguishment of Warrants

We entered into an agreement where certain common stock warrants were exchanged for a convertible note payable and warrants. This is considered an extinguishment of a liability as there is both the addition and

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elimination of a substantive conversion option at the date of exchange. The accounting of an extinguishment of a liability requires the difference between the fair value of the warrants extinguished and the fair value of the consideration provided be recorded as a loss in the statement of operations.

Change in Fair Value of Derivative Liability

We have issued certain common stock warrants that contain a price adjustment clause which states that in the event the Company issues common stock for a price less than the exercise price of warrants, the exercise price will be reduced to the issuance price of the common stock. We have also issued convertible notes payable that contain a conversion feature that could result in modification of the conversion price to issue a variable amount of additional common shares. The Company has determined that the warrants are accounted for as a derivative liability and the conversion feature of the convertible notes is an embedded derivative. These derivatives are recorded at fair value measured at the transaction date and again at each reporting period. Any difference in fair value between the transaction date and future reporting periods must be recognized in earnings for the period.

Results of Operations

Comparison of the Years Ended December 31, 2015 and 2014

The following table sets forth our results of operations for the years ended December 31, 2015 and December 31, 2014:

	Years Ended December 31,
	2015			2014
Revenue	$	2,142,040		$	1,606,254
Cost of sales		4,813,415			3,968,185
Gross loss		(2,671,375	)		(2,361,931	)
Operating Expenses
Research and development		8,485,668			4,609,913
Selling and marketing		5,007,320			2,301,610
General and administrative		6,241,433			2,928,186
(Gain) loss on sale of assets		—			(8,166	)
Total operating expenses		19,734,421			9,831,543
Loss from operations		(22,405,796	)		(12,193,474	)
Interest expense		(11,757,445	)		(1,136,054	)
Interest income		18,193			3,176
Loss on extinguishment of warrants		(4,038,063	)		—
Change in fair value of derivative liability		(19,714,808	)		(8,396,169	)
Provision for income taxes		(1,250	)		(5,297	)
Net loss	$	(57,899,169	)	$	(21,727,818	)

Revenue

Revenue increased by $535,786 or 33.4% in the twelve months ended December 31, 2015 to $2,142,040 as compared to $1,606,254 in same period of 2014. This increase was attributable to the number of customers in the U.S. increasing to 186 at December 31, 2015 as compared to 84 at December 31, 2014.

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Cost of Sales

Cost of sales increased $845,230, or 21.3%, in the twelve months ended December 31, 2015 to $4,813,415 as compared to $3,968,185 for the same period of 2014. The increase is due mainly to a $453,806 increase in costs associated with manufacturing additional C. diff assays to meet the increased demand for our product, $314,745 in depreciation on additional analyzers and manufacturing equipment needed to support the increase in customers and a $76,679 increase in royalties. The negative gross margin decreased from 147.0% in the year ended December 31, 2014 to 124.7% in the year ended December 31, 2015 primarily due to the decrease in the cost of our C. diff assays due to increased production that allowed for economies of scale and the allocation of fixed costs over a greater number of units as well as increased utilization of capacity in our analyzer manufacturing.

Research and Development

Research and development expenses increased $3,875,755, or 84.1%, in the twelve months ended December 31, 2015 to $8,485,668 as compared to $4,609,913 for the same period of 2014. The increase was due to an increase in salaries of $1,425,033 as the result of hiring new developers and scientists, the increased cost of $1,352,191 for the supply of internal assays and research and development materials associated with the development of our new products, an increase of $500,053 in costs associated with our clinical trials for Staph ID/R and shiga toxin producing e.coli product candidates, an increase of $257,332 in outside development consultants and all other expenses of $341,146.

Selling and Marketing

Selling and marketing expenses increased $2,705,710 or 117.6%, in the twelve months ended December 31, 2015 to $5,007,320 as compared to $2,301,610 for the same period of 2014. The increase was due primarily to an increase of $2,063,978 in salaries for new sales and marketing personnel as well as increased sales commissions as a result of new customers, an increase of $269,740 in travel costs, an increase of $237,988 in marketing and public relations costs as we have expanded our marketing efforts and an increase in all other expenses of $134,004.

General and Administrative

General and administrative expenses increased $3,313,247, or 113.2%, in the twelve months ended December 31, 2015 to $6,241,433 as compared to $2,928,186 for the same period of 2014. The increase was due to an increase in salaries in the amount of $1,106,664 due to increased accounting and human resource personnel as well as executive bonuses awarded during the year, an increase in legal, accounting and investor relations fees of $707,122 associated with our public and debt offerings, an increase in non-cash compensation of $499,822 due to the fair value of the issuance of the subordination warrants, an increase in board of directors fees, directors and officers and other general insurance in the amount of $623,451 and an increase in all other expenses of $376,188.

Interest Expense

Interest expense increased by $10,621,391 or 934.9% in the twelve months ended December 31, 2015 to $11,757,445 as compared to $1,136,054 for the same period of 2014. The increase was due to a non-cash charge in the amount of $10,657,904 as the result of the excess of the fair value of the components of our convertible note payable over the proceeds we received in the transaction. This was partially offset by a $36,513 decrease in all other debt payments amortized to interest.

Interest Income

Interest income increased by $15,017 or 472.8% in the twelve months ended December 31, 2015 as compared to the same period of 2014, due to an increase in our average cash balance during 2015.

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Loss on Extinguishment of Warrants

The loss on extinguishment of warrants in the amount of $4,038,063 in the twelve months ended December 31, 2015 was due to the extinguishment of 1,050,000 Series C Warrants for $2.1 million in convertible notes payable and associated Series D Warrants. This is considered an extinguishment of a liability as there is both the addition and elimination of a substantive conversion option at the date of exchange. The accounting of an extinguishment of a liability requires the difference between the fair value of the warrants extinguished and the fair value of the consideration provided be recorded as a loss in the statement of operations. The fair value of the $2.1 million convertible note and warrants issued as consideration for the exchange was $6,378,303 and the fair value of the Series C Warrants was $2,340,240.

Change in fair value of derivative liability

The loss in earnings resulting from the change in fair value of derivative liability increased by $11,318,639 or 134.8%, in the twelve months ended December 31, 2015 to $19,714,808 as compared to $8,396,169 for the same period of 2014. The increase was due mainly to the follow-on offering of the sale of Units in February 2015. The excess of the fair value on the transaction date of the components of the offering over the net proceeds resulted in an increase of $32,738,211 to the loss in earnings. This increase was partially offset by a decrease in the derivative liability of $21,419,572 which represents the change in the estimated fair value of warrants accounted for as derivative liabilities during the twelve months ended December 31, 2015. This decrease was caused mainly by the decrease in the common stock price.

Liquidity and Capital Resources

We have funded our operations to date primarily with net proceeds from our initial and other public offerings, sales of our preferred stock, convertible notes, and revenues from operations. Since January 2014, we issued the following securities to help fund our operations. All share numbers and prices set forth below have been adjusted to reflect a reverse stock split effective as of December 11, 2015 whereby each sixty shares of common stock were replaced with one share of stock (with no fractional shares issued). In addition, we have adjusted the number of shares of preferred stock to reflect the number of shares of common stock into which such preferred stock would convert.

• In 2014, we issued an aggregate of 74,441 shares of our Series C Preferred stock for an aggregate price of $0.4 million at a price per share of $295.20.

• In 2014, we issued an aggregate principal amount of $0.4 million of 8% Convertible Promissory Notes, or the Series D Notes. All outstanding Series D Notes were converted into 1,378 shares of our Series D convertible preferred stock in July of 2014.

• In July 2014, we issued a promissory note for $500,000 to Spring Forth Investments, LLC, an entity controlled by Mr. Spafford. The note has a maturity date of one year, with a one-year extension option. As additional consideration for the note, we issued Spring Forth Investments, LLC 20,000 Series D Preferred Units.

• From April 2014 to July 2014, we issued an aggregate of 1,510,458 shares of our Series D Preferred Units for a net price of $6.7 million (including the conversion of the $0.4 million of convertible promissory notes described above) at a price per unit of $5.00. The 1,510,458 units consisted of 1,510,458 shares of our Series D Preferred stock, 1,510,458 Class A warrants to purchase common stock at a price of $295.20 per share subsequently adjusted to $0.16 per share and 1,510,458 Class B warrants to purchase common stock at a price of $12.00 per share subsequently adjusted to $0.16 per share.

• In October 2014, in our initial public offering, we issued 1,150,000 units for net proceeds of $6,375,335 at a price per unit of $7.00. The 1,150,000 units consist of 1,150,000 shares of our common stock, and 1,150,000 Series A warrants exercisable at $7.00 per warrant. Each Series A warrant was exercisable for one share of common stock for every 60 Series A warrants and one Series B warrant.

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The Series B warrants will only be issued upon the exercise of the Series A warrants. Each Series B warrant is exercisable for one share of common stock for every 60 Series B warrants at $525.00 per share subsequently adjusted to $482.10 per share.

• In February 2015, the Company entered into a loan agreement for $250,000 with Spring Forth Investments, LLC, an entity controlled by Mr. Spafford. The loan bears interest at a rate of twelve percent (12%) per year and has a maturity date of the earlier of (i) 90 days from the date of the loan agreement or (ii) five days after the closing of a registered public offering of securities of the Company. Upon the earlier to occur of the maturity date or the prepayment of the loan, the Company will be obligated to pay a termination fee equal to five percent (5%) of the principal balance of the loan. Payment of the principal balance of the loan plus any accrued interest due and payable may be accelerated upon an event of default by the Company pursuant to the terms and conditions of the loan agreement.

• In February 2015 the Company initiated a Units Offering (the “February 2015 Units Offering”) whereby the Company sold 2,724,000 units at a price of $8.80 per unit for net proceeds of $21.8 million after deducting underwriting commissions and offering costs. Each unit consisted of one share of our Series E Convertible Preferred Stock convertible into four shares of common stock for each 60 shares of Series E Convertible Preferred Stock and eight Series C Warrants convertible into one share of common stock for each 60 Series C Warrants at an exercise price of $153.00 per share.

• On December 30, 2015, the Company entered into a Securities Purchase Agreement (“SPA”) with certain investors pursuant to which we agreed to issue $22.1 million in senior secured convertible notes (“Notes”) that are convertible into shares of Common Stock at a price equal to $1.85 per share subsequently adjusted to $0.16 per share. $20 million of the Notes were issued for cash at an original issue discount in the amount of $1.6 million which is equal to sixteen (16) months of simple interest at a rate of six percent (6.0%) per annum on the aggregate principal of the Notes (assuming, that the entire aggregate original principal amount remains outstanding through the maturity date). $2.1 million of the Notes were issued upon exchange of outstanding Series C Warrants at an exchange value of $2 per Series C Warrant with no original issue discount. Each Note was sold with a related number of Series D warrants to purchase Common Stock. In relation to the Note Financing, certain warrants were issued to prior debt holders as consideration for their agreement to subordinate the debt owed them by the Company to the Notes (the “Subordination Warrants”). Under the terms of the Notes, at closing the Company received an initial tranche of $4.6 million at the close of the Note Financing. Pursuant to the Notes, the remaining cash purchase price of $13.8 million will be released to the Company in subsequent tranches subject to the terms of the agreement.

• On February 24, 2016, the Company closed a public offering of 39.2 million units at a public offering price of $0.16 per unit. The gross proceeds from the offering of the units is approximately $6.3 million. Each unit consists of one share of common stock and 1.5 Series E warrants. Each whole Series E warrant entitles the holder to acquire one share of common stock, subject to adjustment, at an exercise price of $0.25 per share for a period of five years following the date they first become exercisable. The Series E warrants will not be exercisable until at least one year from the date of issuance and exercise of the Series E warrants is subject to certain stockholder approval requirements.

As of December 31, 2015 and 2014, we had approximately $4.8 million and $2.0 million, respectively, in cash. Following the closing of the Company’s public offering of units on February 24, 2016, we had approximately $6.3 million in unrestricted cash. In order to finance the continued growth in product sales, to invest in further product development and to otherwise satisfy obligations as they mature, we will need to seek additional financing through the issuance of common stock, preferred stock, convertible or non-convertible debt financing. Any additional equity financing, if available to us, may not be available on favorable terms, will most likely be dilutive to our current stockholders, and debt financing, if available, may involve restrictive covenants. If we are unable to access additional funds when needed, we will not be able to continue the development of our molecular diagnostic platform, our diagnostic tests or we could be required to delay, scale back or eliminate some or all of

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our development programs and other operations. Any of these events could have an adverse impact on our business, financial condition and prospects.

Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements. We may be unable to continue to operate without the threat of liquidation for the foreseeable future unless we raise additional capital. Following our February 24, 2016 public offering of units for $6.3 million in gross proceeds and assuming the cash balance in our restricted accounts are released to us in accordance with the terms of the convertible notes, we anticipate we will have sufficient cash to fund our planned operations through the end of calendar year 2016. However, we anticipate we will need to seek additional financing prior to the calendar year end in order to continue to fund the growth of our operations into 2017.

Summary Statement of Cash Flows for the Years Ended December 31, 2015 and 2014

The following table summarizes our cash flows for the periods indicated:

	Years Ended December 31,
	2015			2014
Cash used in operating activities	$	(20,669,754	)	$	(12,397,418	)
Cash provided by (used in) investing activities	$	(4,792,987	)	$	315,745
Cash provided by financing activities	$	28,232,677		$	12,888,073
Net increase in cash	$	2,769,936		$	806,400

Cash Flows from Operating Activities

Cash used in operating activities for 2015 was $20,669,754. The net loss of $57,899,169 was partially offset by non-cash items of $19,714,808 for change in fair value of derivative liability, $10,594,182 in interest from issuance of convertible note, $4,038,063 in a loss on extinguishment of warrants, $1,612,086 for depreciation and amortization, $612,006 of warrant issuance costs $232,174 in other non-cash items. The change in operating assets and liabilities offset the cash used in operating activities by $426,096, primarily due to an increase of $602,056 in accounts payable and an increase of $700,790 in accrued liabilities partially offset by a $676,048 increase in inventory and a $200,702 increase in accounts receivables and prepaid and other assets. As of December 31, 2015, 71.6% of accounts receivable was less than 60 days old.

Cash used in operating activities for 2014 was $12,397,418. The net loss of $21,727,818 was partially offset by non-cash items of $8,396,169 for change in fair value of derivative liability, $1,157,976 for depreciation and amortization, $297,244 of stock-based compensation and $82,817 in other non-cash items. The change in operating assets and liabilities further reduced cash used in operations by $603,806, primarily due to a decrease of $217,597 in prepaid and other assets, a decrease of $203,455 in accrued liabilities and a $219,925 increase in inventory and accounts receivables partially offset by an increase of $31,171 in accounts payable. As of December 31, 2014, 64.6% of accounts receivable was less than 60 days old.

Cash Flows from Investing Activities

Cash used in investing activities was $4,792,987 for 2015 and is due to $3,226,943 for the cost of the construction of our analyzer equipment and $1,566,044 of capital expenditures for acquisition of property and equipment.

Cash provided by investing activities was $315,745 for 2014 and is due to $1,500,000 that was provided from the sale-leaseback of analyzers and $35,000 provided from the sale of assets partially offset by $971,122 for the cost of the construction of our analyzer equipment and $248,133 of capital expenditures for acquisition of property and equipment.

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Cash Flows from Financing Activities

Cash provided by financing activities for 2015 of $28,232,677 was from the proceeds of $21,933,874 from the issuance of units in our follow-on offering, proceeds of $4,135,000 from the issuance of convertible notes payable, proceeds of $3,161,220 from exercise of warrants and $250,000 in other financing activities offset by $947,423 in payments of capital leases and $299,994 for the payments of notes payables.

Cash provided by financing activities for 2014 of $12,888,073 was from the proceeds of $6,569,886 from the issuance of preferred stock, proceeds of $6,375,837 from the issuance of units in our initial public offering and proceeds of $1,321,600 in other financing activities offset by $944,606 in payments of capital leases and $434,644 for the payments of notes payables.

Critical Accounting Policies and Estimates

The preparation of the financial statements requires us to make assumptions, estimates and judgments that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Certain of our more critical accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. On an ongoing basis, we evaluate our judgments, including those related to inventories, receivables, recoverability of long-lived assets, and derivative instruments. We use historical experience and other assumptions as the basis for our judgments and making these estimates. Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in those estimates will be reflected in our financial statements as they occur. While our significant accounting policies are more fully described in the footnotes to our financial statements included elsewhere in this 10-K, we believe that the following accounting policies and estimates are most critical to a full understanding and evaluation of our reported financial results. The critical accounting policies addressed below reflect our most significant judgments and estimates used in the preparation of our financial statements.

As an emerging growth company, we have elected to opt-in to the extended transition period for new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

Revenue Recognition

We derive our product revenue from the sale of single use diagnostic test cartridges sold through our dedicated sales force, except in the European Union where we sell through a network of distributors. Product revenue is recognized when all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the products has occurred; (3) the selling price of the product is fixed or determinable; and (4) collectability of that price is reasonably assured. Change in title to the product and recognition of revenue from sales of diagnostic test cartridges occurs at the time of shipment. Shipping and handling fees and related freight costs and supplies for test kits are billed to customers. Additional costs associated with shipping products to customers are included as a component of cost of sales.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are generated from the sale of assays to end users in the United States and to a network of distributors outside the United States. These accounts receivable are recorded at the invoiced amount, net of allowances for doubtful amounts. We routinely review outstanding accounts receivable balances for estimated uncollectible accounts and establish or adjust the allowances for doubtful accounts receivable using the specific identification method and records a reserve for amounts not expected to be fully recovered. Actual balances are not applied against the reserve until substantially all collection efforts have been exhausted. We do not have customer acceptance provisions, but we provide our customers a limited right of return for defective diagnostic test cartridges.

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Inventories

Inventories are stated at the lower of cost or market with cost determined according to the average cost method. Manufactured inventory consists of raw material, direct labor and manufacturing overhead cost components. We review the components of our inventory on a regular basis for excess and obsolete inventory and make appropriate adjustments when necessary. We have made adjustments to, and it is reasonably possible that we may be required to make further adjustments to, the carrying value of inventory in future periods.

Long-Lived Assets

Long-lived tangible assets, including property and equipment, and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. We regularly evaluate whether events or circumstances have occurred that indicate possible impairment and rely on a number of factors, including expected future operating results, business plans, economic projections, and anticipated future cash flows. We use an estimate of the future undiscounted net cash flows and comparisons to like-kind assets, as appropriate, of the related asset over the remaining life in measuring whether the assets are recoverable. Measurement of the amount of impairment, if any, is based upon the difference between the asset’s carrying value and estimated fair value. Fair value is determined through various valuation techniques, including cost-based, market and income approaches as considered necessary. We amortize intangible assets on a straight-line basis over their estimated useful lives.

Our long-lived assets include our analyzers used by hospitals in the United States to run the assays they buy from us. There are no contractual terms with respect to the usage of our analyzers by our customers. Hospitals are under no contractual commitment to use our analyzers. We maintain ownership of these analyzers and, when requested, we can remove the analyzers from the customer’s site. We do not currently charge for the use of our analyzers and there are no minimum purchase commitments of our assays. As our analyzer is used numerous times over several years, often by many different customers, analyzers are capitalized as property and equipment once they have been placed in service. Once placed in service, analyzers are carried at cost, less accumulated depreciation. Depreciation is computed using the straight-line method based on average estimated useful lives. The estimated useful life of our analyzers is determined based on a variety of factors including in reference to associated product life cycles, and average 5 years. As analyzers are integral to the performance of our diagnostic test, depreciation of analyzers is recognized as a cost of sales.

Analyzers used outside the United States are sold to the customer and the sale is accounted for as a sale of fixed assets. Since inception, the Company has not focused nor placed significant emphasis on developing international markets for the Company’s product. The Company has never had an international sales force and has never manufactured analyzers specifically for international markets. Over the past two years on occasion, small, international sales opportunities have come along through international distributors. The analyzers that were sold to them were part of the fixed asset pool of analyzers the Company has, and many of these specific analyzers had been previously placed at customer locations within the United States. In 2014, these opportunities represented 4% of the total analyzers built. For the year ended December 31, 2015 there were no analyzers sold to international distributors. Sale of the fixed asset analyzers in these limited international opportunities have not been based on established product price listings as no such listing exists or has been publicly marketed to customers; instead, the final sales price has been a negotiated amount based on the sale of a functioning fixed asset analyzer, whether or not that analyzer was previously used at another customer site. Similar to other fixed asset sales, there were no stated or implied warranties or other continuing service requirements made with the sale of these assets. For these limited situations, management has elected to sell the fixed asset analyzers as opposed to placing them with international customers (thereby not retaining title over the analyzers) as it would be impractical for us to retain ownership due to, among other reasons, the Company lacking the necessary personnel needed to service international customers, the need to comply with the additional laws and regulations of countries outside the United States to which the Company is not currently subject, and the added costs to recover, reconfigure, ship and redeploy fixed asset analyzers that have been used internationally.

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Income Taxes

We are required to determine the aggregate amount of income tax expense or loss based upon tax statutes in jurisdictions in which we conduct business. In making these estimates, we adjust our results determined in accordance with generally accepted accounting principles for items that are treated differently by the applicable taxing authorities. Deferred tax assets and liabilities resulting from these differences are reflected on our balance sheet for temporary differences in loss and credit carryforwards that will reverse in subsequent years. We also establish a valuation allowance against deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized. Valuation allowances are based, in part, on predictions that management must make as to our results in future periods. The outcome of events could differ over time which would require that we make changes in our valuation allowance.

The tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained if the position were to be challenged by a taxing authority. We examined the tax positions taken in tax returns and determined that there are no uncertain tax positions. As a result, we recorded no uncertain tax liabilities in our balance sheet.

Stock Based Compensation

We measure and recognize compensation expense for stock options granted to our employees and directors, based on the estimated fair value of the award on the grant date. Historically, for all periods prior to our initial public offering, the fair values of the shares of common stock underlying our stock-based awards were estimated on each grant date by our board of directors. In order to determine the fair value of our common stock underlying option grants, our board of directors considered, among other things, contemporaneous valuations of our common stock prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the Statements of Standards for Valuation Services No. 1 of the American Institute of Certified Public Accountants.

Subsequent to the completion of our initial public offering, our board of directors determines the fair value of each share of underlying common stock based on the closing price of our common stock as reported by the NASDAQ Capital Market on the date of grant. We use the Black-Scholes valuation model to estimate the fair value of stock option awards. The fair value is recognized as expense, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award on a straight-line basis.

Derivative Instruments

We account for derivative instruments under the provisions of ASC 815 Derivatives and Hedging. ASC 815 requires the Company to record derivative instruments at their fair value at the initial transaction date and again at each reporting period. Changes in the fair value of derivatives are recognized in earnings. As a result of certain terms, conditions and features included in certain common stock warrants granted by the Company as well as the conversion features in the convertible notes, those provisions are required to be accounted for as derivatives at estimated fair value, with changes in fair value recognized in earnings.

Jumpstart Our Business Startups Act of 2012

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or JOBS Act, was enacted. Section 107 of the JOBS Act, provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Presently, we are an emerging growth company as defined in Section 2(a) of the Securities Act. We are electing to delay such adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result of this election, our financial statements may not be comparable to the financial statements of other public companies. We may take advantage of these reporting exemptions until we are no longer an emerging growth company.

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We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an emerging growth company, we intend to rely on certain of these exemptions, including without limitation, (1) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We may be able to remain an “emerging growth company” until the earliest of (a) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more, (b) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering, (c) the date on which we have issued more than $1 billion in non-convertible debt during the previous three years or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

Controls and Procedures

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. Our independent public registered accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until the first year we are no longer an “emerging growth company”.

In the prior year, we identified a material weakness in our system of internal control over financial reporting relating to processes and controls over properly identifying and accounting for transactions of a complex or non-routine nature. We made progress in this area in 2015. For example, we recognized the need to engage independent consultants to assist with accounting for certain complex transactions. However, due to the nature of our complex transactions, we could not complete the fair valuations in a timely manner. Accordingly, we believe the material weakness has not been fully remediated.

While performing our assessment of internal control over financial reporting, management identified certain design deficiencies relating to segregation of duties, review and approval, and verification procedures, primarily resulting from the limited number of our accounting staff available to perform such procedures. Additionally, management identified certain design deficiencies to access over information systems. Based on the evaluation of our disclosure controls and procedures as of December 31, 2015, our chief executive officer and chief financial officer concluded that, as a result of material weaknesses in our internal control over financial reporting, our disclosure controls and procedures were not effective as of December 31, 2015.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, we have elected not to provide the disclosure required by this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our financial statements required by this item are set forth immediately following the signature page to this annual report on Form 10-K beginning on page F-1 and are incorporated herein by reference. As a smaller reporting company, we have elected not to provide the disclosure regarding supplementary data required by this item.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Internal Control Over Financial Reporting

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2015 pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2015, our chief executive officer and chief financial officer concluded that, as a result of material weaknesses in our internal control over financial reporting, our disclosure controls and procedures were not effective as of December 31, 2015.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed 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 in the United States.

In the prior year, we identified a material weakness in our system of internal control over financial reporting relating to processes andcontrols over properly identifying and accounting for transactions of a complex or non-routine nature. We made progress in this area in 2015. For example, we recognized the need to engage independent consultants to assist with accounting for certain complex transactions. However, due to the nature of our complex transactions, we could not complete the fair valuations in a timely manner. Accordingly, we believe the material weakness has not been fully remediated.

Concurrent with year-end reporting, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the

71

effectiveness of the overall design of our system of internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 (COSO). Under standards established by the Public Company Accounting Oversight Board of the United States (“PCAOB”), a material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In performing this evaluation, management identified certain design deficiencies relating to segregation of duties, review and approval, and verification procedures, primarily resulting from the limited number of our accounting staff available to perform such procedures. Additionally, management identified certain design deficiencies to access over information systems.

Based on its assessment, our management concluded that, as of December 31, 2015, the design of our system of internal control over financial reporting was not effective due to the design deficiencies identified. However, management believes that the identified design weaknesses have not affected our ability to present GAAP-compliant financial statements in this Form 10-K. During the year-end financial statement close we were able to recognize and adjust our financial records to properly present our financial statements and we were therefore able to present GAAP-compliant financial statements. Management does not believe that its design effectiveness with respect to its procedures and controls have had a pervasive effect upon our financial reporting and the overall control environment due to our ability to make the necessary reconciling adjustments to our financial statements.

Management’s Remediation Initiatives

Management plans to implement a number of initiatives to address the ineffective design of the system of internal control over financial reporting, including but not limited to the following:

• Employ additional staff in our finance and accounting department to perform the required tasks to maintain an optimal segregation of duties, review and approval and verification procedures and provide optimal levels of oversight.

• Continue to work closely with our independent SOX consultants to help improve the overall design of our system of internal control over financial reporting and promptly remediate any identified weaknesses

• Continue to evaluate control procedures on an ongoing basis, and, where possible modify those control procedures to improve oversight.

• Continue to engage independent consultants to assist accounting staff with processing transactions and preparing financial statements, especially related to complex transactions.

We believe that these additional resources will enable us to broaden the scope and quality of our controls relating to the oversight and review of financial statements and our application of relevant accounting policies. Furthermore, we plan to implement and improve systems to automate certain financial reporting processes and to improve information accuracy.

Management will continue the process of implementing our new system and reviewing existing controls, procedures and responsibilities to more closely identify financial reporting risks and the required controls to address them. Key control and compensating control procedures will be developed to ensure that weaknesses are properly addressed and related financial reporting risks are mitigated. Periodic control validation and testing will also be implemented to ensure that controls continue to operate consistently and as designed. Management plans to complete this remediation process as quickly as possible. Although we expect it will take at least a year, we cannot estimate how long it will take to remediate the material weakness related to accounting for complex accounting transactions and the overall ineffective design of our system of internal controls over financial reporting. In addition, the remediation steps we have taken, are taking and expect to take may not effectively

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remediate the material weakness, in which case our internal control over financial reporting would continue to be ineffective. We cannot guarantee that we will be able to complete our remedial actions successfully. Even if we are able to complete these actions successfully, these measures may not adequately address our material weakness and may take more than a year to complete. In addition, it is possible that we will discover additional material weaknesses in our internal control over financial reporting or that our existing material weakness will result in additional errors in or restatements of our financial statements.

Limitations of the Effectiveness of Internal Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Controls over Financial Reporting

As reported above, there were changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during our fiscal year ended December 31, 2015 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this item will be included in our definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after our year ended December 31, 2015 in connection with our 2016 Annual Meeting of Stockholders, or the 2016 Proxy Statement, and is incorporated herein by reference.

Code of Business Conduct and Ethics

Our Board of Directors has adopted a written Code of Business Conduct and Ethics applicable to our employees, officers and directors, including those officers responsible for financial reporting. The Code of Business Conduct and Ethics is available on our website at www.gbscience.com. If the Company amends the Code of Business Conduct and Ethics or grants a waiver, including an implicit waiver, from the Code of Business Conduct and Ethics, the Company will disclose the information on its internet website. The waiver information will remain on the website for at least twelve months after the initial disclosure of such waiver.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this item will be included in the 2016 Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by this item will be included in the 2016 Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by this item will be included in the 2016 Proxy Statement and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this item will be included in the 2016 Proxy Statement and is incorporated herein by reference.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) Financial Statements:

See “Index to Financial Statements” set forth on page F-1.

(b) Financial Statement Schedules:

All schedules for which provision is made in the applicable accounting requirements of the Securities and Exchange Commission are not required or the required information has been included within the financial statements or the notes thereto.

(c) Exhibits:

The list of exhibits in the Exhibit Index to this annual report on Form 10-K is incorporated herein by reference.

EXHIBIT INDEX

Exhibit No.	Description
3.1	Seventh Amended and Restated Certificate of Incorporation of Great Basin Scientific, Inc. as amended through December 11, 2015 (12)
3.3	Amended and Restated Bylaws of Great Basin Scientific, Inc. (2)
3.4	Form of Certificate of Designation of Series E Convertible Preferred Stock. (5)
3.5	Certificate of Amendment to Certificate of Designation of Series E Convertible Preferred Stock, as filed with the Delaware Secretary of State on June 23, 2015. (7)
4.1	Specimen certificate evidencing shares of common stock. (2)
4.2	Amended and Restated Voting Agreement dated as of July 30, 2014. (1)
4.3	Third Amended and Restated Investor Rights Agreement dated as of April 21, 2014. (1)
4.4	Form of Second Amended and Restated Series C Warrant. (8)
10.1	Master Lease Agreement by and between Onset Financial, Inc. and Great Basin, dated as of October 16, 2013 (“Onset Lease Agreement”). (1)
10.2	Schedule 001 for Onset Lease Agreement dated October 16, 2013, as amended by that certain amendment dated December 10, 2013 and associated (i) Acceptance and Delivery Certificate, (ii) Bill of Sale and (iii) Sale and Leaseback Agreement. (1)
10.3	Schedule 002 for Onset Lease Agreement dated March 14, 2014, as amended by that certain amendment dated March 18, 2014 and associated (i) Acceptance and Delivery Certificate, (ii) Bill of Sale and (iii) Sale and Leaseback Agreement. (1)
10.4	Financial Advisory Agency Agreement by and between Great Basin and Rona Capital, LLC, dated as of April 15, 2014 (Series D Compensation). (1)
10.5	Financial Advisory Agency Agreement by and between Great Basin and Rona Capital, LLC, dated as of April 15, 2014 (IPO Compensation). (1)
10.6#	Great Basin 2006 Stock Option Plan and forms used in connection therewith. (1)

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Exhibit No.	Description
10.7#	Great Basin 2014 Stock Option Plan and forms used in connection therewith. (1)
10.8#	Great Basin Scientific, Inc. 2014 Omnibus Incentive Plan, as amended. (6)
10.9#	Form of Stock Option Agreement. (2)
10.10	Letter of Appointment Regarding Appointment of David Spafford as Executive Chairman. (3)
10.11	Amended and Restated Series D Preferred Stock and Warrant Purchase Agreement dated July 30, 2014 (the “Series D Purchase Agreement”). (1)
10.12	Form of Class A Warrant to Purchase common stock issued to investors pursuant to the Series D Purchase Agreement. (1)
10.13	Form of Class B Warrant to Purchase common stock issued to investors pursuant to Series D Purchase Agreement. (1)
10.14@	License and Supply Agreement by and between Biohelix Corporation and Great Basin, effective as of January 9, 2009, as amended by (i) that First Amendment dated June 25, 2010, and (ii) that Second Amendment dated January 18, 2011. (1)
10.15@	License Agreement by and between Integrated DNA Technologies, Inc. and Great Basin, effective as of August 5, 2010, as amended by (i) that First Amendment dated February 21, 2012, (ii) that Second Amendment dated October 17, 2012, (iii) that Third Amendment dated February 21, 2013 and (iv) that Fourth Amendment dated March 19, 2014. (1)
10.16	Reimbursement Agreement dated as of October 30, 2013 by and between Great Basin and Utah Autism Foundation. (1)
10.17	Reimbursement Agreement dated as of March 21, 2014 by and between Great Basin and Utah Autism Foundation. (1)
10.18	Reimbursement Agreement dated as of October 30, 2013 by and between Great Basin and Spring Forth Investments, LLC. (1)
10.19	Security Agreement dated as of October 30, 2013 by and between Great Basin and Utah Autism Foundation. (1)
10.20	Security Agreement dated as of March 21, 2014 by and between Great Basin and Utah Autism Foundation. (1)
10.21	Security Agreement dated as of October 30, 2013 by and between Great Basin and Spring Forth Investments, LLC. (1)
10.22#	Employment Agreement with Ryan Ashton. (2)
10.23#	Employment Agreement with Jeffrey A. Rona. (2)
10.24#	Employment Agreement with Robert Jenison. (2)
10.25	Lease Agreement between JTM, Inc. and Great Basin, dated April 26, 2010, as amended by that certain amendment dated July 1, 2012 (South Side Lease). (1)
10.26	Lease Agreement between JTM, Inc. and Great Basin, dated September 6, 2012 (North Side Lease). (1)
10.27	Loan and Issuance Agreement by and between Great Basin and Spring Forth Investments, LLC, dated July 18, 2014. (1)
10.28	Promissory Note dated July 18, 2014 in favor of Spring Forth Investments, LLC. (1)

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Exhibit No.	Description
10.29	Form of Warrant to Purchase common stock. (4)
10.30	Form of Warrant to Purchase common stock or Preferred Stock. (4)
10.31	Form of Warrant to Purchase common stock. (4)
10.32	Form of Series A Warrant. (3)
10.33	Form of Series B Warrant. (3)
10.34	Amended and Restated Form of Series C Warrant (amended and restated as of June 23, 2015). (7)
10.35	Form of Unit Purchase Option issued in connection with the Registrant’s follow-on offering. (5)
10.36	Form of Representative’s Warrant issued in connection with the Registrant’s initial public offering. (3)
10.37	Loan Agreement between Great Basin and Spring Forth Investments, LLC, dated February 12, 2015. (5)
10.38	Form of Placement Agent Agreement. (15)
10.39	Form of Subscription Agreement. (12)
10.40	Form of Series E Warrant. (15)
10.41	Form of Prefunded Series F Warrant (13)
10.42	Form of Second Amendment Agreement dated December 7, 2015 (8)
10.43	Securities Purchase Agreement dated December 28, 2015 (9)
10.44	Form of Senior Secured Convertible Note, filed as Exhibit A to the Securities Purchase Agreement (9)
10.45	Form of Series D Warrant, filed as Exhibit B to the Securities Purchase Agreement (9)
10.46	Registration Rights Agreement, filed as Exhibit C to the Securities Purchase Agreement (9)
10.47	Pledge and Security Agreement, filed as Exhibit D to the Securities Purchase Agreement (9)
10.48	Amendment Agreement to Securities Purchase Agreement between the Company and certain holders of its Notes and Series D warrants, dated February 8, 2016 (10)
10.49	Settlement Agreement between the Company and Dawson James dated February 8, 2016 (11)
10.50	Consulting Agreement between the Company and Dawson James dated February 8, 2016 (11)
10.51	Amendment Agreement to the Registration Rights Agreement between the Company and certain holders of its convertible notes and Series D warrants, dated February 13, 2016. (14)
10.52	Second Amendment Agreement to the Registration Rights Agreement between the Company and certain holders of its convertible notes and Series D warrants, dated February 29, 2016 (16)
23.1*	Consent of Mantyla McReynolds LLC, independent registered public accounting firm
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Exhibit No.	Description
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Linkbase Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

@ Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a grant of confidential treatment from the SEC.

# Management contract or compensatory plan or arrangement.

(1) Filed as an exhibit to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-197954) filed with the SEC on August 20, 2014, and incorporated herein by reference.

(2) Filed as an exhibit to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-197954) filed with the SEC on September 8, 2014, and incorporated herein by reference.

(3) Filed as an exhibit to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-197954) filed with the SEC on September 23, 2014, and incorporated herein by reference.

(4) Filed as an exhibit to Amendment No. 4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-197954) filed with the SEC on September 24, 2014, and incorporated herein by reference.

(5) Filed as an exhibit to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-201596) filed with the SEC on February 24, 2015, and incorporated herein by reference.

(6) Filed as an exhibit to the Registrant’s Current Report on Form 8-K (File No. 001-3662) filed with the SEC on June 2, 2015, and incorporated herein by reference.

(7) Filed as an exhibit to the Registrant’s Current Report on Form 8-K (File No. 001-3662) filed with the SEC on June 23, 2015, and incorporated herein by reference.

(8) Filed as an exhibit to the Registrant’s Current Report on Form 8-K (File No. 001-36662 ) filed with the SEC on December 7, 2015 and incorporated herein by reference.

(9) Filed as an exhibit to the Registrant’s Current Report on Form 8-K (File No. 001-36662) filed with the SEC on December 28, 2015 and incorporated herein by reference

(10) Filed as an exhibit to the Registrant’s Current Report on Form 8-K (File No. 001-36662) filed with the SEC on February 8, 2016 and incorporated herein by reference

(11) Filed as an exhibit to the Registrant’s Current Report on Form 8-K (File No. 001-36662) filed with the SEC on February 8, 2016 and incorporated by reference.

(12) Filed as an exhibit to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-207761) filed with the SEC on February 9, 2016 and incorporated herein by reference.

(13) Filed as an exhibit to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-207761) filed with the SEC on February 11, 2016 and incorporated by reference.

(14) Filed as an exhibit to the Registrant’s Current Report on Form 8-K (File No. 001-36662) filed with the SEC on February 16, 2016 and incorporated herein by reference.

(15) Filed as an exhibit to Amendment No. 4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-207761) filed with the SEC on February 16, 2016 and incorporated by reference.

(16) Filed as an exhibit to the Registrant’s Current Report on Form 8-K (File No. 001-36662 ) filed with the SEC on February 29, 2016 and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Great Basin Scientific, Inc.
Date: March 1, 2016	By:	/s/ Ryan Ashton
		Ryan Ashton
		President, Chief Executive Officer, Director (Principal Executive Officer)
Date: March 1, 2016	By:	/s/ Jeffrey A. Rona
		Jeffrey A. Rona
		Chief Financial Officer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Name	Title	Date
/s/ David Spafford David Spafford	Director and Executive Chairman	March 1, 2016
/s/ Kirk K. Calhoun Kirk K. Calhoun	Director	March 1, 2016
/s/ Ronald K. Labrum Ronald K. Labrum	Director	March 1, 2016
/s/ Sam Chawla Sam Chawla	Director	March 1, 2016
/s/ Ryan Ashton Ryan Ashton	President, Chief Executive Officer, Director (Principal Executive Officer)	March 1, 2016
/s/ Jeffrey A. Rona Jeffrey A. Rona	Chief Financial Officer (Principal Financial and Accounting Officer)	March 1, 2016

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INDEX TO FINANCIAL STATEMENTS

Great Basin Scientific, Inc. Audited Financial Statements:
Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets as of December 31, 2015 and 2014	F-3
Statements of Operations for the Years Ended December 31, 2015 and 2014	F-4
Statements of Stockholders’ Deficit for the Years Ended December 31, 2015 and 2014	F-5
Statements of Cash Flows for the Years Ended December 31, 2015 and 2014	F-6
Notes to Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Great Basin Scientific, Inc.

Salt Lake City, UT

We have audited the accompanying balance sheets of Great Basin Scientific, Inc. (the “Company”) as of December 31, 2015 and 2014, and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Great Basin Scientific, Inc. as of December 31, 2015 and 2014, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has incurred substantial losses from operations causing negative working capital and negative operating cash flows. These issues raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Mantyla McReynolds, LLC

Mantyla McReynolds, LLC

Salt Lake City, Utah

March 1, 2016

F-2

GREAT BASIN SCIENTIFIC, INC.

BALANCE SHEETS

	December 31,			December 31,
	2015			2014
Assets
Current assets:
Cash	$	4,787,759		$	2,017,823
Restricted Cash		13,800,000			—
Accounts receivable, net		411,390			267,485
Inventory		1,133,142			457,094
Prepaid and other current assets		564,910			376,778
Total current assets		20,697,201			3,119,180
Intangible assets, net		119,171			216,580
Property and equipment, net		7,741,991			4,237,467
Total assets	$	28,558,363		$	7,573,227
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	2,432,459		$	1,369,169
Accrued expenses		1,313,149			612,359
Current portion of notes payable		5,693			49,994
Current portion of convertible notes payable, net of discount		1,638,717			—
Notes payable—related party, net of discount		500,000			441,667
Current portion of capital lease obligations		1,305,426			947,422
Total current liabilities		7,195,444			3,420,611
Notes payable, net of current portion		—			5,693
Convertible notes payable, net of current portion and debt discount		525,000			—
Capital lease obligations, net of current portion		851,410			2,156,837
Derivative liability		43,181,472			9,998,636
Total liabilities		51,753,326			15,581,777
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $.001 par value, 5,000,000 shares authorized; 88,347 and 0 shares issued and outstanding, respectively		88			—
Common stock, $.0001 par value: 200,000,000 and 50,000,000 shares authorized, respectively; 10,390,408 and 84,777 shares issued and outstanding, respectively		1,039			8
Additional paid-in capital		98,707,775			55,996,138
Accumulated deficit		(121,903,865	)		(64,004,696	)
Total stockholders’ deficit		(23,194,963	)		(8,008,550	)
Total liabilities and stockholders’ deficit	$	28,558,363		$	7,573,227

The accompanying notes are an integral part of these financial statements

F-3

GREAT BASIN SCIENTIFIC, INC.

STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2015			2014
Revenues	$	2,142,040		$	1,606,254
Cost of sales		4,813,415			3,968,185
Gross loss		(2,671,375	)		(2,361,931	)
Operating expenses:
Research and development		8,485,668			4,609,913
Selling and marketing		5,007,320			2,301,610
General and administrative		6,241,433			2,928,186
Gain on sale of assets		—			(8,166	)
Total operating expenses		19,734,421			9,831,543
Loss from operations		(22,405,796	)		(12,193,474	)
Other income (expense):
Interest expense		(11,757,445	)		(1,136,054	)
Interest income		18,193			3,176
Loss on extinguishment of warrants		(4,038,063	)		—
Change in fair value of derivative liability		(19,714,808	)		(8,396,169	)
Total other income (expense)		(35,492,123	)		(9,529,047	)
Loss before provision for income taxes		(57,897,919	)		(21,722,521	)
Provision for income taxes		(1,250	)		(5,297	)
Net loss	$	(57,899,169	)	$	(21,727,818	)
Net loss per common share—basic and diluted	$	(51.17	)	$	(1,039.41	)
Weighted average common shares—basic and diluted		1,131,502			20,904

The accompanying notes are an integral part of these financial statements

F-4

GREAT BASIN SCIENTIFIC, INC.

STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Years Ended December 31, 2014 and 2015

											Additional Paid-In Capital			Accumulated Deficit			Total Stockholders’ Deficit
	Preferred Stock						Common Stock
	Shares			Par Value			Shares		Par Value
Balance—December 31, 2013		—		$	—			1,926	$	—	$	9,733,458		$	(42,276,878	)	$	(32,543,420	)
Issuance of common stock and warrants		—			—			19,167		2		6,375,835			—			6,375,837
Exercise of common stock warrants		—			—			2,634		—		31,600			—			31,600
Employee stock option expense		—			—			—		—		297,244			—			297,244
Conversion of preferred stock into common stock		—			—			61,050		6		41,135,405			—			41,135,411.00
Derivative liability on warrants issued and exercised		—			—			—		—		(1,602,467	)		—			(1,602,467	)
Modification of warrants		—			—			—		—		25,063			—			25,063
Net loss for the year		—			—			—		—					(21,727,818	)		(21,727,818	)
Balance—December 31, 2014		—		$	—			84,777	$	8	$	55,996,138		$	(64,004,696	)	$	(8,008,550	)
Issuance of preferred stock and warrants		2,724,000			2,724			—		—		54,489			—			57,213
Cash exercise of Series A common stock warrants		—			—			17,917		2		2,252,018			—			2,252,020
Cash exercise of Series C common stock warrants		—			—			6,400		—		979,200			—			979,200
Cash exercise of unit purchase option		14,750			15			—		—		162,235			—			162,250
Cashless exercise of Class A & B warrants		—			—			9,220		1		(1	)		—			—
Cashless exercise of Class C warrants		—			—			10,095,399		1,010		(1,010	)		—			—
Employee stock option expense		—			—			—		—		110,124			—			110,124
Conversion of preferred stock into common stock		(2,650,403	)		(2,651	)		176,695		18		2,633			—			—
Derivative liability on warrants issued and exercised		—			—			—		—		39,151,949			—			39,151,949
Net loss year to date		—			—			—		—		—			(57,899,169	)		(57,899,169	)
Balance—December 31, 2015		88,347		$	88			10,390,408	$	1,039	$	98,707,775		$	121,903,865		$	(23,194,963	)

The accompanying notes are an integral part of these financial statements

F-5

GREAT BASIN SCIENTIFIC, INC.

STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2015			2014
Cash flows from operating activities:
Net loss	$	(57,899,169	)	$	(21,727,818	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,612,086			1,157,976
Change in fair value of derivative liability		19,714,808			8,396,169
Interest from issuance of convertible note		10,594,182			—
Loss on extinguishment of warrants		4,038,063			—
Gain on sale of assets		—			(8,166	)
Interest converted to preferred stock		—			13,129
Employee stock compensation		110,124			297,244
Warrant issuance and modifications		612,006			25,063
Debt discount amortization		122,050			41,667
Asset disposal		—			11,124
Changes in operating assets and liabilities:
Increase in accounts receivable, net		(143,905	)		(83,070	)
Increase in inventory		(676,048	)		(136,855	)
Increase in prepaid and other assets		(56,797	)		(217,597	)
Increase in accounts payable		602,056			37,171
Increase (decrease) in accrued liabilities		700,790			(203,455	)
Net cash used in operating activities		(20,669,754	)		(12,397,418	)
Cash flows from investing activities:
Acquisition of property and equipment		(1,566,044	)		(248,133	)
Construction of equipment		(3,226,943	)		(971,122	)
Proceeds from sale of assets		—			35,000
Proceeds from sale leaseback		—			1,500,000
Net cash provided by (used in) investing activities		(4,792,987	)		315,745
Cash flows from financing activities:
Proceeds from issuance of common stock		—			6,375,837
Proceeds from exercise of warrants		3,161,220			31,600
Proceeds from issuance of convertible notes payable		4,135,000			100,000
Proceeds from issuance of convertible notes payable - related party		—			300,000
Proceeds from issuance of preferred stock		—			6,569,886
Proceeds from follow-on offering		21,933,874			—
Proceeds from issuance of notes payable - related party		250,000			890,000
Principal payments of capital leases		(947,423	)		(944,606	)
Principal payments of notes payable		(49,994	)		(44,644	)
Principal payments of notes payable -related party		(250,000	)		(390,000	)
Net cash provided by financing activities		28,232,677			12,888,073
Net increase in cash		2,769,936			806,400
Cash, beginning of the period		2,017,823			1,211,423
Cash, end of the period	$	4,787,759		$	2,017,823
Supplemental disclosures of cash flow information:
Interest paid	$	1,055,255		$	1,121,066
Income taxes paid	$	1,250		$	6,447
Supplemental schedule of non-cash investing and financing activities:
Conversion of preferred stock to common stock	$	2,651		$	18,846,539
Issuance of preferred stock as debt discount	$	—		$	100,000
Restricted Cash from Convertible Debt	$	13,800,000		$	—
Conversion of note payable to preferred stock	$	—		$	400,000
Assets acquired through capital leases	$	—		$	807,272
Offering costs incurred but unpaid	$	235,020		$	64,760
Property and equipment included in accounts payable	$	226,214		$	393,119
Cashless exercise of warrants	$	1,011		$	—
Change in derivative liability from convertible debt	$	15,731,315		$	—
Change in derivative liability from exercised and issued warrants	$	39,151,949		$	1,586,181

The accompanying notes are an integral part of these financial statements

F-6

GREAT BASIN SCIENTIFIC, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1    DESCRIPTION OF BUSINESS

Great Basin Scientific, Inc. (the “Company”) (d.b.a., Great Basin Corporation) is a Delaware corporation headquartered in Salt Lake City, Utah. The Company was originally incorporated as Diagnostic Micro Arrays, Inc., a Nevada corporation, on June 27, 2003. The Company changed its name to Great Basin Scientific, Inc. on April 19, 2006. On August 12, 2008, the Company took steps to change its corporate domicile from Nevada to Delaware by forming Great Basin Scientific, Inc., a Delaware corporation, and on August 29, 2008, Great Basin Scientific, Inc., a Nevada corporation, was merged with and into Great Basin Scientific, Inc., a Delaware corporation, wherein the Delaware corporation was the sole surviving entity.

The Company is a molecular diagnostic testing company focused on the development and commercialization of its patented, molecular diagnostic platform designed to test for infectious disease, especially hospital-acquired infections. The Company believes that small to medium sized hospital laboratories, those under 400 beds, are in need of simpler and more affordable molecular diagnostic testing methods. The Company markets a system that combines both affordability and ease-of-use, when compared to other commercially available molecular testing methods, which it believes will accelerate the adoption of molecular testing in small to medium sized hospitals. The system includes an analyzer, which is provided for our customers’ use without charge in the United States, and a diagnostic cartridge, which is sold to our customers. The testing platform has the capability to identify up to 64 individual targets at one time. If the test identifies one to three targets, they are referred to as low-plex tests, or tests, and if they identify four or more targets they are referred to as multi-plex panels, or panels.

The Company currently has two commercially available tests, the first for clostridium difficile, or C. diff, which received clearance from the Food and Drug Administration, or FDA, in April 2012 and the second for Group B Strep, which received clearance from the FDA in April 2015 and launched commercially in June 2015. The Company filed 510(k) applications for two more tests in the second half of 2015, Staph ID/R and STEC, each of which is currently under review by the FDA. Our customers consist of hospitals, clinics, laboratories and other healthcare providers in the United States, the European Union and New Zealand.

NOTE 2    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These financial statements have been prepared to reflect the financial position, results of operations and cash flows of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Reverse Stock Split

On December 11, 2015, the Company effected a reverse stock split of the Company’s common stock whereby each sixty shares of common stock was replaced with one share of common stock (with no fractional shares issued). The par value of the common stock was adjusted from $0.001 per share to $0.0001 per share as a result of the reverse stock split. The authorized shares of the common stock were not adjusted. All common share and per share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split. The quantity of Series E Preferred Stock, Common Warrants, Class A, Class B, Series A, Series B and Series C Warrants as well as employee and other options were not included in the reverse stock split and their outstanding quantities have not been adjusted. However, the conversion and exchange ratios were adjusted as a result of the reverse stock split such that upon conversion each 60 shares of Series E Preferred Stock will be converted into four shares of common stock and upon exercise each 60 warrants or options will be converted into one share of common stock.

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Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Such estimates include the warranty reserve, accounts receivable and inventory reserves, intangible assets and other long lived assets, legal and regulatory contingencies, income taxes, share based arrangements, the derivative liability and others. These estimates and assumptions are based on management’s best estimates and judgments. Actual amounts and results could differ from those estimates.

Cash and Cash Equivalents

The Company considers highly liquid investments with insignificant interest rate risk and original maturities to the Company of three months or less to be cash equivalents. Cash equivalents consist primarily of interest and non-interest bearing bank accounts held in checking, savings and money market accounts. These assets are generally available on a daily or weekly basis and are highly liquid in nature. If the balances are greater than $250,000, the Company does not have FDIC coverage on the entire amount of bank deposits.

Restricted Cash

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded as restricted cash on our balance sheet. On December 30, 2015, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued $22.1 million senior secured convertible notes and received $18.4 million in cash proceeds. Under the terms of the notes, at closing an initial tranche of $4.6 million was available for immediate use by the Company for general corporate purposes. The remaining cash proceeds of $13.8 million is available in three additional tranches that are subject to an account control agreement whereby the restrictions on the proceeds are terminated when the Company meets certain equity conditions (see NOTE 8 CONVERTIBLE NOTES PAYABLE). The restricted cash is deposited in an account that is not FDIC insured.

Accounts Receivable

Accounts receivable are generated from the sale of single use diagnostic test cartridges to end users in the United States and to a network of distributors outside the United States. These accounts receivable are recorded at the invoiced amount, net of allowances for doubtful amounts. The Company routinely reviews outstanding accounts receivable balances for estimated uncollectible accounts and establishes or adjusts the allowances for doubtful accounts receivable using the specific identification method and records a reserve for amounts not expected to be fully recovered. Actual balances are not applied against the reserve until substantially all collection efforts have been exhausted. The Company does not have customer acceptance provisions, but it does provide its customers a limited right of return for defective diagnostic test cartridges.

The allowance for doubtful accounts at December 31, 2015 and 2014 was $16,892 and $5,482, respectively.

Inventories

Inventories are stated at the lower of cost or market with cost determined according to the average cost method. Manufactured inventory consists of raw material, direct labor and manufacturing overhead cost components. The Company reviews the components of its inventory on a regular basis for excess and obsolete inventory and makes appropriate adjustments when necessary. Inventories consisted of the following at December 31, 2015 and 2014:

	December 31,
	2015		2014
Raw materials	$	758,870	$	360,019
Work-in-process		277,827		91,153
Finished goods		96,445		5,922
Total inventories	$	1,133,142	$	457,094

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Property and Equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets (which range from three to ten years) using the straight-line method. Amortization of leasehold improvements is computed on the straight-line method over the shorter of the lease term or estimated useful lives of the assets. The analyzers that the Company manufactures and retains title over are placed with customers and are recorded in property and equipment under “Analyzers.” The materials used for the manufacture of the analyzers are recorded in property and equipment under “Construction in progress.” Major renewals and betterments are capitalized and depreciated over their estimated useful lives while minor expenditures for maintenance and minor repairs are charged to operations as incurred.

The Company classifies assets to be sold as assets held for sale when (i) Company management has approved and commits to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition and is ready for sale, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Assets classified as held for sale are recorded at the lower of the carrying amount or fair value less the cost to sell and are a component of prepaid and other current assets in the balance sheets. The Company did not have any assets classified as held for sale as of December 31, 2015 and 2014.

Intangible Assets

The Company records its intangible assets at cost which consist of two licensing and royalty agreements for certain intellectual property rights used in the development and manufacture of our products. These intangible assets are being amortized over an estimated useful life of seven years from the date that the technology licenses became effective. As of December 31, 2015 and 2014, intangible assets totaled $600,000 valued at cost, less accumulated amortization of $480,829 and $383,420, respectively. The Company recorded amortization associated with these agreements of $97,407 and $117,445 for the years ended December 31, 2015 and 2014, respectively.

Estimated future intangible asset amortization expense for the next five years are as follows:

Years ended December 31,
2016	$	76,580
2017		42,591
Total estimated amortization expense	$	119,171

Impairment of Long Lived Assets

Long-lived tangible assets, including property and equipment, and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The Company regularly evaluates whether events or circumstances have occurred that indicate possible impairment and relies on a number of factors, including expected future operating results, business plans, economic projections, and anticipated future cash flows. The Company uses an estimate of the future undiscounted net cash flows and comparisons to like-kind assets, as appropriate, of the related asset over the remaining life in measuring whether the assets are recoverable. Measurement of the amount of impairment, if any, is based upon the difference between the asset’s carrying value and estimated fair value. Fair value is determined through various valuation techniques, including cost-based, market and income approaches as considered necessary.

F-9

Derivative Instruments

The Company accounts for derivative instruments under the provisions of ASC 815 Derivatives and Hedging. ASC 815 requires the Company to record derivative instruments at their fair value. Changes in the fair value of derivatives are recognized in earnings. As a result of certain terms, conditions and features included in certain common stock warrants granted by the Company as well as the conversion features in the convertible notes, those provisions are required to be accounted for as derivatives at estimated fair value, with changes in fair value recognized in earnings.

Fair Value of Financial Instruments

The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are:

Level 1—Quoted market prices in active markets for identical assets or liabilities;

Level 2—Significant other observable inputs (e.g. quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable, such as interest rate and yield curves, and market-corroborated inputs); and

Level 3—Unobservable inputs in which there is little or no market data, which require the reporting unit to develop its own assumptions.

The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy at December 31, 2015 and 2014 (see NOTE 12 DERIVATIVE LIABILITIES):

	Fair Value Measurements at December 31, 2015
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	—	$	—	$	26,592,532	$	26,592,532
Convertible notes payable	$	—	$	—	$	16,588,940	$	16,588,940
Total derivative liability	$	—	$	—	$	43,181,472	$	43,181,472

	Fair Value Measurements at December 31, 2014
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	—	$	—	$	9,998,636	$	9,998,636
Total derivative liability	$	—	$	—	$	9,998,636	$	9,998,636

The internal models used to determine fair value for these Level 3 instruments use certain significant unobservable inputs and their use requires determination of relevant inputs and assumptions. Accordingly, changes in these unobservable inputs may have a significant impact on fair value. Such inputs include risk free interest rate, expected average life, expected dividend yield, and expected volatility. These Level 3 liabilities would decrease (increase) in value based upon an increase (decrease) in risk free interest rate and expected dividend yield. Conversely, the fair value of these Level 3 liabilities would generally increase (decrease) in value if the expected average life or expected volatility were to increase (decrease).

Revenue Recognition

The Company derives its product revenue from the sale of single use diagnostic test cartridges sold through our dedicated sales force, except in the European Union where the Company sells through a network of distributors.

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Product revenue is recognized when all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the products has occurred; (3) the selling price of the product is fixed or determinable; and (4) collectability of that price is reasonably assured. Change in title to the product and recognition of revenue from sales of diagnostic test cartridges occurs at the time of shipment. Shipping and handling fees and related freight costs and supplies for test kits are billed to customers. Additional costs associated with shipping products to customers are included as a component of cost of sales.

Research and Development Costs

Research and development costs are charged to operations as incurred. Research and development costs include, among other things, salaries and wages for research scientists and staff (including stock-based compensation), materials and supplies used in the development of new products, developing and validating the manufacturing process, costs for clinical trials, and costs for research and development facilities and equipment.

Stock Based Compensation

The Company has accounted for stock-based compensation under the provisions of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 718, “Compensation—Stock Compensation”. This standard requires the Company to record an expense associated with the fair value of stock-based compensation over the requisite service period. The Company uses the Black-Scholes option valuation model to calculate the value of options at the date of grant. Option pricing models require the input of highly subjective assumptions, including the estimated fair value of the Company’s common stock on the date of grant, the expected term of the stock option, and the expected price volatility of the Company’s common stock over the period equal to the expected term of the grant. Changes in these assumptions can materially affect the fair value estimate. The Company estimates forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Financial Instruments and Concentration of Credit Risk

The Company’s financial instruments include cash and cash equivalents, accounts receivable, and accounts payable. The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value because of their immediate or short-term maturities.

All of the Company’s accounts receivable result from sales in the normal course of business to its customers primarily throughout the United States. The Company attempts to limit its credit risk by performing credit evaluations of new customers and maintaining adequate allowances for potential credit losses. As of December 31, 2015, 17% of the accounts receivable balance resulted from one customer. As of December 31, 2014, 30% of the accounts receivable balance resulted from one customer. Historically, the Company has not experienced any credit losses on such receivables. Allowances for bad debt in the amount of $16,892 and $5,482 were recorded against accounts receivable for the years ended December 31, 2015 and 2014, respectively. There was no bad debt for the year ended December 31, 2015. The Company cannot ensure that such losses will not be realized in the future.

The Company’s customers consist of hospitals, clinics, laboratories and other healthcare providers in the United States, the European Union and New Zealand. For the year ended December 31, 2015, there were no customers that accounted for more than 10% of revenues. For the year ended December 31, 2014, 11% of revenues resulted from one customer who accounted for more than 10% of revenues.

Income Taxes

The Company accounts for income taxes under FASB ASC 740, “Income Taxes”. Deferred income tax assets and liabilities are determined based upon 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

F-11

expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized.

The tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained if the position were to be challenged by a taxing authority. The Company has examined the tax positions taken in its tax returns and determined that there are no uncertain tax positions. As a result, the Company has recorded no uncertain tax liabilities in its balance sheet.

Loss per Common Share

Basic loss per share (“EPS”) is computed by dividing net loss, less cumulative preferred stock dividends for the period, including undeclared or unpaid cumulative dividends (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted EPS is computed by dividing net loss by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include convertible preferred stock, stock options and warrants. The number of potential common shares outstanding is computed using the treasury stock method.

As the Company has incurred losses for the years ended December 31, 2015 and 2014, the potentially dilutive shares are anti-dilutive and are thus not added into the loss per share calculations. As of December 31, 2015 and 2014, there were 27,468,018 and 102,516 potentially dilutive shares, respectively.

Reclassification

During 2015, the Company’s auditors identified a clerical error made by the Company during the preparation of the 2014 cash flow statement, wherein the amount for a certain fixed asset that was included in accounts payable had the sign inadvertently switched. The Company has corrected the presentation of the 2014 cash flows for this clerical item and in doing so, the statement of cash flows for 2014 was adjusted to increase net cash used in operating activities by $786,238, with a corresponding decrease in net cash used from investing activities. Other than the 2014 cash flow statement, no other cash flow statement for any annual or quarterly period, was impacted by this presentation correction. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly financial statements.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-17, “Balance Sheet Classification of Deferred Taxes,” that requires companies to classify all deferred tax assets and liabilities, along with any valuation allowance, as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. During the fourth quarter of 2015, the Company elected early adoption of this standard as it improved the efficiency of the year end financial reporting process for income taxes and applied the changes retrospectively to all prior periods presented in its financial statements.

In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” that simplifies the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost

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or net realizable value test. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its financial statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of debt discounts or premiums. The ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. During the year 2015, the Company elected early adoption of this standard and applied the changes in its financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15 Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern. The update is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. During the year 2015, the Company elected early adoption of this standard and applied the changes in its financial statements and related disclosures.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. In April 2015, the FASB deferred the effective date of ASU 2014-09 to fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2014-09 on its financial statements and related disclosures.

NOTE 3    GOING CONCERN

The Company’s financial statements have been prepared on a going concern basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. The Company has incurred substantial losses from operations causing negative working capital and negative operating cash flows, which raise substantial doubt about the Company’s ability to continue as a going concern. The Company sustained a net loss for the year ended December 31, 2015 of $57,899,169 and a net loss for the year ended December 31, 2014 of $21,727,818, and has an accumulated deficit of $121,903,865 as of December 31, 2015.

The Company intends to develop its products and expand its customer base, but does not have sufficient realized revenues or operating cash flows in order to finance these activities internally. As a result, the Company intends to seek financing in order to fund its working capital and development needs.

The Company has been able to meet its short-term needs through private placements of convertible preferred securities, an initial public offering (“IPO”), a secondary public offering, convertible debt financing and the sale and leaseback of analyzers used to report test results. The Company will continue to seek funding through the issuance of additional equity securities, debt financing, the sale and leaseback of analyzers, or a combination of these items. Any proceeds received from these items could provide the needed funds for continued operations and development programs. The Company can provide no assurance that it will be able to obtain sufficient additional financing that it needs to alleviate doubt about its ability to continue as a going concern. If the

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Company is able to obtain sufficient additional financing proceeds, the Company cannot be certain that this additional financing will be available on acceptable terms, if at all. To the extent the Company raises additional funds by issuing equity securities, the Company’s stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. If the Company is unable to obtain additional financings, the impact on the Company’s operations will be material and adverse.

NOTE 4    PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2015 and December 31, 2014:

	December 31,
	2015			2014
Construction in progress	$	680,679		$	1,133,654
Analyzers		5,045,481			1,139,352
Computers and office equipment		462,441			290,754
Machinery and equipment		2,372,558			1,060,993
Leasehold improvements		393,271			366,945
Furniture and fixtures		72,618			16,145
Equipment under capital lease		2,148,476			2,148,476
		11,175,522			6,156,319
Less: accumulated depreciation and amortization		(3,433,531	)		(1,918,852	)
Total property and equipment, net	$	7,741,991		$	4,237,467

The total expense for depreciation of fixed assets and amortization of leasehold improvements was $1,514,679 and $1,040,531 for the years ended December 31, 2015 and 2014, respectively. Of this amount $1,199,183 and $601,947 was for depreciation of equipment under capital leases for the year ended December 31, 2015 and 2014, respectively.

NOTE 5    ACCRUED EXPENSES

Accrued liabilities consisted of the following as of December 31, 2015 and 2014:

	December 31,
	2015		2014
Accrued payroll	$	1,094,666	$	421,645
Royalties		75,642		166,540
Accrued interest		44,291		—
Accrued property and use tax		10,905		10,905
Other		87,645		13,269
Total accrued liabilities	$	1,313,149	$	612,359

NOTE 6    LEASE COMMITMENTS

Capital Leases

The Company has entered into two lease agreements for the sale-leaseback of molecular diagnostic analyzers. The first agreement was entered into in November 2013 and provided for the sale of 125 molecular diagnostic analyzers for a sales price of $2,500,000, which are being leased back for a base period of thirty-six monthly payments of $74,875. The second agreement was entered into in April 2014 for the sale of 75 molecular diagnostic analyzers for a sales price of $1,500,000, which are being leased back for a base period of twenty-four

F-14

monthly payments of $64,665. At the end of each lease term, the leases shall automatically renew for twelve additional months at the current monthly rate unless the Company gives written notice 150 days prior to the end of the lease. If timely notice is given the Company shall have the opportunity to: 1) repurchase the analyzers for a negotiated purchase price, not to exceed forty percent of their original cost; or 2) terminate the lease, return the property and enter into a new lease with new property that replaces the property of the old lease. Both the Company and the lessor shall have the right to reject any terms of option 1 or 2 and if rejected, the 12 month extension shall apply. As such, the Company is amortizing the capital lease over a forty-eight month period for the first agreement and a thirty-six month period for the second agreement. The second agreement also has a rewrite clause wherein the leasing company agrees to use its commercially best efforts to rewrite the lease agreement at more favorable terms when the Company raises sufficient capital to cover current and future expenses for a minimum of 12 months. The Company’s obligations under the lease agreements are secured by a $500,000 letter of credit. The Letter of Credit was issued by a bank at the behest of a non-profit foundation and Spring Forth Investments LLC both of which are related parties through Mr. David Spafford, a director of the Company. The Company is obligated to reimburse the non-profit foundation and Spring Forth Investments LLC for any draws made under the Letter of Credit. The lease agreement is also secured by personal guarantees from Mr. Ryan Ashton, the Chief Executive Officer of the Company, and Mr. Spafford (See Note 14 RELATED PARTY TRANSACTIONS). The lease is accounted for as a capital lease sale-leaseback transaction in accordance with ASC 840, “Leases”.

Annual future minimum lease payments of capital leases for the next five years are as follows:

Years ended December 31,
2016	$	1,694,006
2017		923,908
Total capital lease payments		2,617,914
Less amount representing interest		(461,078	)
Total future minimum lease payments		2,156,836
Less current portion of capital leases		(1,305,426	)
Long term portion of capital leases	$	851,410

Operating leases

The Company leases approximately 33,000 square feet of building space located in Salt Lake City, Utah pursuant to two lease agreements totaling $21,226 in base rent per month. The leases expire on April 30, 2016 and each have two options, with each option for a three year renewal period. We also lease approximately 13,399 square feet of office space located at another location in Salt Lake City, Utah for use as our executive offices and labs. Base rent payments due under the lease are expected to be approximately $1,231,526 in the aggregate over the term of the lease of 65 months beginning on December 1, 2015. While the tenant improvements are being completed, we are leasing temporary office space in the same building on a monthly basis for base rent of $8,437 per month. The Company also leases certain office equipment such as copiers and printers under operating lease agreements that expire at various dates.

Amounts charged to expense under operating leases were $279,296 and $293,773 for the years ended December 31, 2015 and 2014, respectively.

F-15

Operating lease commitments for the next five years are as follows:

Years ended December 31,
2016	$	355,797
2017		246,255
2018		252,092
2019		259,132
2020		266,455
Total operating lease commitments	$	1,379,731

NOTE 7    NOTES PAYABLE

The Company purchased certain machinery and equipment under two note payable agreements which consist of the following as of December 31, 2015 and 2014:

	December 31,
	2015			2014
Note payable, 15.2% interest, monthly payments of $1,328, due February 6, 2016, secured by equipment	$	2,607		$	16,938
Note payable, 10.0% interest, monthly payments of $3,161, due January 1, 2016, secured by equipment		3,086			38,749
Total notes payable		5,693			55,687
Less: current portion of notes payable		(5,693	)		(49,994	)
Long term portion of notes payable	$	—		$	5,693

NOTE 8    CONVERTIBLE NOTES PAYABLE

On December 30, 2015, the Company entered into a Securities Purchase Agreement (“SPA”) with certain investors pursuant to which it agreed to issue $22.1 million in senior secured convertible notes (“Notes”) and Series D Warrants (further described below). The Notes are convertible into 11,945,946 shares of Common Stock at a price equal to $1.85 per share, subject to adjustment for certain dilutive events and currently subject to a 19.9% cap as described below. $20 million of the notes were issued for cash proceeds totaling $18.4 million with an original issue discount in the amount of $1.6 million which is equal to sixteen (16) months of simple interest at a rate of six percent (6.0%) per annum on the aggregate principal of the Notes (assuming, that the entire aggregate original principal amount remains outstanding through the maturity date). $2.1 million of the Notes were issued to extinguish 1,050,000 outstanding Series C Warrants at an extinguish value of $2.00 per warrant. The Notes are senior secured obligations of the Company and will rank senior to all outstanding and future indebtedness of the Company. They will be secured by a first priority perfected security interest (subject to permitted liens as defined in the Notes) in all of the current and future assets of the Company. The Notes contain standard and customary events of default and the entire principal balance is subject to the default and redemption provisions contained in the Notes, regardless of whether or not any of the proceeds have been released from the Company’s restricted accounts. The Notes also have a provision that the Company is required to reserve at least 120,000,000 shares of authorized and unissued common stock for issuance pursuant to the Notes and associated Series D warrants.

In connection with the issuance of the Notes under the SPA, the Company issued Series D Warrants (the “Series D Warrants”), exercisable to acquire 3,503,116 shares of Common Stock, subject to a one time adjustment on December 31, 2016 under the terms of the Series D Warrants (see NOTE 11 WARRANTS). Each Series D Warrant is exercisable by the holder beginning six months after December 30, 2015 and continuing for a period five years thereafter. Each Series D Warrant was exercisable initially at $1.85 per share of common stock, subject to adjustments for certain dilutive events and subject to an exercise price floor equal to $1.16 per share.

F-16

The Company has agreed to make amortization payments with respect to the Notes in twelve (12) equal installments beginning four (4) months after the original date of issuance of December 30, 2015 (each, an “Installment Date”). On each installment date, assuming certain equity conditions are met, the installment payment shall automatically be converted into shares of Common Stock at (i) at 80% of the five day volume weighted average price of the common stock for the first four payments and (ii) at 85% of the five day volume weighted average price of the common stock for the last 8 payments with both conversion rates being subject to a floor conversion price of $0.20.

Under the terms of the Notes, at closing the Company received an initial tranche of $4.6 million for immediate use for general corporate purposes. The remaining cash proceeds of $13.8 million are being held in a restricted account and will be released to the Company from the Company’s restricted accounts in subsequent equal tranches subject to certain equity conditions and the following terms and conditions:

(1) 25% will be released 30 trading days following the later of (i) the “Control Account Release Eligibility Date” and (ii) the first installment date under the Note,

(2) 25% will be released 90 trading days following the Control Account Release Eligibility Date and

(3) 25% will be released 120 trading days following the Control Account Release Eligibility Date.

“Control Account Release Eligibility Date” means the later of (x) the date the Company obtains the required stockholder approval of the issuance of the shares of common stock upon conversion of the notes pursuant to the rules of the NASDAQ Stock Market and (y) the earlier of (I) the date a resale registration statement registering all of the shares of Common Stock issuable upon conversion of the Notes and (II) the initial date the shares of Common Stock issuable upon conversion of the Notes may be freely sold by a non-affiliate of the Company pursuant to Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”). If shareholder approval is not obtained the Notes will go into default and restricted cash will not be released.

The dilutive events that provide for the adjustment of the conversion price of the Notes and the exercise price of the Series D Warrants relate to any transaction in which the Company issues or is deemed to have issued shares of common stock for consideration per share less than the conversion price then in effect.

The issuance of shares of common stock upon conversion of the Notes is subject to the rules of the NASDAQ Capital Market which requires an initial cap of 19.9% of the Company’s issued and outstanding shares of common stock on December 30, 2015 unless and until the Company’s stockholders approve removal of the cap. Further, the current exercise price floor of $1.16 on the exercise price of the Series D Warrants is subject to removal upon approval of the Company’s stockholders at which point the exercise price of the Series D Warrants will automatically reset pursuant to its anti-dilution provisions as if the exercise price floor was not applicable since the issuance of the Series D Warrants.

Convertible Notes of $20 Million Issued for Cash

$20 million of the Notes were issued for cash proceeds of $18.4 million with an original issue discount in the amount of $1.6 million. In addition the Company incurred debt issuance costs in the amount of $568,685. The conversion feature in the Notes represents an embedded derivative that requires bifurcation due to the ratchet provision described above related to the conversion feature. The provisions in the Series D Warrants also require the Company to account for the warrants as derivative liabilities. The original issue discount, the fair value of the embedded conversion feature, the fair value of the Series D Warrants and the debt issuance costs are all together considered the debt discount. Any excess of the total debt discount and the face value of the convertible notes are recorded to interest expense in the statement of operations.

The initial fair value of the embedded conversion feature on the $20 million portion of the note was valued using a binomial model with Monte Carlo simulation, resulting in a fair value of $14,788,365. The initial fair value of the Series D Warrants related to the $20 million note was also valued using a binomial model with Monte Carlo

F-17

simulation, resulting in a fair value of $13,637,132. The Company recorded a charge to interest expense in the amount of $10,594,182 in the statement of operations for the year ended December 31, 2015, representing the excess of the total debt discount over the face value of the convertible notes. The Company recorded a debt discount in the amount of $20 million which will be amortized over the life of the note using the effective interest method. As of December 31, 2015, $63,717 of the debt discount had been amortized to interest expense.

Convertible Notes of $2.1 Million Issued for Series C Warrants

$2.1 million of the Notes and related Series D Warrants were issued to extinguish 1,050,000 outstanding Series C Warrants. Since the Series C Warrants were derivative liabilities at the time of the transaction, the Company has accounted for this as an extinguishment of liabilities. Accordingly, all consideration issued to extinguish the liabilities were recorded at their fair value on the date of the extinguishment and the liabilities extinguished were removed at their carrying value. Since the liabilities extinguished were derivative liabilities, their carrying value is continuously adjusted to equal their fair value. The fair value of the Series C Warrants that were extinguished was calculated using the predetermined inputs to Black Scholes formula as defined in the Series C Warrant, resulting in a fair value of $2,340,240 for the extinguished warrants. The initial fair value of the embedded conversion feature on the $2.1 million portion of the Notes was valued using a binomial model with Monte Carlo simulation, resulting in a fair value of $1,865,729. The initial fair value of the Series D Warrants related to the $2.1 million note was also valued using a binomial model with Monte Carlo simulation, resulting in a fair value of $2,412,574. The host debt instrument’s fair value was deemed to be $2.1 million. The Company recorded a loss in the amount of $4,038,063 in its statement of operations for the year ended December 31, 2015, representing the excess of the consideration provided over the liability extinguished.

The following table summarizes the convertible notes outstanding at December 31, 2015:

Convertible notes payable, principal	$	22,100,000
Debt discounts		(19,936,283	)
Net convertible note payable		2,163,717
Less current portion		(1,638,717	)
Convertible notes payable, long term	$	525,000

NOTE 9    NOTES PAYABLE—RELATED PARTY

In July 2014, the Company entered into a note agreement for $500,000 with Spring Forth Investments, LLC a company owned by Mr. David Spafford, a director. The original maturity date for the note was July 18, 2015, which was extended by the Company to July 18, 2016 by giving notice and paying an extension fee of $10,000. The note pays interest at an annual rate of 20% and is paid monthly. The Company prepaid the last three months of interest for a total of $25,000 at the time of issuance of the note. As additional consideration for the note, the Company issued 4,000,000 Series D preferred stock units (which were separable into 4,000,000 shares of Series D preferred stock, 20,000 Class A warrants to purchase one share of common stock for every 60 Class A Warrants at an exercise price of $295.20 per share and 20,000 Class B warrants to purchase one share of common stock for every 60 Class B warrants at an exercise price of $12.00 per share) at a value of $100,000 or $0.025 per unit. On the date of the IPO, the 4,000,000 shares of Series D Preferred Stock converted into 334 shares of Common Stock at a conversion ratio of 12,000 to 1. The Series D preferred stock units were accounted as a debt discount to be amortized over the life of the note. As of December 31, 2015 there was no unamortized debt discount.

In February 2015, the Company entered into another loan agreement for $250,000 with Spring Forth Investments, LLC. The loan had an interest rate of twelve percent (12%) per year and matured the earlier of (i) 90 days from the date of the loan agreement, or (ii) five days after the closing of a registered public offering of securities of the Company. In April 2015, the Company paid off the note along with the accrued interest in the amount of $4,192 and a termination fee of $12,500.

F-18

NOTE 10    COMMON AND PREFERRED STOCK

Common Stock

The Company had 200,000,000 and 50,000,000 shares of common stock authorized at a par value of $0.0001 per share as of December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014 there were 10,390,408 and 84,777 shares of common stock issued and outstanding, respectively. The Company has reserved 120,000,000 of authorized but unissued shares of common stock for issuance pursuant to the convertible notes and associated Series D Warrants.

During the year ended December 31, 2014, the Company issued 771 shares of common stock to Spring Forth Investments pursuant to the exercise of the conversion option of 9,250,000 shares of Series A preferred stock at a conversion ratio of 12,000 to 1 (SEE NOTE 14 RELATED PARTY TRANSACTIONS). The Company also issued 2,634 shares of common stock to various unaffiliated investors upon the exercise of 158,000 of Class B warrants for cash proceeds of $31,600.

In October 2014, the Company completed an IPO, whereby the Company sold 19,167 shares of its common stock and 1,150,000 Series A Warrants, which were sold in units of one share of common stock for every 60 units and one Series A Warrant at a public offering price of $7.00 per unit. Each Series A Warrant is exercisable for one share of common stock for every 60 warrants and one Series B Warrant. In addition, the underwriter was granted 57,500 common warrants and also exercised its option to purchase 172,500 Series A Warrants each of which is exercisable for one share of common stock for every 60 warrants. The shares began trading on the NASDAQ Capital Market on October 9, 2014. The aggregate net proceeds received by the Company from the offering were approximately $6.4 million, after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. Upon the closing of the IPO, all outstanding shares of convertible preferred stock converted into 60,279 shares of common stock.

During the year ended December 31, 2015, the Company issued 17,917 shares of common stock pursuant to the cash exercise of 1,074,082 Series A Warrants for total net proceeds of $2,252,020. In conjunction with the exercise of the Series A Warrants, 1,074,082 Series B Warrants to purchase shares of common stock were also issued.

During the year ended December 31, 2015, the Company issued 176,695 shares of common stock pursuant to the conversion of 2,650,403 shares of Series E Convertible preferred stock at a conversion ratio of 60 preferred shares to 4 common shares.

During the year ended December 31, 2015, the Company issued 9,220 shares of common stock pursuant to the cashless exercise of both 508,641 Class A Warrants and 334,889 Class B Warrants.

During the year ended December 31, 2015, the Company issued 10,101,480 shares of common stock pursuant to the exercise of 15,630,027 Series C Warrants. Of these, 10,095,080 shares of common stock were issued as a result of the cashless exercise of 15,246,027 Series C Warrants and 6,400 shares of common stock were issued as a result of the cash exercise of 384,000 Series C Warrants for total net proceeds of $979,200.

Preferred Stock

The Company had 5,000,000 shares of preferred stock authorized at a par value of $0.001 per share as of December 31, 2015 and 2014. As of December 31, 2015 there are 88,347 shares of Series E Preferred Stock issued and outstanding. There were no shares of preferred stock outstanding as of December 31, 2014. The preferred stock may be issued from time to time by the board of directors as shares of one or more classes or series with authority to fix the designation and relative powers including voting powers, preferences, rights, qualifications, limitations, and restrictions relating to the shares of each class or series.

During the year ended December 31, 2014 the Company issued 14,888,211 shares of Series C preferred stock for cash in the amount of $366,250 or $0.0246 per share. The Company also sold 285,566,560 shares of Series D

F-19

preferred stock units for gross proceeds in the amount of $7,139,164 or $0.025 per unit and after deducting offering costs and expenses, the Company received $6,203,636 in net proceeds. The preferred stock units were separated into 285,566,560 shares of Series D preferred stock, 1,427,832 Class A warrants with an exercise price of $4.92 to purchase one share of common stock for every 60 warrants and 1,427,832 Class B warrants with an exercise price of $0.20 to purchase one share of common stock for every 60 warrants. In conjunction with the offering an additional 7,200,000, 466,436 and 251,216 of Series D preferred stock warrants, Class A warrants and Class B warrants, respectively, were granted as part of the offering costs.

During the year ended December 31, 2014, the Company converted notes payable in the amount of $400,000 plus $13,129 in accrued interest into 16,525,121 Series D preferred stock units at a conversion price of $0.025 per share. These units consist of 16,525,121 shares of Series D preferred stock, 82,625 Class A warrants with an exercise price of $4.92 to purchase one share of common stock for every 60 warrants and 82,625 Class B warrants with an exercise price of $0.20 to purchase one share of common stock for every 60 warrants. The shares of Series D preferred stock are convertible into shares of common stock at a ratio of 12,000 : 1, at the option of the holder at any time after issuance. The conversion of the notes was pursuant to the terms of the notes that upon a qualified equity financing of at least $5 million the notes would be converted into shares of the equity securities at the price per share at which the equity securities were issued in the qualified equity financing. The sale of the Series D preferred stock units through July 2014 met this threshold and triggered the conversion.

During the year ended December 31, 2014, as additional consideration for the issuance of the Spring Forth Note (See NOTE 9 NOTES PAYABLE—RELATED PARTY) the Company issued 4,000,000 Series D preferred stock units (which were separable into 4,000,000 shares of Series D preferred stock, 20,000 Class A warrants with an exercise price of $4.92 to purchase one share of common stock for every 60 warrants and 20,000 Class B warrants with an exercise price of $0.20 to purchase one share of common stock for every 60 warrants) at a value of $100,000 or $0.025 per unit.

During the year ended December 31, 2014, Spring Forth Investments exercised its conversion option and converted 9,250,000 shares of Series A preferred stock valued at $1,480,000 into 771 shares of common stock.

The Series C and Series D preferred stock had a conversion price adjustment provision that in the event the Company sells shares of any additional stock, subject to certain exceptions, at a price per share less than the original issue price of the respective series preferred stock, the conversion price shall be adjusted to a price equal to the price paid per share for such additional stock. These conversion price adjustment provisions, and other relevant features of the preferred stock, were analyzed in accordance with the provisions of FASB ASC 815, “Derivatives and Hedging”. The Company evaluated the conversion price adjustment provision embedded in the preferred stock and other relevant features and determined, in accordance with the provisions of the referenced accounting guidance, that such conversion option or other relevant features do not meet the criteria requiring bifurcation as a derivative liability of these instruments. The characteristics of the common stock that is issuable upon a holder’s exercise of the conversion option embedded in the convertible preferred stock are deemed to be clearly and closely related to the characteristics of the preferred shares. Further, the Company determined the other relevant features of the preferred stock are clearly and closely related to the equity host and do not qualify for derivative accounting.

During the year ended December 31, 2014, the Company filed a seventh amended and restated Certificate of Incorporation authorizing a modification to the number of authorize shares of common stock and preferred stock. The number of common shares authorized was amended to 50,000,000 shares and the number of preferred shares authorized was amended to 5,000,000 shares.

In October 2014, upon the closing of the IPO, all outstanding shares of convertible preferred stock converted into 60,279 shares of common stock at a conversion ratio of 12,000 to 1.

F-20

In February 2015 the Company initiated a Units Offering (the “February 2015 Units Offering”) whereby the Company sold 2,724,000 units at a price of $8.80 per unit for net proceeds of $21.8 million after deducting underwriting commissions and offering costs. Each unit consisted of one share of our Series E Convertible Preferred Stock and eight Series C Warrants (the “Units”).

The original terms of the Units provided that shares of Series E Convertible Preferred Stock and the Series C Warrants would automatically separate on August 25, 2015. However, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate prior to August 25, 2015 if at any time after 30 days from February 25, 2015 the closing price of our common stock was greater than $240.00 per share for 20 consecutive trading days (the “Separation Trigger Date”). The Company refers to this separation herein as Early Separation. In the event of Early Separation, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate 15 days after the Separation Trigger Date. In June 2015, the above terms of the Series E Convertible Preferred Stock and Series C Warrants were each modified to allow for an optional early separation and conversion upon the cash exercise of all eight of the Series C Warrants within the Unit.

In June 2015, 48,000 of the Units were separated early pursuant to the optional early separation resulting in the exercise of 384,000 Series C Warrants into 6,400 shares of common stock for cash proceeds of $979,200. On August 25, 2015 the remaining 2,676,000 Units separated into 2,676,000 shares of Series E Convertible Preferred Stock and 21,408,000 Series C Warrants.

Each 60 shares of Series E Convertible Preferred Stock is convertible at the option of the holder into four shares of common stock. The Series E Convertible Preferred Stock has no voting rights. An amendment to the terms of the Series E Convertible Preferred Stock only requires the vote of the holders of Series E Convertible Preferred Stock. With respect to payment of dividends and distribution of assets upon liquidation or dissolution or winding up of the Company, the Series E Preferred Stock shall rank equal to the common stock of the Company. No sinking fund has been established for the retirement or redemption of the Convertible Preferred Stock. As such, the Series E Convertible Preferred Stock is not subject to any restriction on the repurchase or redemption of shares by the Company due to an arrearage in the payment of dividends or sinking fund installments. The Series E Convertible Preferred Stock also has no liquidation rights or preemption rights, and there are no special classifications of our Board of Directors related to the Series E Convertible Preferred Stock.

During the year ended December 31, 2015, 14,750 Underwriter Purchase Options were exercised for cash in the amount of $162,250 or $11.00 per option. Pursuant to the exercise of these options, 14,750 shares of Series E Convertible Preferred Stock and 118,000 Series C Warrants were issued.

During the year ended December 31, 2015, 2,650,403 shares of Series E Convertible Preferred Stock were converted into 176,695 shares of common stock at a conversion ratio of 60 preferred shares to 4 common shares. As of December 31, 2015, 88,347 shares of Series E Convertible Preferred Stock remain outstanding.

F-21

NOTE 11    WARRANTS

As of December 31, 2014, the Company had 5,447,940 warrants outstanding to purchase shares of common stock.

The following table outlines the warrants outstanding and exercisable as of December 31, 2014:

Warrants	Outstanding and Exercisable		Warrant Exercise Price	Common Stock Exchange Ratio	Total Shares of Common Stock Underlying the Warrant		Aggregate Exercise Price for One Common Share	Expiration
Class A		2,041,239	$4.92	60 : 1		34,021	$295.20	April 2021 - July 2021
Class B		1,645,845	$0.20	60 : 1		27,431	$12.00	April 2021 - July 2021
Series A		1,322,500	$7.00	60 : 1		22,042	$420.00	October 2015
Common		438,356	$2.00 - $32.00	60 : 1		7,306	$120.00 - $1,920.00	April 2016 - July 2021
Total Warrants		5,447,940				90,800

During the year ended December 31, 2014 Class A and Class B warrants totaling 2,855,664 were granted as part of the sale for cash of the Series D preferred stock units (see NOTE 10 COMMON AND PREFERRED STOCK).

In addition during 2014 prior to the IPO, 1,048,698 common warrants, Class A warrants and Class B warrants to purchase common stock and 7,200,000 warrants to purchase Series D preferred stock were granted in conjunction with the issuance of certain convertible notes payable, consulting services and as financing fees. The Company determined that the fair value of the warrants granted was nominal due to the fair value of the Company’s common stock as of the grant date being nominal as a result of the priority provisions of the preferred stock outstanding at that time.

In October 2014, 57,500 common warrants and 1,322,500 Series A warrants were issued in conjunction with our IPO (see NOTE 10 COMMON AND PREFERRED STOCK).

In October 2014 upon the closing of the IPO, 2,231,727 outstanding warrants to purchase shares of Series A preferred stock and 7,200,000 outstanding warrants to purchase shares of Series D preferred stock were converted at a ratio of 200 to 1 into 47,158 common warrants to purchase shares of common stock.

In September 2014, 157,093 warrants previously issued were amended to eliminate a clause that would cancel the warrant upon the completion of an IPO. The Company recorded an expense for the incremental fair value based on the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified using the Black-Scholes option valuation model to calculate the fair value. The Company determined the incremental fair value of the warrants to be $25,061 which was expensed in the period as the warrants were fully vested.

The following is the weighted average of the assumptions used in calculating the fair value of the warrants at an exchange ratio of 60 warrants for one share of common stock after they were modified in September 2014 using the Black-Scholes method:

Fair market value of one share of common stock	$	296.40
Aggregate exercise price of 60 warrants	$	600.00
Risk free rate		0.61	%
Dividend yield		0.00	%
Expected volatility		37.23	%
Remaining contractual term		1.97 years

F-22

The following table summarizes the Preferred A stock warrant activity during the year ended December 31, 2014:

	Preferred A Stock Warrants			Weighted Average Exercise Price		Weighted Average Remainder Contractual Term in Years
As of December 31, 2014:
Warrants outstanding as of January 1, 2014		2,231,727		$	0.16		3.1
Granted		—			—		—
Converted		(2,231,727	)		0.16		2.3
Expired		—			—		—
Warrants outstanding as of December 31, 2014		—		$	—		—

The following table summarizes the preferred D stock warrant activity during the year ended December 31, 2014:

	Preferred D Stock Warrants			Weighted Average Exercise Price		Weighted Average Remainder Contractual Term in Years
As of December 31, 2014:
Warrants outstanding as of January 1, 2014		—			—		—
Granted		7,200,000		$	0.025		6.8
Converted		(7,200,000	)	$	0.025		6.7
Expired		—			—		—
Warrants outstanding as of December 31, 2014		—		$	—		—

As of December 31, 2015, the Company had 13,219,597 warrants outstanding to purchase shares of common stock.

The following table outlines the warrants outstanding and exercisable as of December 31, 2015:

Warrants	Outstanding and Exercisable		Warrant Exercise Price	Common Stock Exchange Ratio	Total Shares of Common Stock Underlying the Warrant		Aggregate Exercise Price for One Common Share	Expiration
Class A		1,532,598	$0.03	60 : 1		25,566	$1.85	April 2021 - July 2021
Class B		1,310,956	$0.03	60 : 1		21,862	$1.85	April 2021 - July 2021
Series B		1,074,082	$8.75	60 : 1		17,917	$525.00	March 2021 - July 2021
Series C		5,229,973	$2.55	60 : 1		87,167	$153.00	January 2017
Series D		3,503,116	$1.85	1 : 1		3,503,116	$1.85	June 2021
Subordination		105,516	$1.85	1 : 1		105,516	$1.85	June 2021
Common		463,356	$0.03 - $32.00	60 : 1		7,735	$1.85 - $1,920.00	April 2016 - July 2021
Total Warrants		13,219,597				3,768,879

Class A Warrants

During the year ended December 31, 2015, 508,641 Class A Warrants were exercised pursuant to the cashless exercise provision of the warrant resulting in the issuance of 3,936 shares of common stock. The Class A Warrants include a provision which provides that the exercise price of the Class A Warrants will be adjusted in

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connection with certain equity issuances by the Company. In March 2015, as a result of the February 2015 Unit Offering, the price adjustment provision was triggered for our Class A Warrants and the exercise price was adjusted from $4.92 to $2.20. In December 2015, the price adjustment was triggered again for our Class A Warrants as the Company closed a senior secured convertible note financing and the exercise price was adjusted from $2.20 to $0.03.

Class B Warrants

During the year ended December 31, 2015, 334,889 Class B Warrants were exercised pursuant to the cashless exercise provision of the warrant resulting in the issuance of 5,284 shares of common stock. The Class B Warrants include a provision which provides that the exercise price of the Class B Warrants will be adjusted in connection with certain equity issuances by the Company. In December 2015, the Company closed a senior secured convertible note financing and the price adjustment provision was triggered for our Class B Warrants and the exercise price was adjusted from $0.20 to $0.03.

Series A Warrants

During the year ended December 31, 2015, 1,074,082 Series A Warrants were exercised into 17,917 shares of common stock resulting in net cash proceeds of $2,252,020. The Series A Warrants include a provision which provides that the exercise price of the Series A Warrants will be adjusted in connection with certain equity issuances by the Company. In March 2015, as a result of the February 2015 Unit Offering, the price adjustment provision was triggered for our Series A Warrants and the exercise price was adjusted from $7.00 to $2.20. The Series A Warrants expired on October 15, 2015 and all remaining 248,418 outstanding Series A Warrants expired unexercised.

Series B Warrants

The Company sold Units in connection with the Company’s IPO in October 2014, with one Unit consisting of one share of common stock and one Series A Warrant to purchase: (i) one share of common stock for every 60 Series A Warrants and (ii) one Series B Warrant to purchase one share of common stock for every 60 Series B Warrants. The Series B Warrants are only issued upon the exercise of the Series A Warrants, are exercisable immediately at an exercise price of 125% of the public offering price and expire 6 years from the date of issue. The exercise price and the number of shares for which each Series B Warrant may be exercised is subject to adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock. In addition, subject to certain exceptions, the exercise price of the Series B Warrants is subject to reduction if the Company issues shares of common stock (or securities convertible into common stock) in the future at a price below the then current market price. There have been no issuances that have triggered the price adjustment provision on the Series B Warrants. During the year ended December 31, 2015, the Company issued 1,074,082 Series B Warrants pursuant to the exercise of 1,074,082 Series A Warrants.

Series C Warrants

In connection with the February 2015 Units Offering, the Company issued Series C Warrants to purchase 21,792,000 shares of common stock as part of the Units sold in the follow-on offering (see NOTE 10 COMMON AND PREFERRED STOCK) with and exercise price of $2.55 and expire in five years. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock and the exercise price. The Series C Warrants have a cashless exercise provision where in lieu of payment of the exercise price in cash, the holder may receive, at the Company’s discretion, either a cash payment of a predetermined Black Scholes Value of the number of shares the holder elects to exercise, or a number of shares of the Company’s common stock determined according to a cashless exercise formula using the predetermined Black Scholes Value. On December 11, 2015, an amendment was made to the Series C Warrants to require that all warrants be exercised within 25 trading days or be subject to a mandatory exercise provision.

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In June 2015, 48,000 of the Units were separated early pursuant to the optional early separation as 384,000 Series C Warrants were exercised into 6,400 shares of common stock resulting in cash proceeds of $979,200. On August 25, 2015 the remaining 2,676,000 Units separated into 2,676,000 shares of Series E Convertible Preferred Stock and 21,408,000 Series C Warrants.

From August 25, 2015 through December 31, 2015, 15,128,027 Series C Warrants were exercised pursuant to the cashless exercise provision resulting in the issuance of 9,899,174 shares of Common Stock.

During the year ended December 31, 2015, 14,750 Underwriter Purchase Options were exercised for cash in the amount of $162,250. Upon the exercise of these options, 118,000 Series C Warrants were issued and immediately exercised pursuant to the cashless exercise provision resulting in the issuance of 195,906 shares of common stock.

As of December 31, 2015, 5,229,973 Series C Warrants remain outstanding. Had the cashless exercise provision been exercised by all holders of our Series C Warrants at December 31, 2015, the Company would have had to either pay $11.7 million in cash or issue 9,962,354 shares of common stock. The number of shares of common stock that would be required to satisfy the cashless exercise provision increases as the price of the Company’s stock decreases and decreases as the price of the Company’s stock increases.

Series D Warrants

In connection with the issuance of the Notes under the Securities Purchase Agreement, the Company issued Series D Warrants (the “Series D Warrants”), exercisable to acquire 3,503,116 shares of Common Stock. Each Series D Warrant is exercisable by the holder beginning six months after December 30, 2015 and continuing for a period five years thereafter. Each Series D Warrant will be exercisable initially at an exercise price of $1.85 per share, subject to adjustments for certain dilutive events and subject to an exercise price floor equal to $1.16 per share.

On December 31, 2016, the number of warrants issuable upon exercise of the Series D Warrants will be increased to equal the difference, if positive, obtained by subtracting (x) the shares of Common Stock issuable under the Warrants on the date of issuance from (y) 16.6% of the sum of the number of shares of Common Stock actually outstanding on December 31, 2016, plus the number of shares of Common Stock deemed to be outstanding pursuant to all outstanding options or convertible securities of the Company.

The Series D Warrants are exercisable on a cashless basis in the event that there is no effective registration statement under the Securities Act covering the resale of the shares of Common Stock issuable upon exercise of the Series D Warrants. Pursuant to the registration rights agreement between the investors under the Securities Purchase Agreement and the Company, the Company is required to file a registration statement for these shares of Common Stock and the Company intends to file the registration statement in early 2016.

Subordination Warrants

The Subordination Warrants were issued to Spring Forth Investments LLC and Utah Autism Foundation in relation to their agreement to enter into subordination agreements with the collateral agent in the Note Financing whereby each agreed to subordinate their debt to the Notes issued in the Note Financing. The Subordination Warrants have the same general material terms and conditions of the Series D Warrants.

The Subordination Warrants are exercisable for 105,516 shares of common stock. On December 31, 2016, the number of warrants issuable upon exercise of the Subordination Warrants will be increased to equal the difference, if positive, obtained by subtracting (x) the shares of common stock issuable under the Subordination Warrants on the date of issuance from (y) 0.5% of the sum of the number of shares of common stock actually outstanding on December 31, 2016, plus the number of shares of common stock deemed to be outstanding pursuant to all outstanding options or convertible securities of the Company. Each Subordination Warrant is

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exercisable by the holder beginning six months after December 30, 2015 and continuing for a period five years thereafter. Each Subordination Warrant will be exercisable initially at a price of $1.85 per share, subject to adjustments for certain dilutive events (same as the Series D Warrants) and subject to an exercise price floor equal to the Series D Warrant exercise floor price of $1.16 per share.

Common Warrants

For the year ended December 31, 2015, the Company granted 25,000 Common Stock warrants to a consultant of the Company. The warrants are fully vested, have an exercise price of $2.56 and expire in August 2020. The Company recorded an expense in the amount of $54,489 on the date of grant which represents the fair value of the warrants. The Company estimates the fair value of the warrants at grant date using a Black-Scholes valuation model. The estimates in the Black-Scholes option-pricing model are based, in part, on assumptions, including a stock price volatility of 127.37%, the warrant life of 5 years, a risk free rate of 1.53%, the fair value of $153.60 of the equity stock underlying the option and the aggregate exercise price of $153.60 for one share of common stock.

The following table summarizes the common stock warrant activity during the years ended December 31, 2015 and 2014:

	Common Stock Warrants			Weighted Average Exercise Price $		Weighted Average Remainder Contractual Term in Years
As of December 31, 2014:
Warrants outstanding as of January 1, 2014		274,420			8.00		4.2
Granted		5,331,520			3.91		5.5
Exercised		(158,000	)		0.20		6.6
Expired		—			—		—
Warrants outstanding as of December 31, 2014		5,447,940			4.17		4.9
As of December 31, 2015:
Warrants outstanding as of January 1, 2015		5,447,940			4.17		4.9
Granted		26,617,714			2.71		4.3
Exercised		(17,547,639	)		2.47		4.0
Expired		(1,298,418	)		2.48		3.4
Warrants outstanding as of December 31, 2015		13,219,597			2.71		4.7

Underwriters’ Unit Purchase Option

In connection with the February 2015 Units Offering, the Company issued to the representative of the underwriters’ a Unit Purchase Option (“Option”) to purchase a number of our Units equal to an aggregate of 5% of the Units sold or 136,200 Units. The purchase option has an exercise price equal to 125% of the public offering price of the Units or $11.00, and the units may be exercised on a cashless basis and will expire 5 years from the date of issue. Each Unit consists of one share of Series E Convertible Preferred Stock and eight Series C Warrants. During the year ended December 31, 2015, 14,750 Underwriter Purchase Options were exercised for cash in the amount of $162,250. Pursuant to the exercise of these options, 14,750 shares of Series E Convertible Preferred Stock were issued and immediately converted into 984 shares of common stock and 118,000 Series C Warrants were issued and immediately exercise pursuant to the cashless exercise provision into 195,906 shares of common stock. As of December 31, 2015, 121,450 Unit Purchase Options remain outstanding.

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NOTE 12    DERIVATIVE LIABILITIES

The derivative liability for our instruments classified as derivative liabilities are recorded at fair value at inception and subsequently re-measured to fair value as long as such instruments are classified as derivative liabilities. Changes in the fair value of the derivative liability was included as a component of Other income (expense) and has no effect on the Company’s cash flows. The valuation methodologies used vary by instrument and include a modified Black-Scholes option valuation model utilizing the fair value of underlying common stock and a binomial model with Monte Carlo simulation. The Company has determined the fair value measurements to be a level 3 measurement (see NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES).

Class A Warrants, Class B Warrants, Series A Warrants, Series B Warrants and Certain Common Warrants

Our Class A Warrants, Class B Warrants, Series A Warrants and certain common warrants, have an exercise price adjustment provision that in the event the Company sells shares of any additional stock, subject to certain exceptions, at a price per share less than the original exercise price of the respective warrant, the exercise price shall be adjusted to a price equal to the price paid per share for such additional stock. Our Series B Warrants have an exercise price adjustment provision that in the event the Company sells shares of any additional stock, subject to certain exceptions, at a price per share less than the then current market price, the exercise price shall be adjusted to a price equal to the price paid per share for such additional stock. Such exercise price adjustments prohibit the Company from being able to conclude that the warrants are indexed to the Company’s own stock. Accordingly, these warrants are accounted for as derivative liabilities and are recorded at fair value at each reporting date with the change in fair value being recorded in earnings for the period. In March 2015, as a result of the February 2015 Unit Offering, the price adjustment provision was triggered for our Class A Warrants, Series A Warrants and certain common warrants. In December 2015, as a result of the senior secured convertible note financing, the price adjustment provision was again triggered and the exercise price for our Class A, Class B and certain common warrants was adjusted to $0.03 or the equivalent of $1.85 per share.

The fair value of these warrants was calculated using a modified Black-Scholes option valuation model utilizing the fair value of underlying common stock. Black-Scholes has inherent limitations for use in the case of a warrant with a price protection provision, since the model is designed to be used when the inputs to the model are static throughout the life of a security. Due to the significant variance between the fair market value of the stock and the exercise price, the Black-Scholes option-pricing model resulted in a fair value that equals the current market value of the stock. As such, the fair value of the Class A, Class B and certain other common warrants was estimated to be $0.94 per share, which was the closing price of the common stock on December 31, 2015. The total fair value of these warrants at December 31, 2015 was $61,941.

Series C Warrants and Unit Purchase Option

Our Series C Warrants contain a cashless exercise provision using a predetermined Black Scholes Value. Such provision, if exercised by the holder, would require the Company to settle these warrants, at its option, either by cash payment or the granting of a variable number of common shares. This provision results in the potential for the Company to either have to net cash settle the warrant or potentially issue an indeterminate number of common shares which prohibits the Company from being able to conclude that the warrants are indexed to the Company’s own stock. Accordingly, the warrants and the unit purchase option are accounted for as derivative liabilities and are recorded at fair value at each reporting date with the change in fair value being recorded in earnings for the period.

The Series C Warrants have predetermined inputs to Black Scholes formula for the determination of the fair value of the warrant which the Company used for the calculation of the fair value of the Series C Warrants at December 31, 2015. The inputs to the Black-Scholes formula are a stock price volatility of 135.00%, the warrant life of 5 years, a risk free rate of 1.61%, the fair value of $153.00 of the equity stock underlying the option and the exercise price of $2.55. The total fair value of these warrants at December 31, 2015 was $12,404,503.

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Convertible Notes Conversion Feature

The convertible notes issued on December 30, 2015 contain provisions that protect holders from future issuances of the Company’s common stock at prices below such convertible notes’ respective conversion price. These provisions could result in modification of the conversion price due to a future equity offering and as such the conversion feature cannot be considered indexed to the Company’s own stock. The note also provides that the Company will repay the principal amount at an initial conversion rate subject to certain adjustment with a floor price. These features represent an embedded derivative that requires bifurcation and was recorded at fair value at issuance and again at year end with the change in fair value being recorded in earnings for the period. The Company determined the fair value of the conversion feature using a binomial model with Monte Carlo simulation to reflect different scenarios where reset may be triggered using the following assumptions:

Trading price of common stock on measurement date	$0.94 - $1.10
Conversion price (1)	$0.87 - $1.03
Risk free interest rate (2)	0.86%
Conversion notes lives in years	1.33
Expected volatility (3)	215%
Expected dividend yield (4)	—
Expected probability of shareholder approval (5)	85%

(1) The conversion price of the convertible notes was calculated based the formula in the Notes agreement as of the respective measurement date

(2) The risk-free interest rate was determined by management using the 1.5-year Treasury Bill as of the respective measurement date.

(3) The volatility factor was estimated by using the historical volatilities of the Company’s trading history.

(4) Management determined the dividend yield to be 0% based upon its expectation that it will not pay dividends for the foreseeable future.

(5) Management has estimated a probability of 85% that shareholder approval will be obtained for the removal of the 19.9% conversion cap. This is based on past shareholder voting history and discussions with current shareholders and consultants.

Series D Warrants and Subordination Warrants

In connection with the issuance of convertible notes on December 30, 2015, the Company issued Series D Warrants to acquire 3,503,116 shares of common stock. In addition, the Company issued 105,510 shares of Subordination Warrants. The Company has determined that the provisions contained in the Series D Warrants and the Subordination Warrants could result in modification of the warrants exercise price resulting in a variable number of additional common shares that could be issued. These warrants also contain a provision for a one-time adjustment to the number of warrants issued. On December 31, 2016 the warrant share number for the Series D Warrants and the Subordination Warrants shall be increased by the difference, if positive, between the number of Series D Warrants and Subordination Warrants issued on the issuance date and 16.6%, in the case of the Series D Warrants, and 0.5%, in the case of the Subordination Warrants, of the number of shares of common stock actually outstanding or deemed to be outstanding on December 30, 2016. The issuance of shares of common stock upon conversion of the Notes is subject to an initial cap of 19.9% of the Company’s issued and outstanding shares of common stock on December 31, 2015 unless and until the Company’s shareholders approve removal of the cap (see NOTE 8 CONVERTIBLE NOTES PAYABLE).

These provisions represent a derivative liability that requires recording at fair value at issuance and again at year end with the change in fair value being recorded in earnings for the period. The Company used a binomial model with Monte Carlo simulation to reflect different scenarios where reset may be triggered and to project the range of the additional shares to be issued on December 31, 2016 due to the 16.6% and 0.5% requirement.

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The fair values of the Series D Warrants and Subordination Warrants were determined using a binomial valuation model which included additional warrants to be issued on December 31, 2016 and the following assumptions:

Trading price of common stock on measurement date	$0.94 - $1.10
Conversion price (1)	$1.85
Risk free interest rate (2)	1.80%
Warrant lives in years	5.50
Expected volatility (3)	215%
Expected dividend yield (4)	—

(1) The exercise price of the Series D Warrants calculated by 120% of the arithmetic average of five weighted average price of the common stock on the five consecutive trading days prior to issuance date on December 30, 2015.

(2) The risk-free interest rate was determined by management using the 5-year Treasury Bill as of the respective measurement date.

(3) The volatility factor was estimated by using the historical volatilities of the Company’s trading history.

(4) Management determined the dividend yield to be 0% based upon its expectation that it will not pay dividends for the foreseeable future.

The following summarizes the total change in the value of the derivative liabilities during the years ended December 31, 2015 and 2014:

As of December 31, 2014:
Balance at January 1, 2014	$	—
Issuance of warrants and option		2,487,726
Exercise of warrants		(885,259	)
Change in fair value of warrant and option liability		8,396,169
Balance at December 31, 2014	$	9,998,636
As of December 31, 2015:
Balance at January 1, 2015	$	9,998,636
Issuance of warrants, unit purchase option and convertible note		56,026,979
Exercise and expiration of warrants and unit purchase option		(42,558,951	)
Change in fair value of warrant, option and conversion feature liability		19,714,808
Balance at December 31, 2015	$	43,181,472

NOTE 13    EMPLOYEE STOCK OPTIONS

The Company has three stock based employee compensation plans, the 2006 Stock Option Plan, the 2014 Stock Option Plan, and the Omnibus Plan pursuant to which certain employees and non-employee directors have been

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granted options to purchase common stock. The Company had 792,534 and 703,034 employee stock options outstanding as of December 31, 2015 and 2014, respectively. All options vest in installments over a three to four year period and expire ten years from the date of grant.

During the year ended December 31, 2014, the Company awarded 619,781 common stock options to certain employees and non-employee directors under the 2014 Stock Option and Omnibus Option plans. The options have an exercise price ranging from $2.00 to $7.00 per option expire ten years from date of issuance and vest over a period of three to four years. Pursuant to the reverse stock split on December 11, 2015, the exchange ratio upon the exercise of the options was adjusted such that for every 60 options exercised, one share of common stock would be issued.

The Company accounts for employee stock options according to FASB ASC 718 which requires the Company to calculate the fair value of the stock options on the date of grant and amortize over the vesting period of the options. The Company determined the value of 483,000 options granted prior to our IPO in October 2014 to be nominal due to the fair value of the Company’s common stock as of the grant date being nominal as a result of the priority provisions of the preferred stock outstanding at the time. The Company determined the fair value of the remaining 136,784 stock options granted after our IPO in October 2014 to be $306,709 of which $54,394 was expensed in 2014 with the remainder to be expensed over the vesting term of the options.

Also in the year ended December 31, 2014, the Company completed a tender offer to eligible employees to exchange 103,250 employee stock options under the 2006 Stock Option Plan for new options under the 2014 Stock Option Plan. The new options have an exercise price of $3.50 per option with all other terms the same as the original terms under the 2006 Option Plan. Pursuant to the reverse stock split on December 11, 2015, the exchange ratio upon the exercise of the options was adjusted such that for every 60 options exercised, one share of common stock would be issued. These transactions are accounted for under the provisions of FASB ASC 718 as a modification of a stock based compensation award and require the Company to record an expense for the incremental fair value based on the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified. The Company used the Black-Scholes option valuation model to calculate the fair value of the stock options. The Company determined the incremental fair value of the options to be $223,031 which was expensed in 2014 as the options are fully vested.

The following is the range of the weighted average of the assumptions used in calculating the fair value of the options granted after our IPO in October 2014 and the options modified in 2014 using the Black-Scholes method:

Fair market value of one share of common stock	$ 296.40 - 316.80
Aggregate exercise price of 60 options	$ 210.00 - 354.60
Risk free rate	1.06% - 1.70%
Dividend yield	0.00%
Expected volatility	46.31% - 54.97%
Expected term	2.74 - 6.06 years

For the year ended December 31, 2015, the Company awarded 117,500 common stock options under the Omnibus Plan to certain employees and non-employee directors with an exercise price of $2.56 per option that expire in ten years and vest over a three and four year period. The Company determined the value of the 117,500 options granted during the year ended December 31, 2015 to be $268,202 of which $29,309 was expensed in 2015 with the remainder to be expensed over the vesting term of the options.

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The following is the weighted average of the assumptions used in calculating the fair value of the options granted in 2015 using the Black-Scholes method:

Fair market value of one share of common stock	$ 153.60
Aggregate exercise price of 60 options	$ 153.60
Risk free rate	1.71%
Dividend yield	0.00%
Expected volatility	127.52%
Expected term	6.14 years

The following table summarizes the Company’s total option activity for the years ended December 31, 2015 and 2014:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
As of December 31, 2014:
Options outstanding as of January 1, 2014		115,750		$	30.00		6.3
Granted		619,784		$	2.86		9.4
Exercised		—			—		—
Forfeited/expired		(32,500	)	$	8.92		5.7
Options outstanding as of December 31, 2014		703,034		$	2.98		8.8	$	—
As of December 31, 2015:
Options outstanding as of January 1, 2015		703,034		$	2.98		8.8
Granted		117,500		$	2.56		9.6
Exercised		—			—		—
Forfeited/expired		(28,000	)	$	5.16		8.6
Options outstanding as of December 31, 2015		792,534		$	2.84		8.0	$	—

Outstanding and exercisable stock options as of December 31, 2015 and 2014 are as follows:

	Options Outstanding						Options Exercisable
	Number of Options Outstanding		Remaining Life (Years)		Exercise Price		Number of Options Exercisable		Exercise Price		Intrinsic Value
December 31, 2014		703,034		8.8	$	2.98		117,404	$	3.86	$	—
December 31, 2015		792,534		8.0	$	2.84		328,445	$	3.07	$	—

The estimated fair value of the Company stock options, less expected forfeitures, is amortized over the options vesting period on the straight-line basis. The Company recognized the following equity-based compensation expenses during the twelve months ended December 31, 2015 and 2014:

	December 31,
	2015		2014
Stock based compensation expense	$	110,123	$	297,244

As of December 31, 2015 and 2014, there were $408,907 and $252,315 of total unrecognized compensation cost with a remaining vesting period of 2.71 and 3.44 years, respectively.

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NOTE 14    RELATED PARTY TRANSACTIONS

The Company’s obligations pursuant to its sale-leaseback agreements described in NOTE 6 LEASE COMMITMENTS are secured by letters of credit (Letters of Credit) in an aggregate amount of $3,000,000. The Letters of Credit were issued by a bank at the behest of a non-profit foundation (the “Foundation”) and Spring Forth Investments. The Company is obligated to reimburse the Foundation and Spring Forth Investments for any draws made under the Letters of Credit pursuant to two reimbursement agreements between the Company and the Foundation and Spring Forth Investments dated October 30, 2013. Mr. Spafford, one of our directors, and his wife, Susan Spafford, have been designated by the Foundation as “Founding Trustees” under its bylaws and have authority to control certain activities of the Foundation. Our obligations under the reimbursement agreements are secured by a security interest in all of our assets pursuant to a Security Agreement dated October 30, 2013. As of December 31, 2015, no draws on the line of credit had taken place.

In February 2014, we issued a convertible promissory note with an 8% interest rate and 25,000 warrants to purchase common stock to Mr. Ashton. The consideration paid by Mr. Ashton for the note and warrants was $200,000. The maturity date for the promissory note was February 26, 2015, or upon or a qualified equity financing of at least $5 million. This financing was for general working capital purposes. The principal balance of this note, along with accrued interest of $6,751 converted to 8,270,027 Series D Units in July 2014 which separated into 8,270,027 shares of Series D Preferred Stock, 41,350 Class A warrants to purchase common stock exercisable at $4.92 per warrant which expire in July 2021 and 41,350 Class B warrants exercisable at $0.20 per warrant which expire in July 2021. Upon the closing of our IPO, the Series D Preferred Stock converted into 690 shares of common stock. The exercise price of the Class A warrants and Class B warrants has been adjusted pursuant to the price protection feature in the warrants and is currently at $0.03 for both the Class A warrants and Class B warrants. The exchange ratio for the Class A warrants and Class B warrants upon the exercise of the options is such that for every 60 options exercised, one share of common stock would be issued.

In March 2014, we issued a convertible promissory note with an 8% interest rate and 12,500 warrants to purchase common stock to DRS, LLC, an entity controlled by Mr. Spafford. The consideration paid by DRS, LLC for the note and warrants was $100,000. The maturity date for the promissory note was March 10, 2015, or upon a qualified equity financing of at least $5 million. This financing was for general working capital purposes. The principal balance of this note, along with accrued interest of $3,112 converted to 4,124,493 Series D Units in July 2014 which separated into 4,124,493 shares of Series D Preferred Stock, 20,622 Class A warrants to purchase common stock exercisable at $4.92 per warrant which expire in July 2021 and 20,622 Series B warrants exercisable at $0.20 per warrant which expire in July 2021. Upon the closing of our IPO, the Series D Preferred Stock converted into 344 shares of common stock. The exercise price of the Class A warrants and Class B warrants has been adjusted pursuant to the price protection feature in the warrants and is currently at $0.03 for both the Class A warrants and Class B warrants. The exchange ratio for the Class A warrants and Class B warrants upon the exercise of the options is such that for every 60 options exercised, one share of common stock would be issued.

In July 2014, the Company entered into a note agreement for $500,000 with Spring Forth Investments, LLC a company owned by Mr. Spafford. The maturity date for the note is July 18, 2015. The note pays interest at an annual rate of 20% and is paid monthly. The Company may extend the due date of the note to July 18, 2016 by giving notice no later than April 18, 2015 and paying an extension fee of $10,000. The Company prepaid the last three months of interest for a total of $25,000 at the time of issuance of the note. As additional consideration for the note, the Company issued 4,000,000 Series D preferred stock units at a value of $100,000 which separated into 4,000,000 shares of Series D preferred stock, 20,000 Class A warrants to purchase common stock exercisable at $4.92 per warrant and 20,000 Class B warrants to purchase common stock at $0.20 per share. The Series D preferred stock units were accounted as a debt discount to be amortized over the life of the note. As of December 31, 2015 the unamortized debt discount was $58,333. Upon the closing of our IPO, the 4,000,000 shares of Series D Preferred Stock converted into 334 shares of common stock. The exercise price of the Class A warrants and Class B warrants has been adjusted pursuant to the price protection feature in the warrants and is

F-32

currently at $0.03 for both the Class A warrants and Class B warrants. The exchange ratio for the Class A warrants and Class B warrants upon the exercise of the options is such that for every 60 options exercised, one share of common stock would be issued.

In April 2014, the Company entered into two Financial Advisory Agency Agreements with Rona Capital, LLC, an entity owned by Jeffrey A. Rona. Mr. Rona became our Chief Financial Officer in October 2014. The first agreement was for financial advisory services related to the Company’s ongoing financing activities prior to the filing of an S-1 registration with the SEC. The Company agreed to pay Rona Capital $15,000 per month plus reasonable out-or-pocket expenses. In addition, the Company issued warrants to Rona Capital to purchase 7,200,000 Series D units which separated into 7,200,000 Series D Preferred Shares, 36,000 Class A warrants to purchase common stock exercisable at $4.92 per warrant and 36,000 Class B warrants to purchase common stock exercisable at $0.20 per warrant pursuant to the initial S-1 filing with the SEC. The Company also indemnified Rona Capital for claims arising from the agreement, subject to certain exceptions. This agreement terminated upon the final closing of the Series D Preferred Stock financing. Upon the closing of our IPO, the 7,200,000 shares of Series D Preferred Stock converted into 600 shares of common stock. The exercise price of the Class A warrants and Class B warrants has been adjusted pursuant to the price protection feature in the warrants and is currently at $0.03 for both the Class A warrants and Class B warrants. The exchange ratio for the Class A warrants and Class B warrants upon the exercise of the options is such that for every 60 options exercised, one share of common stock would be issued.

The Company also entered into a second Financial Advisory Agency Agreement with Rona Capital effective in June 2014, wherein Rona Capital provided the Company with financial advisory services related to the Company’s ongoing financing activities. The Company paid Rona Capital $15,000 per month and additional cash amounts on the achievement of specified milestones, including $50,000 upon the filing of an S-1 with the SEC and $100,000 upon the closing of an initial public offering.

In relation to the convertible note financing on December 30, 2015, the Foundation and Spring Forth investments agreed to enter into subordination agreements with the collateral agent in the convertible note financing whereby each agreed to subordinate their debt to the notes issued in the convertible note financing. As consideration for their agreement the Company issued them Subordination Warrants exercisable for 105,516 shares of common stock (see NOTE 11 WARRANTS).

NOTE 15    INCOME TAXES

The Company utilizes the asset and liability approach to measuring deferred tax assets and liabilities based on temporary differences existing at each balance sheet date using currently enacted tax rates in accordance with FASB ASC 740. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The income tax expense for the years ended December 31, 2015 and 2014 consists of the following:

	2015		2014
Current
Federal	$	—	$	—
State and Local		1,250		5,297
		1,250		5,297
Deferred
Federal		—		—
State and Local		—		—
		—		—
	$	1,250	$	5,297

F-33

The following is a reconciliation of the reported amount of income tax expense (benefit) for the years ended December 31, 2015 and 2014 to the amount of income tax expenses that would result from applying the statutory rate to pretax income.

The components of the Company’s deferred tax assets for the years ended December 31, 2015 and 2014 are as follows:

	2015			2014
Deferred tax assets:
Net operating losses		4,194,990			18,229,887
Depreciation and amortization		(182,903	)		162,344
Allowance for doubtful accounts		6,324			2,035
Accrued vacation		112,892			85,081
Accrued personal property tax		4,083			4,048
Other		1,652			171
Total deferred tax assets		4,137,036			18,483,566
Less: Valuation allowance		(4,137,036	)		(18,483,566	)
Net deferred tax assets	$	—		$	—

Reconciliation of reported amount of income tax expense for the years ended December 31, 2015 and 2014 consists of the following:

	2015			2014
Benefit for income taxes computed at federal statutory rate	$	(19,685,292	)	$	(7,385,656	)
State income taxes, net of federal tax benefit		1,998,974			(407,156	)
Non-deductible expenses		12,902,916			3,024,860
NOL write off due to Section 382 limitation		23,200,232			—
Increase (decrease) in valuation allowance		(14,346,481	)		4,622,286
Other, net		(71,150	)		150,963
Provision for income taxes	$	1,250		$	5,297
Effective tax rate		(0.01	%)		(0.07	%)

As of December 31, 2015 the Company has generated operating losses. As a result the Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2015 and 2014. The valuation allowance decreased by $14,346,481 during the tax year ended December 31, 2015.

During 2015, the Corporation had a change of ownership for Internal Revenue Code purposes. The amount of the NOLs for federal and state purposes was reduced to the amount that can be used considering those limitations. The amount presented is reduced based on the section 382 limitation and the carryforward period as provided by the federal and state tax laws.

As of December 31, 2015 and 2014, the Company has a net operating loss carry forwards for Federal income tax purposes of $11.5 million and $51.8 million, respectively, which expire in varying amounts during the tax years 2025 and 2035. The Company has net operating loss carry forwards for State income tax purposes of $8.2 million and $32.5 million which expire in varying years from 2025 to 2035.

Under FASB ASC 740, tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of December 31, 2015 and 2014, the Company has no liabilities for unrecognized tax benefits.

F-34

The Company’s policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the years ended December 31, 2015, and 2014, the Company did not recognize any interest or penalties in its statement of operations, nor did it have any interest or penalties accrued in its balance sheet at December 31, 2015 and 2014 relating to unrecognized tax benefits.

The tax years 2012-2015 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which the Company is subject.

NOTE 16    LEGAL PROCEEDINGS

The Company is not currently a party to any pending or threatened legal proceeding or regulatory or government investigations. We may become involved in litigation from time to time relating to claims arising in the ordinary course of our business. We do not believe that the ultimate resolution of such claims would have a material effect on our business, results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material effect on our business, results of operations, financial condition and cash flows.

NOTE 17    GEOGRAPHIC INFORMATION

The Company has both domestic (U.S.) and international customers for its products. Sales for the years ended December 31, 2015 and 2014 were as follows:

	2015		2014
Domestic sales	$	2,096,825	$	1,559,614
International sales		45,215		46,640
Total sales	$	2,142,040	$	1,606,254

NOTE 18    SUBSEQUENT EVENTS

In January and February 2016, the Company issued 64,641,576 shares of common stock pursuant to the cashless exercise of 5,001,687 Series C Warrants, the conversion of 13,967 shares of Series E Preferred Stock and the exercise of 121,450 unit purchase options with the immediate conversion and exercise of the Series E Preferred Stock and Series C Warrants.

In January 2016, the Company settled the cashless exercise of 138,158 Series C Warrants with cash in the amount of $304,017.

On January 21, 2016 all outstanding Series C Warrants were mandatorily exercised utilizing the cashless provision of the warrants. As of March 1, 2016 there are 50,418 Series C Warrants that have yet to be delivered and upon delivery, the Company will issue 563,651 shares of common stock.

In February 2016, the Company entered into a settlement agreement with Dawson James Securities, Inc. (“Dawson James”) pursuant to a dispute related to an underwriting agreement. Dawson James has agreed to terminate its right of first refusal for a one time payment by the Company of $80,000. In addition, Dawson James has agreed to provide consulting services for a 12 month period in consideration of the Company paying them an aggregate consulting fee of $800,000 consisting of $200,000 paid upon execution of the agreement and $50,000 per month for 12 months.

In February 2016, the Company entered into amendment agreements with holders of the Notes and Series D Warrants. The amendments (i) reduced the number of shares of common stock required to be reserved for issuance upon the conversion of the Notes and exercise of the Series D Warrants from 120,000,000 to

F-35

85,000,000. The reduction will expire on April 1, 2016, and (ii) extend the deadline for filing the initial registration statement to register the common stock issuable upon conversion of the Notes and exercise of the Series D Warrants.

In February 2016 the Company completed a public offering of 39.2 million Units. Each Unit consisted of one share of common stock and 1.5 Series E Warrants, each whole Series E Warrant is to purchase one share of our common stock at $0.25 per Series E Warrants. The Company received approximately $6.3 million of gross proceeds and approximately $5.6 million of net proceeds. The Series E Warrants expire six years from the date of issuance but are not exercisable for one year and are subject to a vote of the shareholders and an increase in the number of authorized common stock that the Company can issue.

F-36

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Great Basin Scientific, Inc.:

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-205199) of Great Basin Scientific, Inc. of our report dated March 1, 2016, with respect to the audited financial statements of the Company as of December 31, 2015 and 2014 and for the years then ended, which appears in this Form 10-K. Our report contains an explanatory paragraph describing the conditions that raise substantial doubt about the Company’s ability to continue as a going concern as described in Note 3 to the financial statements.

Salt Lake City, Utah

March 1, 2016

Gateway 5 • 178 South Rio Grande Street, Suite 200 • Salt Lake City, Utah 84101 • Tel. (801) 269-1818 • Fax (801) 266-3481 • www.mmacpa.com

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ryan Ashton, certify that:

1. I have reviewed this annual report on Form 10-K of Great Basin Scientific, 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 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 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: March 1, 2016	By:	/s/ Ryan Ashton
		Ryan Ashton
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey A. Rona, certify that:

1. I have reviewed this annual report on Form 10-K of Great Basin Scientific, 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 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 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: March 1, 2016	By:	/s/ Jeffrey A. Rona
		Jeffrey A. Rona
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Great Basin Scientific, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 1, 2016	By:	/s/ Ryan Ashton
		Ryan Ashton
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Great Basin Scientific, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 1, 2016	By:	/s/ Jeffrey A. Rona
		Jeffrey A. Rona
		Chief Financial Officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Feb. 25, 2016	Jun. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Trading Symbol	GBSN
Entity Registrant Name	Great Basin Scientific, Inc.
Entity Central Index Key	0001512138
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		114,231,984
Entity Public Float			$ 17,800,000

XML

BALANCE SHEETS - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash	$ 4,787,759	$ 2,017,823
Restricted Cash	13,800,000
Accounts receivable, net	411,390	267,485
Inventory	1,133,142	457,094
Prepaid and other current assets	564,910	376,778
Total current assets	20,697,201	3,119,180
Intangible assets, net	119,171	216,580
Property and equipment, net	7,741,991	4,237,467
Total assets	28,558,363	7,573,227
Current liabilities:
Accounts payable	2,432,459	1,369,169
Accrued expenses	1,313,149	612,359
Current portion of notes payable	5,693	49,994
Current portion of convertible notes payable, net of discount	1,638,717
Notes payable-related party, net of discount	500,000	441,667
Current portion of capital lease obligations	1,305,426	947,422
Total current liabilities	7,195,444	3,420,611
Notes payable, net of current portion		5,693
Convertible notes payable, net of current portion and debt discount	525,000
Capital lease obligations, net of current portion	851,410	2,156,837
Derivative liability	43,181,472	9,998,636
Total liabilities	$ 51,753,326	$ 15,581,777
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $.001 par value, 5,000,000 shares authorized; 88,347 and 0 shares issued and outstanding, respectively	$ 88
Common stock, $.0001 par value: 200,000,000 and 50,000,000 shares authorized, respectively; 10,390,408 and 84,777 shares issued and outstanding, respectively	1,039	$ 8
Additional paid-in capital	98,707,775	55,996,138
Accumulated deficit	(121,903,865)	(64,004,696)
Total stockholders' deficit	(23,194,963)	(8,008,550)
Total liabilities and stockholders' deficit	$ 28,558,363	$ 7,573,227

XML

BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2015	Dec. 11, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001		$ 0.001
Preferred stock, shares authorized	5,000,000		5,000,000
Preferred stock, shares issued	88,347		0
Preferred Stock, Shares Outstanding	88,347		0
Common stock, par value	$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000		50,000,000
Common stock, shares issued	10,390,408		84,777
Common stock, shares outstanding	10,390,408		84,777

XML

STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Revenues	$ 2,142,040	$ 1,606,254
Cost of sales	4,813,415	3,968,185
Gross loss	(2,671,375)	(2,361,931)
Operating expenses
Research and development	8,485,668	4,609,913
Selling and marketing	5,007,320	2,301,610
General and administrative	6,241,433	2,928,186
Gain on sale of assets		(8,166)
Total operating expenses	19,734,421	9,831,543
Loss from operations	(22,405,796)	(12,193,474)
Other income (expense):
Interest expense	(11,757,445)	(1,136,054)
Interest income	18,193	3,176
Loss on extinguishment of warrants	(4,038,063)
Change in fair value of derivative liability	(19,714,808)	(8,396,169)
Change in fair value of derivative liability	(19,714,808)	(8,396,169)
Total other income (expense)	(35,492,123)	(9,529,047)
Loss before provision for income taxes	(57,897,919)	(21,722,521)
Provision for income taxes	(1,250)	(5,297)
Net loss	$ (57,899,169)	$ (21,727,818)
Net loss per common share-basic and diluted	$ (51.17)	$ (1,039.41)
Weighted average common shares-basic and diluted	1,131,502	20,904

XML

STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($)	Total	Series A Warrants	Series C Warrant	Preferred Stock, Shares	Preferred Stock, Shares Series A Warrants	Preferred Stock, Shares Series C Warrant	Preferred Stock, Shares Class C Warrant	Common Stock, Shares	Common Stock, Shares Series A Warrants	Common Stock, Shares Series C Warrant	Common Stock, Shares Series A and B Warrants	Common Stock, Shares Class C Warrant	Additional Paid-In Capital	Additional Paid-In Capital Series A Warrants	Additional Paid-In Capital Series C Warrant	Additional Paid-In Capital Series A and B Warrants	Additional Paid-In Capital Class C Warrant	Accumulated Deficit
Beginning balance, value at Dec. 31, 2013	$ (32,543,420)												$ 9,733,458					$ (42,276,878)
Beginning balance, shares at Dec. 31, 2013								1,926
Issuance of stock and warrants	6,375,837							$ 2					6,375,835
Issuance of stock and warrants (in shares)								19,167
Exercise of common stock warrants	31,600												31,600
Exercise of common stock warrants (in shares)								2,634
Employee stock option expense	297,244												297,244
Conversion of preferred stock into common stock	41,135,411							$ 6					41,135,405
Conversion of preferred stock into common stock, shares								61,050
Derivative liability on warrants issued and exercised	(1,602,467)												(1,602,467)
Modification of warrants	25,063												25,063
Net loss for the year	(21,727,818)																	(21,727,818)
Ending balance, value at Dec. 31, 2014	(8,008,550)							$ 8					55,996,138					(64,004,696)
Ending balance, shares at Dec. 31, 2014								84,777
Issuance of stock and warrants	57,213			$ 2,724									54,489
Issuance of stock and warrants (in shares)				2,724,000				0
Exercise of common stock warrants		$ 2,252,020	$ 979,200						$ 2					$ 2,252,018	$ 979,200
Cash exercise of unit purchase option	162,250			$ 15									162,235
Exercise of common stock warrants (in shares)					0	0			17,917	6,400
Cash exercise of unit purchase option(in shares)				14,750				0
Cashless exercise of warrants											$ 1	$ 1,010				$ (1)	$ (1,010)
Cashless exercise of warrants (in shares)							0				9,220	10,095,399
Employee stock option expense	110,124												110,124
Conversion of preferred stock into common stock				$ (2,651)				$ 18					2,633
Conversion of preferred stock into common stock, shares				(2,650,403)				176,695
Derivative liability on warrants issued and exercised	39,151,949												39,151,949
Net loss for the year	(57,899,169)																	(57,899,169)
Ending balance, value at Dec. 31, 2015	$ (23,194,963)			$ 88				$ 1,039					$ 98,707,775					$ 121,903,865
Ending balance, shares at Dec. 31, 2015				88,347				10,390,408

XML

STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net loss	$ (57,899,169)	$ (21,727,818)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,612,086	1,157,976
Change in fair value of derivative liability	19,714,808	8,396,169
Interest from issuance of convertible note	10,594,182
Loss on extinguishment of warrants	4,038,063
(Gain) loss on sale of assets		(8,166)
Interest converted to preferred stock		13,129
Employee stock compensation	110,124	297,244
Warrant issuance and modifications	612,006	25,063
Debt discount amortization	122,050	41,667
Asset disposal		11,124
Changes in operating assets and liabilities:
Increase in accounts receivable, net	(143,905)	(83,070)
Increase in inventory	(676,048)	(136,855)
Increase in prepaid and other assets	(56,797)	(217,597)
Increase in accounts payable	602,056	37,171
Increase in accrued liabilities	700,790	(203,455)
Net cash used in operating activities	(20,669,754)	(12,397,418)
Cash flows from investing activities:
Acquisition of property and equipment	(1,566,044)	(248,133)
Construction of equipment	(3,226,943)	(971,122)
Proceeds from sale of assets		35,000
Proceeds from sale leaseback		1,500,000
Net cash used in investing activities	(4,792,987)	315,745
Cash flows from financing activities:
Proceeds from issuance of common stock		6,375,837
Proceeds from exercise of warrants	3,161,220	31,600
Proceeds from issuance of convertible notes payable	4,135,000	100,000
Proceeds from issuance of convertible notes payable - related party		300,000
Proceeds from issuance of preferred stock		6,569,886
Proceeds from follow-on offering	21,933,874
Proceeds from issuance of notes payable - related party	250,000	890,000
Principal payments of capital leases	(947,423)	(944,606)
Principal payments of notes payable	(49,994)	(44,644)
Principal payments of notes payable - related party	(250,000)	(390,000)
Net cash provided by financing activities	28,232,677	12,888,073
Net increase in cash	2,769,936	806,400
Cash, beginning of the period	2,017,823	1,211,423
Cash, end of the period	4,787,759	2,017,823
Supplemental disclosures of cash flow information:
Interest paid	1,055,255	1,121,066
Income taxes paid	1,250	6,447
Supplemental schedule of non-cash investing and financing activities:
Conversion of preferred stock to common stock	2,651	18,846,539
Issuance of preferred stock as debt discount	0	100,000
Restricted Cash from Convertible Debt	13,800,000
Conversion of note payable to preferred stock	0	400,000
Assets acquired through capital leases	0	807,272
Offering costs incurred but unpaid	235,020	64,760
Property and equipment included in accounts payable	226,214	393,119
Cashless exercise of warrants	1,011
Change in derivative liability from convertible debt	15,731,315
Change in derivative liability from exercised and issued warrants	$ 39,151,949	$ 1,586,181

XML

DESCRIPTION OF BUSINESS

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

DESCRIPTION OF BUSINESS

NOTE 1    DESCRIPTION OF BUSINESS

Great Basin Scientific, Inc. (the “Company”) (d.b.a., Great Basin Corporation) is a Delaware corporation headquartered in Salt Lake City, Utah. The Company was originally incorporated as Diagnostic Micro Arrays, Inc., a Nevada corporation, on June 27, 2003. The Company changed its name to Great Basin Scientific, Inc. on April 19, 2006. On August 12, 2008, the Company took steps to change its corporate domicile from Nevada to Delaware by forming Great Basin Scientific, Inc., a Delaware corporation, and on August 29, 2008, Great Basin Scientific, Inc., a Nevada corporation, was merged with and into Great Basin Scientific, Inc., a Delaware corporation, wherein the Delaware corporation was the sole surviving entity.

The Company is a molecular diagnostic testing company focused on the development and commercialization of its patented, molecular diagnostic platform designed to test for infectious disease, especially hospital-acquired infections. The Company believes that small to medium sized hospital laboratories, those under 400 beds, are in need of simpler and more affordable molecular diagnostic testing methods. The Company markets a system that combines both affordability and ease-of-use, when compared to other commercially available molecular testing methods, which it believes will accelerate the adoption of molecular testing in small to medium sized hospitals. The system includes an analyzer, which is provided for our customers’ use without charge in the United States, and a diagnostic cartridge, which is sold to our customers. The testing platform has the capability to identify up to 64 individual targets at one time. If the test identifies one to three targets, they are referred to as low-plex tests, or tests, and if they identify four or more targets they are referred to as multi-plex panels, or panels.

The Company currently has two commercially available tests, the first for clostridium difficile, or C. diff, which received clearance from the Food and Drug Administration, or FDA, in April 2012 and the second for Group B Strep, which received clearance from the FDA in April 2015 and launched commercially in June 2015. The Company filed 510(k) applications for two more tests in the second half of 2015, Staph ID/R and STEC, each of which is currently under review by the FDA. Our customers consist of hospitals, clinics, laboratories and other healthcare providers in the United States, the European Union and New Zealand.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These financial statements have been prepared to reflect the financial position, results of operations and cash flows of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Reverse Stock Split

On December 11, 2015, the Company effected a reverse stock split of the Company’s common stock whereby each sixty shares of common stock was replaced with one share of common stock (with no fractional shares issued). The par value of the common stock was adjusted from $0.001 per share to $0.0001 per share as a result of the reverse stock split. The authorized shares of the common stock were not adjusted. All common share and per share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split. The quantity of Series E Preferred Stock, Common Warrants, Class A, Class B, Series A, Series B and Series C Warrants as well as employee and other options were not included in the reverse stock split and their outstanding quantities have not been adjusted. However, the conversion and exchange ratios were adjusted as a result of the reverse stock split such that upon conversion each 60 shares of Series E Preferred Stock will be converted into four shares of common stock and upon exercise each 60 warrants or options will be converted into one share of common stock.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Such estimates include the warranty reserve, accounts receivable and inventory reserves, intangible assets and other long lived assets, legal and regulatory contingencies, income taxes, share based arrangements, the derivative liability and others. These estimates and assumptions are based on management’s best estimates and judgments. Actual amounts and results could differ from those estimates.

Cash and Cash Equivalents

The Company considers highly liquid investments with insignificant interest rate risk and original maturities to the Company of three months or less to be cash equivalents. Cash equivalents consist primarily of interest and non-interest bearing bank accounts held in checking, savings and money market accounts. These assets are generally available on a daily or weekly basis and are highly liquid in nature. If the balances are greater than $250,000, the Company does not have FDIC coverage on the entire amount of bank deposits.

Restricted Cash

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded as restricted cash on our balance sheet. On December 30, 2015, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued $22.1 million senior secured convertible notes and received $18.4 million in cash proceeds. Under the terms of the notes, at closing an initial tranche of $4.6 million was available for immediate use by the Company for general corporate purposes. The remaining cash proceeds of $13.8 million is available in three additional tranches that are subject to an account control agreement whereby the restrictions on the proceeds are terminated when the Company meets certain equity conditions (see NOTE 8 CONVERTIBLE NOTES PAYABLE). The restricted cash is deposited in an account that is not FDIC insured.

Accounts Receivable

Accounts receivable are generated from the sale of single use diagnostic test cartridges to end users in the United States and to a network of distributors outside the United States. These accounts receivable are recorded at the invoiced amount, net of allowances for doubtful amounts. The Company routinely reviews outstanding accounts receivable balances for estimated uncollectible accounts and establishes or adjusts the allowances for doubtful accounts receivable using the specific identification method and records a reserve for amounts not expected to be fully recovered. Actual balances are not applied against the reserve until substantially all collection efforts have been exhausted. The Company does not have customer acceptance provisions, but it does provide its customers a limited right of return for defective diagnostic test cartridges.

The allowance for doubtful accounts at December 31, 2015 and 2014 was $16,892 and $5,482, respectively.

Inventories

Inventories are stated at the lower of cost or market with cost determined according to the average cost method. Manufactured inventory consists of raw material, direct labor and manufacturing overhead cost components. The Company reviews the components of its inventory on a regular basis for excess and obsolete inventory and makes appropriate adjustments when necessary. Inventories consisted of the following at December 31, 2015 and 2014:

	December 31,
	2015		2014
Raw materials	$	758,870	$	360,019
Work-in-process		277,827		91,153
Finished goods		96,445		5,922
Total inventories	$	1,133,142	$	457,094

Property and Equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets (which range from three to ten years) using the straight-line method. Amortization of leasehold improvements is computed on the straight-line method over the shorter of the lease term or estimated useful lives of the assets. The analyzers that the Company manufactures and retains title over are placed with customers and are recorded in property and equipment under “Analyzers.” The materials used for the manufacture of the analyzers are recorded in property and equipment under “Construction in progress.” Major renewals and betterments are capitalized and depreciated over their estimated useful lives while minor expenditures for maintenance and minor repairs are charged to operations as incurred.

The Company classifies assets to be sold as assets held for sale when (i) Company management has approved and commits to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition and is ready for sale, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Assets classified as held for sale are recorded at the lower of the carrying amount or fair value less the cost to sell and are a component of prepaid and other current assets in the balance sheets. The Company did not have any assets classified as held for sale as of December 31, 2015 and 2014.

Intangible Assets

The Company records its intangible assets at cost which consist of two licensing and royalty agreements for certain intellectual property rights used in the development and manufacture of our products. These intangible assets are being amortized over an estimated useful life of seven years from the date that the technology licenses became effective. As of December 31, 2015 and 2014, intangible assets totaled $600,000 valued at cost, less accumulated amortization of $480,829 and $383,420, respectively. The Company recorded amortization associated with these agreements of $97,407 and $117,445 for the years ended December 31, 2015 and 2014, respectively.

Estimated future intangible asset amortization expense for the next five years are as follows:

Years ended December 31,
2016	$	76,580
2017		42,591
Total estimated amortization expense	$	119,171

Impairment of Long Lived Assets

Long-lived tangible assets, including property and equipment, and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The Company regularly evaluates whether events or circumstances have occurred that indicate possible impairment and relies on a number of factors, including expected future operating results, business plans, economic projections, and anticipated future cash flows. The Company uses an estimate of the future undiscounted net cash flows and comparisons to like-kind assets, as appropriate, of the related asset over the remaining life in measuring whether the assets are recoverable. Measurement of the amount of impairment, if any, is based upon the difference between the asset’s carrying value and estimated fair value. Fair value is determined through various valuation techniques, including cost-based, market and income approaches as considered necessary.

Derivative Instruments

The Company accounts for derivative instruments under the provisions of ASC 815 Derivatives and Hedging. ASC 815 requires the Company to record derivative instruments at their fair value. Changes in the fair value of derivatives are recognized in earnings. As a result of certain terms, conditions and features included in certain common stock warrants granted by the Company as well as the conversion features in the convertible notes, those provisions are required to be accounted for as derivatives at estimated fair value, with changes in fair value recognized in earnings.

Fair Value of Financial Instruments

The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are:

Level 1—Quoted market prices in active markets for identical assets or liabilities;

Level 2—Significant other observable inputs (e.g. quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable, such as interest rate and yield curves, and market-corroborated inputs); and

Level 3—Unobservable inputs in which there is little or no market data, which require the reporting unit to develop its own assumptions.

The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy at December 31, 2015 and 2014 (see NOTE 12 DERIVATIVE LIABILITIES):

	Fair Value Measurements at December 31, 2015
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	—	$	—	$	26,592,532	$	26,592,532
Convertible notes payable	$	—	$	—	$	16,588,940	$	16,588,940
Total derivative liability	$	—	$	—	$	43,181,472	$	43,181,472

	Fair Value Measurements at December 31, 2014
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	—	$	—	$	9,998,636	$	9,998,636
Total derivative liability	$	—	$	—	$	9,998,636	$	9,998,636

The internal models used to determine fair value for these Level 3 instruments use certain significant unobservable inputs and their use requires determination of relevant inputs and assumptions. Accordingly, changes in these unobservable inputs may have a significant impact on fair value. Such inputs include risk free interest rate, expected average life, expected dividend yield, and expected volatility. These Level 3 liabilities would decrease (increase) in value based upon an increase (decrease) in risk free interest rate and expected dividend yield. Conversely, the fair value of these Level 3 liabilities would generally increase (decrease) in value if the expected average life or expected volatility were to increase (decrease).

Revenue Recognition

The Company derives its product revenue from the sale of single use diagnostic test cartridges sold through our dedicated sales force, except in the European Union where the Company sells through a network of distributors. Product revenue is recognized when all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the products has occurred; (3) the selling price of the product is fixed or determinable; and (4) collectability of that price is reasonably assured. Change in title to the product and recognition of revenue from sales of diagnostic test cartridges occurs at the time of shipment. Shipping and handling fees and related freight costs and supplies for test kits are billed to customers. Additional costs associated with shipping products to customers are included as a component of cost of sales.

Research and Development Costs

Research and development costs are charged to operations as incurred. Research and development costs include, among other things, salaries and wages for research scientists and staff (including stock-based compensation), materials and supplies used in the development of new products, developing and validating the manufacturing process, costs for clinical trials, and costs for research and development facilities and equipment.

Stock Based Compensation

The Company has accounted for stock-based compensation under the provisions of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 718, “Compensation—Stock Compensation”. This standard requires the Company to record an expense associated with the fair value of stock-based compensation over the requisite service period. The Company uses the Black-Scholes option valuation model to calculate the value of options at the date of grant. Option pricing models require the input of highly subjective assumptions, including the estimated fair value of the Company’s common stock on the date of grant, the expected term of the stock option, and the expected price volatility of the Company’s common stock over the period equal to the expected term of the grant. Changes in these assumptions can materially affect the fair value estimate. The Company estimates forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Financial Instruments and Concentration of Credit Risk

The Company’s financial instruments include cash and cash equivalents, accounts receivable, and accounts payable. The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value because of their immediate or short-term maturities.

All of the Company’s accounts receivable result from sales in the normal course of business to its customers primarily throughout the United States. The Company attempts to limit its credit risk by performing credit evaluations of new customers and maintaining adequate allowances for potential credit losses. As of December 31, 2015, 17% of the accounts receivable balance resulted from one customer. As of December 31, 2014, 30% of the accounts receivable balance resulted from one customer. Historically, the Company has not experienced any credit losses on such receivables. Allowances for bad debt in the amount of $16,892 and $5,482 were recorded against accounts receivable for the years ended December 31, 2015 and 2014, respectively. There was no bad debt for the year ended December 31, 2015. The Company cannot ensure that such losses will not be realized in the future.

The Company’s customers consist of hospitals, clinics, laboratories and other healthcare providers in the United States, the European Union and New Zealand. For the year ended December 31, 2015, there were no customers that accounted for more than 10% of revenues. For the year ended December 31, 2014, 11% of revenues resulted from one customer who accounted for more than 10% of revenues.

Income Taxes

The Company accounts for income taxes under FASB ASC 740, “Income Taxes”. Deferred income tax assets and liabilities are determined based upon 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. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized.

The tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained if the position were to be challenged by a taxing authority. The Company has examined the tax positions taken in its tax returns and determined that there are no uncertain tax positions. As a result, the Company has recorded no uncertain tax liabilities in its balance sheet.

Loss per Common Share

Basic loss per share (“EPS”) is computed by dividing net loss, less cumulative preferred stock dividends for the period, including undeclared or unpaid cumulative dividends (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted EPS is computed by dividing net loss by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include convertible preferred stock, stock options and warrants. The number of potential common shares outstanding is computed using the treasury stock method.

As the Company has incurred losses for the years ended December 31, 2015 and 2014, the potentially dilutive shares are anti-dilutive and are thus not added into the loss per share calculations. As of December 31, 2015 and 2014, there were 27,468,018 and 102,516 potentially dilutive shares, respectively.

Reclassification

During 2015, the Company’s auditors identified a clerical error made by the Company during the preparation of the 2014 cash flow statement, wherein the amount for a certain fixed asset that was included in accounts payable had the sign inadvertently switched. The Company has corrected the presentation of the 2014 cash flows for this clerical item and in doing so, the statement of cash flows for 2014 was adjusted to increase net cash used in operating activities by $786,238, with a corresponding decrease in net cash used from investing activities. Other than the 2014 cash flow statement, no other cash flow statement for any annual or quarterly period, was impacted by this presentation correction. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly financial statements.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-17, “Balance Sheet Classification of Deferred Taxes,” that requires companies to classify all deferred tax assets and liabilities, along with any valuation allowance, as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. During the fourth quarter of 2015, the Company elected early adoption of this standard as it improved the efficiency of the year end financial reporting process for income taxes and applied the changes retrospectively to all prior periods presented in its financial statements.

In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” that simplifies the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost or net realizable value test. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its financial statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of debt discounts or premiums. The ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. During the year 2015, the Company elected early adoption of this standard and applied the changes in its financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15 Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern. The update is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. During the year 2015, the Company elected early adoption of this standard and applied the changes in its financial statements and related disclosures.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. In April 2015, the FASB deferred the effective date of ASU 2014-09 to fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2014-09 on its financial statements and related disclosures.

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GOING CONCERN

12 Months Ended

Dec. 31, 2015

Text Block [Abstract]

GOING CONCERN

NOTE 3    GOING CONCERN

The Company’s financial statements have been prepared on a going concern basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. The Company has incurred substantial losses from operations causing negative working capital and negative operating cash flows, which raise substantial doubt about the Company’s ability to continue as a going concern. The Company sustained a net loss for the year ended December 31, 2015 of $57,899,169 and a net loss for the year ended December 31, 2014 of $21,727,818, and has an accumulated deficit of $121,903,865 as of December 31, 2015.

The Company intends to develop its products and expand its customer base, but does not have sufficient realized revenues or operating cash flows in order to finance these activities internally. As a result, the Company intends to seek financing in order to fund its working capital and development needs.

The Company has been able to meet its short-term needs through private placements of convertible preferred securities, an initial public offering (“IPO”), a secondary public offering, convertible debt financing and the sale and leaseback of analyzers used to report test results. The Company will continue to seek funding through the issuance of additional equity securities, debt financing, the sale and leaseback of analyzers, or a combination of these items. Any proceeds received from these items could provide the needed funds for continued operations and development programs. The Company can provide no assurance that it will be able to obtain sufficient additional financing that it needs to alleviate doubt about its ability to continue as a going concern. If the Company is able to obtain sufficient additional financing proceeds, the Company cannot be certain that this additional financing will be available on acceptable terms, if at all. To the extent the Company raises additional funds by issuing equity securities, the Company’s stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. If the Company is unable to obtain additional financings, the impact on the Company’s operations will be material and adverse.

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 4    PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2015 and December 31, 2014:

	December 31,
	2015			2014
Construction in progress	$	680,679		$	1,133,654
Analyzers		5,045,481			1,139,352
Computers and office equipment		462,441			290,754
Machinery and equipment		2,372,558			1,060,993
Leasehold improvements		393,271			366,945
Furniture and fixtures		72,618			16,145
Equipment under capital lease		2,148,476			2,148,476
		11,175,522			6,156,319
Less: accumulated depreciation and amortization		(3,433,531	)		(1,918,852	)
Total property and equipment, net	$	7,741,991		$	4,237,467

The total expense for depreciation of fixed assets and amortization of leasehold improvements was $1,514,679 and $1,040,531 for the years ended December 31, 2015 and 2014, respectively. Of this amount $1,199,183 and $601,947 was for depreciation of equipment under capital leases for the year ended December 31, 2015 and 2014, respectively.

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ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2015

Payables and Accruals [Abstract]

ACCRUED EXPENSES

NOTE 5    ACCRUED EXPENSES

Accrued liabilities consisted of the following as of December 31, 2015 and 2014:

	December 31,
	2015		2014
Accrued payroll	$	1,094,666	$	421,645
Royalties		75,642		166,540
Accrued interest		44,291		—
Accrued property and use tax		10,905		10,905
Other		87,645		13,269
Total accrued liabilities	$	1,313,149	$	612,359

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LEASE COMMITMENTS

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

LEASE COMMITMENTS

NOTE 6    LEASE COMMITMENTS

Capital Leases

The Company has entered into two lease agreements for the sale-leaseback of molecular diagnostic analyzers. The first agreement was entered into in November 2013 and provided for the sale of 125 molecular diagnostic analyzers for a sales price of $2,500,000, which are being leased back for a base period of thirty-six monthly payments of $74,875. The second agreement was entered into in April 2014 for the sale of 75 molecular diagnostic analyzers for a sales price of $1,500,000, which are being leased back for a base period of twenty-four monthly payments of $64,665. At the end of each lease term, the leases shall automatically renew for twelve additional months at the current monthly rate unless the Company gives written notice 150 days prior to the end of the lease. If timely notice is given the Company shall have the opportunity to: 1) repurchase the analyzers for a negotiated purchase price, not to exceed forty percent of their original cost; or 2) terminate the lease, return the property and enter into a new lease with new property that replaces the property of the old lease. Both the Company and the lessor shall have the right to reject any terms of option 1 or 2 and if rejected, the 12 month extension shall apply. As such, the Company is amortizing the capital lease over a forty-eight month period for the first agreement and a thirty-six month period for the second agreement. The second agreement also has a rewrite clause wherein the leasing company agrees to use its commercially best efforts to rewrite the lease agreement at more favorable terms when the Company raises sufficient capital to cover current and future expenses for a minimum of 12 months. The Company’s obligations under the lease agreements are secured by a $500,000 letter of credit. The Letter of Credit was issued by a bank at the behest of a non-profit foundation and Spring Forth Investments LLC both of which are related parties through Mr. David Spafford, a director of the Company. The Company is obligated to reimburse the non-profit foundation and Spring Forth Investments LLC for any draws made under the Letter of Credit. The lease agreement is also secured by personal guarantees from Mr. Ryan Ashton, the Chief Executive Officer of the Company, and Mr. Spafford (See Note 14 RELATED PARTY TRANSACTIONS). The lease is accounted for as a capital lease sale-leaseback transaction in accordance with ASC 840, “Leases”.

Annual future minimum lease payments of capital leases for the next five years are as follows:

Years ended December 31,
2016	$	1,694,006
2017		923,908
Total capital lease payments		2,617,914
Less amount representing interest		(461,078	)
Total future minimum lease payments		2,156,836
Less current portion of capital leases		(1,305,426	)
Long term portion of capital leases	$	851,410

Operating leases

The Company leases approximately 33,000 square feet of building space located in Salt Lake City, Utah pursuant to two lease agreements totaling $21,226 in base rent per month. The leases expire on April 30, 2016 and each have two options, with each option for a three year renewal period. We also lease approximately 13,399 square feet of office space located at another location in Salt Lake City, Utah for use as our executive offices and labs. Base rent payments due under the lease are expected to be approximately $1,231,526 in the aggregate over the term of the lease of 65 months beginning on December 1, 2015. While the tenant improvements are being completed, we are leasing temporary office space in the same building on a monthly basis for base rent of $8,437 per month. The Company also leases certain office equipment such as copiers and printers under operating lease agreements that expire at various dates.

Amounts charged to expense under operating leases were $279,296 and $293,773 for the years ended December 31, 2015 and 2014, respectively.

Operating lease commitments for the next five years are as follows:

Years ended December 31,
2016	$	355,797
2017		246,255
2018		252,092
2019		259,132
2020		266,455
Total operating lease commitments	$	1,379,731

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NOTES PAYABLE

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTE 7    NOTES PAYABLE

The Company purchased certain machinery and equipment under two note payable agreements which consist of the following as of December 31, 2015 and 2014:

	December 31,
	2015			2014
Note payable, 15.2% interest, monthly payments of $1,328, due February 6, 2016, secured by equipment	$	2,607		$	16,938
Note payable, 10.0% interest, monthly payments of $3,161, due January 1, 2016, secured by equipment		3,086			38,749
Total notes payable		5,693			55,687
Less: current portion of notes payable		(5,693	)		(49,994	)
Long term portion of notes payable	$	—		$	5,693

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CONVERTIBLE NOTES PAYABLE

12 Months Ended

Dec. 31, 2015

Text Block [Abstract]

CONVERTIBLE NOTES PAYABLE

NOTE 8    CONVERTIBLE NOTES PAYABLE

On December 30, 2015, the Company entered into a Securities Purchase Agreement (“SPA”) with certain investors pursuant to which it agreed to issue $22.1 million in senior secured convertible notes (“Notes”) and Series D Warrants (further described below). The Notes are convertible into 11,945,946 shares of Common Stock at a price equal to $1.85 per share, subject to adjustment for certain dilutive events and currently subject to a 19.9% cap as described below. $20 million of the notes were issued for cash proceeds totaling $18.4 million with an original issue discount in the amount of $1.6 million which is equal to sixteen (16) months of simple interest at a rate of six percent (6.0%) per annum on the aggregate principal of the Notes (assuming, that the entire aggregate original principal amount remains outstanding through the maturity date). $2.1 million of the Notes were issued to extinguish 1,050,000 outstanding Series C Warrants at an extinguish value of $2.00 per warrant. The Notes are senior secured obligations of the Company and will rank senior to all outstanding and future indebtedness of the Company. They will be secured by a first priority perfected security interest (subject to permitted liens as defined in the Notes) in all of the current and future assets of the Company. The Notes contain standard and customary events of default and the entire principal balance is subject to the default and redemption provisions contained in the Notes, regardless of whether or not any of the proceeds have been released from the Company’s restricted accounts. The Notes also have a provision that the Company is required to reserve at least 120,000,000 shares of authorized and unissued common stock for issuance pursuant to the Notes and associated Series D warrants.

In connection with the issuance of the Notes under the SPA, the Company issued Series D Warrants (the “Series D Warrants”), exercisable to acquire 3,503,116 shares of Common Stock, subject to a one time adjustment on December 31, 2016 under the terms of the Series D Warrants (see NOTE 11 WARRANTS). Each Series D Warrant is exercisable by the holder beginning six months after December 30, 2015 and continuing for a period five years thereafter. Each Series D Warrant was exercisable initially at $1.85 per share of common stock, subject to adjustments for certain dilutive events and subject to an exercise price floor equal to $1.16 per share.

The Company has agreed to make amortization payments with respect to the Notes in twelve (12) equal installments beginning four (4) months after the original date of issuance of December 30, 2015 (each, an “Installment Date”). On each installment date, assuming certain equity conditions are met, the installment payment shall automatically be converted into shares of Common Stock at (i) at 80% of the five day volume weighted average price of the common stock for the first four payments and (ii) at 85% of the five day volume weighted average price of the common stock for the last 8 payments with both conversion rates being subject to a floor conversion price of $0.20.

Under the terms of the Notes, at closing the Company received an initial tranche of $4.6 million for immediate use for general corporate purposes. The remaining cash proceeds of $13.8 million are being held in a restricted account and will be released to the Company from the Company’s restricted accounts in subsequent equal tranches subject to certain equity conditions and the following terms and conditions:

(1) 25% will be released 30 trading days following the later of (i) the “Control Account Release Eligibility Date” and (ii) the first installment date under the Note,

(2) 25% will be released 90 trading days following the Control Account Release Eligibility Date and

(3) 25% will be released 120 trading days following the Control Account Release Eligibility Date.

“Control Account Release Eligibility Date” means the later of (x) the date the Company obtains the required stockholder approval of the issuance of the shares of common stock upon conversion of the notes pursuant to the rules of the NASDAQ Stock Market and (y) the earlier of (I) the date a resale registration statement registering all of the shares of Common Stock issuable upon conversion of the Notes and (II) the initial date the shares of Common Stock issuable upon conversion of the Notes may be freely sold by a non-affiliate of the Company pursuant to Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”). If shareholder approval is not obtained the Notes will go into default and restricted cash will not be released.

The dilutive events that provide for the adjustment of the conversion price of the Notes and the exercise price of the Series D Warrants relate to any transaction in which the Company issues or is deemed to have issued shares of common stock for consideration per share less than the conversion price then in effect.

The issuance of shares of common stock upon conversion of the Notes is subject to the rules of the NASDAQ Capital Market which requires an initial cap of 19.9% of the Company’s issued and outstanding shares of common stock on December 30, 2015 unless and until the Company’s stockholders approve removal of the cap. Further, the current exercise price floor of $1.16 on the exercise price of the Series D Warrants is subject to removal upon approval of the Company’s stockholders at which point the exercise price of the Series D Warrants will automatically reset pursuant to its anti-dilution provisions as if the exercise price floor was not applicable since the issuance of the Series D Warrants.

Convertible Notes of $20 Million Issued for Cash

$20 million of the Notes were issued for cash proceeds of $18.4 million with an original issue discount in the amount of $1.6 million. In addition the Company incurred debt issuance costs in the amount of $568,685. The conversion feature in the Notes represents an embedded derivative that requires bifurcation due to the ratchet provision described above related to the conversion feature. The provisions in the Series D Warrants also require the Company to account for the warrants as derivative liabilities. The original issue discount, the fair value of the embedded conversion feature, the fair value of the Series D Warrants and the debt issuance costs are all together considered the debt discount. Any excess of the total debt discount and the face value of the convertible notes are recorded to interest expense in the statement of operations.

The initial fair value of the embedded conversion feature on the $20 million portion of the note was valued using a binomial model with Monte Carlo simulation, resulting in a fair value of $14,788,365. The initial fair value of the Series D Warrants related to the $20 million note was also valued using a binomial model with Monte Carlo simulation, resulting in a fair value of $13,637,132. The Company recorded a charge to interest expense in the amount of $10,594,182 in the statement of operations for the year ended December 31, 2015, representing the excess of the total debt discount over the face value of the convertible notes. The Company recorded a debt discount in the amount of $20 million which will be amortized over the life of the note using the effective interest method. As of December 31, 2015, $63,717 of the debt discount had been amortized to interest expense.

Convertible Notes of $2.1 Million Issued for Series C Warrants

$2.1 million of the Notes and related Series D Warrants were issued to extinguish 1,050,000 outstanding Series C Warrants. Since the Series C Warrants were derivative liabilities at the time of the transaction, the Company has accounted for this as an extinguishment of liabilities. Accordingly, all consideration issued to extinguish the liabilities were recorded at their fair value on the date of the extinguishment and the liabilities extinguished were removed at their carrying value. Since the liabilities extinguished were derivative liabilities, their carrying value is continuously adjusted to equal their fair value. The fair value of the Series C Warrants that were extinguished was calculated using the predetermined inputs to Black Scholes formula as defined in the Series C Warrant, resulting in a fair value of $2,340,240 for the extinguished warrants. The initial fair value of the embedded conversion feature on the $2.1 million portion of the Notes was valued using a binomial model with Monte Carlo simulation, resulting in a fair value of $1,865,729. The initial fair value of the Series D Warrants related to the $2.1 million note was also valued using a binomial model with Monte Carlo simulation, resulting in a fair value of $2,412,574. The host debt instrument’s fair value was deemed to be $2.1 million. The Company recorded a loss in the amount of $4,038,063 in its statement of operations for the year ended December 31, 2015, representing the excess of the consideration provided over the liability extinguished.

The following table summarizes the convertible notes outstanding at December 31, 2015:

Convertible notes payable, principal	$	22,100,000
Debt discounts		(19,936,283	)
Net convertible note payable		2,163,717
Less current portion		(1,638,717	)
Convertible notes payable, long term	$	525,000

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NOTES PAYABLE-RELATED PARTY

12 Months Ended

Dec. 31, 2015

Text Block [Abstract]

NOTES PAYABLE-RELATED PARTY

NOTE 9    NOTES PAYABLE—RELATED PARTY

In July 2014, the Company entered into a note agreement for $500,000 with Spring Forth Investments, LLC a company owned by Mr. David Spafford, a director. The original maturity date for the note was July 18, 2015, which was extended by the Company to July 18, 2016 by giving notice and paying an extension fee of $10,000. The note pays interest at an annual rate of 20% and is paid monthly. The Company prepaid the last three months of interest for a total of $25,000 at the time of issuance of the note. As additional consideration for the note, the Company issued 4,000,000 Series D preferred stock units (which were separable into 4,000,000 shares of Series D preferred stock, 20,000 Class A warrants to purchase one share of common stock for every 60 Class A Warrants at an exercise price of $295.20 per share and 20,000 Class B warrants to purchase one share of common stock for every 60 Class B warrants at an exercise price of $12.00 per share) at a value of $100,000 or $0.025 per unit. On the date of the IPO, the 4,000,000 shares of Series D Preferred Stock converted into 334 shares of Common Stock at a conversion ratio of 12,000 to 1. The Series D preferred stock units were accounted as a debt discount to be amortized over the life of the note. As of December 31, 2015 there was no unamortized debt discount.

In February 2015, the Company entered into another loan agreement for $250,000 with Spring Forth Investments, LLC. The loan had an interest rate of twelve percent (12%) per year and matured the earlier of (i) 90 days from the date of the loan agreement, or (ii) five days after the closing of a registered public offering of securities of the Company. In April 2015, the Company paid off the note along with the accrued interest in the amount of $4,192 and a termination fee of $12,500.

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COMMON AND PREFERRED STOCK

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

COMMON AND PREFERRED STOCK

NOTE 10    COMMON AND PREFERRED STOCK

Common Stock

The Company had 200,000,000 and 50,000,000 shares of common stock authorized at a par value of $0.0001 per share as of December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014 there were 10,390,408 and 84,777 shares of common stock issued and outstanding, respectively. The Company has reserved 120,000,000 of authorized but unissued shares of common stock for issuance pursuant to the convertible notes and associated Series D Warrants.

During the year ended December 31, 2014, the Company issued 771 shares of common stock to Spring Forth Investments pursuant to the exercise of the conversion option of 9,250,000 shares of Series A preferred stock at a conversion ratio of 12,000 to 1 (SEE NOTE 14 RELATED PARTY TRANSACTIONS). The Company also issued 2,634 shares of common stock to various unaffiliated investors upon the exercise of 158,000 of Class B warrants for cash proceeds of $31,600.

In October 2014, the Company completed an IPO, whereby the Company sold 19,167 shares of its common stock and 1,150,000 Series A Warrants, which were sold in units of one share of common stock for every 60 units and one Series A Warrant at a public offering price of $7.00 per unit. Each Series A Warrant is exercisable for one share of common stock for every 60 warrants and one Series B Warrant. In addition, the underwriter was granted 57,500 common warrants and also exercised its option to purchase 172,500 Series A Warrants each of which is exercisable for one share of common stock for every 60 warrants. The shares began trading on the NASDAQ Capital Market on October 9, 2014. The aggregate net proceeds received by the Company from the offering were approximately $6.4 million, after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. Upon the closing of the IPO, all outstanding shares of convertible preferred stock converted into 60,279 shares of common stock.

During the year ended December 31, 2015, the Company issued 17,917 shares of common stock pursuant to the cash exercise of 1,074,082 Series A Warrants for total net proceeds of $2,252,020. In conjunction with the exercise of the Series A Warrants, 1,074,082 Series B Warrants to purchase shares of common stock were also issued.

During the year ended December 31, 2015, the Company issued 176,695 shares of common stock pursuant to the conversion of 2,650,403 shares of Series E Convertible preferred stock at a conversion ratio of 60 preferred shares to 4 common shares.

During the year ended December 31, 2015, the Company issued 9,220 shares of common stock pursuant to the cashless exercise of both 508,641 Class A Warrants and 334,889 Class B Warrants.

During the year ended December 31, 2015, the Company issued 10,101,480 shares of common stock pursuant to the exercise of 15,630,027 Series C Warrants. Of these, 10,095,080 shares of common stock were issued as a result of the cashless exercise of 15,246,027 Series C Warrants and 6,400 shares of common stock were issued as a result of the cash exercise of 384,000 Series C Warrants for total net proceeds of $979,200.

Preferred Stock

The Company had 5,000,000 shares of preferred stock authorized at a par value of $0.001 per share as of December 31, 2015 and 2014. As of December 31, 2015 there are 88,347 shares of Series E Preferred Stock issued and outstanding. There were no shares of preferred stock outstanding as of December 31, 2014. The preferred stock may be issued from time to time by the board of directors as shares of one or more classes or series with authority to fix the designation and relative powers including voting powers, preferences, rights, qualifications, limitations, and restrictions relating to the shares of each class or series.

During the year ended December 31, 2014 the Company issued 14,888,211 shares of Series C preferred stock for cash in the amount of $366,250 or $0.0246 per share. The Company also sold 285,566,560 shares of Series D preferred stock units for gross proceeds in the amount of $7,139,164 or $0.025 per unit and after deducting offering costs and expenses, the Company received $6,203,636 in net proceeds. The preferred stock units were separated into 285,566,560 shares of Series D preferred stock, 1,427,832 Class A warrants with an exercise price of $4.92 to purchase one share of common stock for every 60 warrants and 1,427,832 Class B warrants with an exercise price of $0.20 to purchase one share of common stock for every 60 warrants. In conjunction with the offering an additional 7,200,000, 466,436 and 251,216 of Series D preferred stock warrants, Class A warrants and Class B warrants, respectively, were granted as part of the offering costs.

During the year ended December 31, 2014, the Company converted notes payable in the amount of $400,000 plus $13,129 in accrued interest into 16,525,121 Series D preferred stock units at a conversion price of $0.025 per share. These units consist of 16,525,121 shares of Series D preferred stock, 82,625 Class A warrants with an exercise price of $4.92 to purchase one share of common stock for every 60 warrants and 82,625 Class B warrants with an exercise price of $0.20 to purchase one share of common stock for every 60 warrants. The shares of Series D preferred stock are convertible into shares of common stock at a ratio of 12,000 : 1, at the option of the holder at any time after issuance. The conversion of the notes was pursuant to the terms of the notes that upon a qualified equity financing of at least $5 million the notes would be converted into shares of the equity securities at the price per share at which the equity securities were issued in the qualified equity financing. The sale of the Series D preferred stock units through July 2014 met this threshold and triggered the conversion.

During the year ended December 31, 2014, as additional consideration for the issuance of the Spring Forth Note (See NOTE 9 NOTES PAYABLE—RELATED PARTY) the Company issued 4,000,000 Series D preferred stock units (which were separable into 4,000,000 shares of Series D preferred stock, 20,000 Class A warrants with an exercise price of $4.92 to purchase one share of common stock for every 60 warrants and 20,000 Class B warrants with an exercise price of $0.20 to purchase one share of common stock for every 60 warrants) at a value of $100,000 or $0.025 per unit.

During the year ended December 31, 2014, Spring Forth Investments exercised its conversion option and converted 9,250,000 shares of Series A preferred stock valued at $1,480,000 into 771 shares of common stock.

The Series C and Series D preferred stock had a conversion price adjustment provision that in the event the Company sells shares of any additional stock, subject to certain exceptions, at a price per share less than the original issue price of the respective series preferred stock, the conversion price shall be adjusted to a price equal to the price paid per share for such additional stock. These conversion price adjustment provisions, and other relevant features of the preferred stock, were analyzed in accordance with the provisions of FASB ASC 815, “Derivatives and Hedging”. The Company evaluated the conversion price adjustment provision embedded in the preferred stock and other relevant features and determined, in accordance with the provisions of the referenced accounting guidance, that such conversion option or other relevant features do not meet the criteria requiring bifurcation as a derivative liability of these instruments. The characteristics of the common stock that is issuable upon a holder’s exercise of the conversion option embedded in the convertible preferred stock are deemed to be clearly and closely related to the characteristics of the preferred shares. Further, the Company determined the other relevant features of the preferred stock are clearly and closely related to the equity host and do not qualify for derivative accounting.

During the year ended December 31, 2014, the Company filed a seventh amended and restated Certificate of Incorporation authorizing a modification to the number of authorize shares of common stock and preferred stock. The number of common shares authorized was amended to 50,000,000 shares and the number of preferred shares authorized was amended to 5,000,000 shares.

In October 2014, upon the closing of the IPO, all outstanding shares of convertible preferred stock converted into 60,279 shares of common stock at a conversion ratio of 12,000 to 1.

In February 2015 the Company initiated a Units Offering (the “February 2015 Units Offering”) whereby the Company sold 2,724,000 units at a price of $8.80 per unit for net proceeds of $21.8 million after deducting underwriting commissions and offering costs. Each unit consisted of one share of our Series E Convertible Preferred Stock and eight Series C Warrants (the “Units”).

The original terms of the Units provided that shares of Series E Convertible Preferred Stock and the Series C Warrants would automatically separate on August 25, 2015. However, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate prior to August 25, 2015 if at any time after 30 days from February 25, 2015 the closing price of our common stock was greater than $240.00 per share for 20 consecutive trading days (the “Separation Trigger Date”). The Company refers to this separation herein as Early Separation. In the event of Early Separation, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate 15 days after the Separation Trigger Date. In June 2015, the above terms of the Series E Convertible Preferred Stock and Series C Warrants were each modified to allow for an optional early separation and conversion upon the cash exercise of all eight of the Series C Warrants within the Unit.

In June 2015, 48,000 of the Units were separated early pursuant to the optional early separation resulting in the exercise of 384,000 Series C Warrants into 6,400 shares of common stock for cash proceeds of $979,200. On August 25, 2015 the remaining 2,676,000 Units separated into 2,676,000 shares of Series E Convertible Preferred Stock and 21,408,000 Series C Warrants.

Each 60 shares of Series E Convertible Preferred Stock is convertible at the option of the holder into four shares of common stock. The Series E Convertible Preferred Stock has no voting rights. An amendment to the terms of the Series E Convertible Preferred Stock only requires the vote of the holders of Series E Convertible Preferred Stock. With respect to payment of dividends and distribution of assets upon liquidation or dissolution or winding up of the Company, the Series E Preferred Stock shall rank equal to the common stock of the Company. No sinking fund has been established for the retirement or redemption of the Convertible Preferred Stock. As such, the Series E Convertible Preferred Stock is not subject to any restriction on the repurchase or redemption of shares by the Company due to an arrearage in the payment of dividends or sinking fund installments. The Series E Convertible Preferred Stock also has no liquidation rights or preemption rights, and there are no special classifications of our Board of Directors related to the Series E Convertible Preferred Stock.

During the year ended December 31, 2015, 14,750 Underwriter Purchase Options were exercised for cash in the amount of $162,250 or $11.00 per option. Pursuant to the exercise of these options, 14,750 shares of Series E Convertible Preferred Stock and 118,000 Series C Warrants were issued.

During the year ended December 31, 2015, 2,650,403 shares of Series E Convertible Preferred Stock were converted into 176,695 shares of common stock at a conversion ratio of 60 preferred shares to 4 common shares. As of December 31, 2015, 88,347 shares of Series E Convertible Preferred Stock remain outstanding.

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WARRANTS

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

WARRANTS

NOTE 11    WARRANTS

As of December 31, 2014, the Company had 5,447,940 warrants outstanding to purchase shares of common stock.

The following table outlines the warrants outstanding and exercisable as of December 31, 2014:

Warrants	Outstanding and Exercisable		Warrant Exercise Price	Common Stock Exchange Ratio	Total Shares of Common Stock Underlying the Warrant		Aggregate Exercise Price for One Common Share	Expiration
Class A		2,041,239	$4.92	60 : 1		34,021	$295.20	April 2021 - July 2021
Class B		1,645,845	$0.20	60 : 1		27,431	$12.00	April 2021 - July 2021
Series A		1,322,500	$7.00	60 : 1		22,042	$420.00	October 2015
Common		438,356	$2.00 - $32.00	60 : 1		7,306	$120.00 - $1,920.00	April 2016 - July 2021
Total Warrants		5,447,940				90,800

During the year ended December 31, 2014 Class A and Class B warrants totaling 2,855,664 were granted as part of the sale for cash of the Series D preferred stock units (see NOTE 10 COMMON AND PREFERRED STOCK).

In addition during 2014 prior to the IPO, 1,048,698 common warrants, Class A warrants and Class B warrants to purchase common stock and 7,200,000 warrants to purchase Series D preferred stock were granted in conjunction with the issuance of certain convertible notes payable, consulting services and as financing fees. The Company determined that the fair value of the warrants granted was nominal due to the fair value of the Company’s common stock as of the grant date being nominal as a result of the priority provisions of the preferred stock outstanding at that time.

In October 2014, 57,500 common warrants and 1,322,500 Series A warrants were issued in conjunction with our IPO (see NOTE 10 COMMON AND PREFERRED STOCK).

In October 2014 upon the closing of the IPO, 2,231,727 outstanding warrants to purchase shares of Series A preferred stock and 7,200,000 outstanding warrants to purchase shares of Series D preferred stock were converted at a ratio of 200 to 1 into 47,158 common warrants to purchase shares of common stock.

In September 2014, 157,093 warrants previously issued were amended to eliminate a clause that would cancel the warrant upon the completion of an IPO. The Company recorded an expense for the incremental fair value based on the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified using the Black-Scholes option valuation model to calculate the fair value. The Company determined the incremental fair value of the warrants to be $25,061 which was expensed in the period as the warrants were fully vested.

The following is the weighted average of the assumptions used in calculating the fair value of the warrants at an exchange ratio of 60 warrants for one share of common stock after they were modified in September 2014 using the Black-Scholes method:

Fair market value of one share of common stock	$	296.40
Aggregate exercise price of 60 warrants	$	600.00
Risk free rate		0.61	%
Dividend yield		0.00	%
Expected volatility		37.23	%
Remaining contractual term		1.97 years

The following table summarizes the Preferred A stock warrant activity during the year ended December 31, 2014:

	Preferred A Stock Warrants			Weighted Average Exercise Price		Weighted Average Remainder Contractual Term in Years
As of December 31, 2014:
Warrants outstanding as of January 1, 2014		2,231,727		$	0.16		3.1
Granted		—			—		—
Converted		(2,231,727	)		0.16		2.3
Expired		—			—		—
Warrants outstanding as of December 31, 2014		—		$	—		—

The following table summarizes the preferred D stock warrant activity during the year ended December 31, 2014:

	Preferred D Stock Warrants			Weighted Average Exercise Price		Weighted Average Remainder Contractual Term in Years
As of December 31, 2014:
Warrants outstanding as of January 1, 2014		—			—		—
Granted		7,200,000		$	0.025		6.8
Converted		(7,200,000	)	$	0.025		6.7
Expired		—			—		—
Warrants outstanding as of December 31, 2014		—		$	—		—

As of December 31, 2015, the Company had 13,219,597 warrants outstanding to purchase shares of common stock.

The following table outlines the warrants outstanding and exercisable as of December 31, 2015:

Warrants	Outstanding and Exercisable		Warrant Exercise Price	Common Stock Exchange Ratio	Total Shares of Common Stock Underlying the Warrant		Aggregate Exercise Price for One Common Share	Expiration
Class A		1,532,598	$0.03	60 : 1		25,566	$1.85	April 2021 - July 2021
Class B		1,310,956	$0.03	60 : 1		21,862	$1.85	April 2021 - July 2021
Series B		1,074,082	$8.75	60 : 1		17,917	$525.00	March 2021 - July 2021
Series C		5,229,973	$2.55	60 : 1		87,167	$153.00	January 2017
Series D		3,503,116	$1.85	1 : 1		3,503,116	$1.85	June 2021
Subordination		105,516	$1.85	1 : 1		105,516	$1.85	June 2021
Common		463,356	$0.03 - $32.00	60 : 1		7,735	$1.85 - $1,920.00	April 2016 - July 2021
Total Warrants		13,219,597				3,768,879

Class A Warrants

During the year ended December 31, 2015, 508,641 Class A Warrants were exercised pursuant to the cashless exercise provision of the warrant resulting in the issuance of 3,936 shares of common stock. The Class A Warrants include a provision which provides that the exercise price of the Class A Warrants will be adjusted in connection with certain equity issuances by the Company. In March 2015, as a result of the February 2015 Unit Offering, the price adjustment provision was triggered for our Class A Warrants and the exercise price was adjusted from $4.92 to $2.20. In December 2015, the price adjustment was triggered again for our Class A Warrants as the Company closed a senior secured convertible note financing and the exercise price was adjusted from $2.20 to $0.03.

Class B Warrants

During the year ended December 31, 2015, 334,889 Class B Warrants were exercised pursuant to the cashless exercise provision of the warrant resulting in the issuance of 5,284 shares of common stock. The Class B Warrants include a provision which provides that the exercise price of the Class B Warrants will be adjusted in connection with certain equity issuances by the Company. In December 2015, the Company closed a senior secured convertible note financing and the price adjustment provision was triggered for our Class B Warrants and the exercise price was adjusted from $0.20 to $0.03.

Series A Warrants

During the year ended December 31, 2015, 1,074,082 Series A Warrants were exercised into 17,917 shares of common stock resulting in net cash proceeds of $2,252,020. The Series A Warrants include a provision which provides that the exercise price of the Series A Warrants will be adjusted in connection with certain equity issuances by the Company. In March 2015, as a result of the February 2015 Unit Offering, the price adjustment provision was triggered for our Series A Warrants and the exercise price was adjusted from $7.00 to $2.20. The Series A Warrants expired on October 15, 2015 and all remaining 248,418 outstanding Series A Warrants expired unexercised.

Series B Warrants

The Company sold Units in connection with the Company’s IPO in October 2014, with one Unit consisting of one share of common stock and one Series A Warrant to purchase: (i) one share of common stock for every 60 Series A Warrants and (ii) one Series B Warrant to purchase one share of common stock for every 60 Series B Warrants. The Series B Warrants are only issued upon the exercise of the Series A Warrants, are exercisable immediately at an exercise price of 125% of the public offering price and expire 6 years from the date of issue. The exercise price and the number of shares for which each Series B Warrant may be exercised is subject to adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock. In addition, subject to certain exceptions, the exercise price of the Series B Warrants is subject to reduction if the Company issues shares of common stock (or securities convertible into common stock) in the future at a price below the then current market price. There have been no issuances that have triggered the price adjustment provision on the Series B Warrants. During the year ended December 31, 2015, the Company issued 1,074,082 Series B Warrants pursuant to the exercise of 1,074,082 Series A Warrants.

Series C Warrants

In connection with the February 2015 Units Offering, the Company issued Series C Warrants to purchase 21,792,000 shares of common stock as part of the Units sold in the follow-on offering (see NOTE 10 COMMON AND PREFERRED STOCK) with and exercise price of $2.55 and expire in five years. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock and the exercise price. The Series C Warrants have a cashless exercise provision where in lieu of payment of the exercise price in cash, the holder may receive, at the Company’s discretion, either a cash payment of a predetermined Black Scholes Value of the number of shares the holder elects to exercise, or a number of shares of the Company’s common stock determined according to a cashless exercise formula using the predetermined Black Scholes Value. On December 11, 2015, an amendment was made to the Series C Warrants to require that all warrants be exercised within 25 trading days or be subject to a mandatory exercise provision.

In June 2015, 48,000 of the Units were separated early pursuant to the optional early separation as 384,000 Series C Warrants were exercised into 6,400 shares of common stock resulting in cash proceeds of $979,200. On August 25, 2015 the remaining 2,676,000 Units separated into 2,676,000 shares of Series E Convertible Preferred Stock and 21,408,000 Series C Warrants.

From August 25, 2015 through December 31, 2015, 15,128,027 Series C Warrants were exercised pursuant to the cashless exercise provision resulting in the issuance of 9,899,174 shares of Common Stock.

During the year ended December 31, 2015, 14,750 Underwriter Purchase Options were exercised for cash in the amount of $162,250. Upon the exercise of these options, 118,000 Series C Warrants were issued and immediately exercised pursuant to the cashless exercise provision resulting in the issuance of 195,906 shares of common stock.

As of December 31, 2015, 5,229,973 Series C Warrants remain outstanding. Had the cashless exercise provision been exercised by all holders of our Series C Warrants at December 31, 2015, the Company would have had to either pay $11.7 million in cash or issue 9,962,354 shares of common stock. The number of shares of common stock that would be required to satisfy the cashless exercise provision increases as the price of the Company’s stock decreases and decreases as the price of the Company’s stock increases.

Series D Warrants

In connection with the issuance of the Notes under the Securities Purchase Agreement, the Company issued Series D Warrants (the “Series D Warrants”), exercisable to acquire 3,503,116 shares of Common Stock. Each Series D Warrant is exercisable by the holder beginning six months after December 30, 2015 and continuing for a period five years thereafter. Each Series D Warrant will be exercisable initially at an exercise price of $1.85 per share, subject to adjustments for certain dilutive events and subject to an exercise price floor equal to $1.16 per share.

On December 31, 2016, the number of warrants issuable upon exercise of the Series D Warrants will be increased to equal the difference, if positive, obtained by subtracting (x) the shares of Common Stock issuable under the Warrants on the date of issuance from (y) 16.6% of the sum of the number of shares of Common Stock actually outstanding on December 31, 2016, plus the number of shares of Common Stock deemed to be outstanding pursuant to all outstanding options or convertible securities of the Company.

The Series D Warrants are exercisable on a cashless basis in the event that there is no effective registration statement under the Securities Act covering the resale of the shares of Common Stock issuable upon exercise of the Series D Warrants. Pursuant to the registration rights agreement between the investors under the Securities Purchase Agreement and the Company, the Company is required to file a registration statement for these shares of Common Stock and the Company intends to file the registration statement in early 2016.

Subordination Warrants

The Subordination Warrants were issued to Spring Forth Investments LLC and Utah Autism Foundation in relation to their agreement to enter into subordination agreements with the collateral agent in the Note Financing whereby each agreed to subordinate their debt to the Notes issued in the Note Financing. The Subordination Warrants have the same general material terms and conditions of the Series D Warrants.

The Subordination Warrants are exercisable for 105,516 shares of common stock. On December 31, 2016, the number of warrants issuable upon exercise of the Subordination Warrants will be increased to equal the difference, if positive, obtained by subtracting (x) the shares of common stock issuable under the Subordination Warrants on the date of issuance from (y) 0.5% of the sum of the number of shares of common stock actually outstanding on December 31, 2016, plus the number of shares of common stock deemed to be outstanding pursuant to all outstanding options or convertible securities of the Company. Each Subordination Warrant is exercisable by the holder beginning six months after December 30, 2015 and continuing for a period five years thereafter. Each Subordination Warrant will be exercisable initially at a price of $1.85 per share, subject to adjustments for certain dilutive events (same as the Series D Warrants) and subject to an exercise price floor equal to the Series D Warrant exercise floor price of $1.16 per share.

Common Warrants

For the year ended December 31, 2015, the Company granted 25,000 Common Stock warrants to a consultant of the Company. The warrants are fully vested, have an exercise price of $2.56 and expire in August 2020. The Company recorded an expense in the amount of $54,489 on the date of grant which represents the fair value of the warrants. The Company estimates the fair value of the warrants at grant date using a Black-Scholes valuation model. The estimates in the Black-Scholes option-pricing model are based, in part, on assumptions, including a stock price volatility of 127.37%, the warrant life of 5 years, a risk free rate of 1.53%, the fair value of $153.60 of the equity stock underlying the option and the aggregate exercise price of $153.60 for one share of common stock.

The following table summarizes the common stock warrant activity during the years ended December 31, 2015 and 2014:

	Common Stock Warrants			Weighted Average Exercise Price $		Weighted Average Remainder Contractual Term in Years
As of December 31, 2014:
Warrants outstanding as of January 1, 2014		274,420			8.00		4.2
Granted		5,331,520			3.91		5.5
Exercised		(158,000	)		0.20		6.6
Expired		—			—		—
Warrants outstanding as of December 31, 2014		5,447,940			4.17		4.9
As of December 31, 2015:
Warrants outstanding as of January 1, 2015		5,447,940			4.17		4.9
Granted		26,617,714			2.71		4.3
Exercised		(17,547,639	)		2.47		4.0
Expired		(1,298,418	)		2.48		3.4
Warrants outstanding as of December 31, 2015		13,219,597			2.71		4.7

Underwriters’ Unit Purchase Option

In connection with the February 2015 Units Offering, the Company issued to the representative of the underwriters’ a Unit Purchase Option (“Option”) to purchase a number of our Units equal to an aggregate of 5% of the Units sold or 136,200 Units. The purchase option has an exercise price equal to 125% of the public offering price of the Units or $11.00, and the units may be exercised on a cashless basis and will expire 5 years from the date of issue. Each Unit consists of one share of Series E Convertible Preferred Stock and eight Series C Warrants. During the year ended December 31, 2015, 14,750 Underwriter Purchase Options were exercised for cash in the amount of $162,250. Pursuant to the exercise of these options, 14,750 shares of Series E Convertible Preferred Stock were issued and immediately converted into 984 shares of common stock and 118,000 Series C Warrants were issued and immediately exercise pursuant to the cashless exercise provision into 195,906 shares of common stock. As of December 31, 2015, 121,450 Unit Purchase Options remain outstanding.

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DERIVATIVE LIABILITIES

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITIES

NOTE 12    DERIVATIVE LIABILITIES

The derivative liability for our instruments classified as derivative liabilities are recorded at fair value at inception and subsequently re-measured to fair value as long as such instruments are classified as derivative liabilities. Changes in the fair value of the derivative liability was included as a component of Other income (expense) and has no effect on the Company’s cash flows. The valuation methodologies used vary by instrument and include a modified Black-Scholes option valuation model utilizing the fair value of underlying common stock and a binomial model with Monte Carlo simulation. The Company has determined the fair value measurements to be a level 3 measurement (see NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES).

Class A Warrants, Class B Warrants, Series A Warrants, Series B Warrants and Certain Common Warrants

Our Class A Warrants, Class B Warrants, Series A Warrants and certain common warrants, have an exercise price adjustment provision that in the event the Company sells shares of any additional stock, subject to certain exceptions, at a price per share less than the original exercise price of the respective warrant, the exercise price shall be adjusted to a price equal to the price paid per share for such additional stock. Our Series B Warrants have an exercise price adjustment provision that in the event the Company sells shares of any additional stock, subject to certain exceptions, at a price per share less than the then current market price, the exercise price shall be adjusted to a price equal to the price paid per share for such additional stock. Such exercise price adjustments prohibit the Company from being able to conclude that the warrants are indexed to the Company’s own stock. Accordingly, these warrants are accounted for as derivative liabilities and are recorded at fair value at each reporting date with the change in fair value being recorded in earnings for the period. In March 2015, as a result of the February 2015 Unit Offering, the price adjustment provision was triggered for our Class A Warrants, Series A Warrants and certain common warrants. In December 2015, as a result of the senior secured convertible note financing, the price adjustment provision was again triggered and the exercise price for our Class A, Class B and certain common warrants was adjusted to $0.03 or the equivalent of $1.85 per share.

The fair value of these warrants was calculated using a modified Black-Scholes option valuation model utilizing the fair value of underlying common stock. Black-Scholes has inherent limitations for use in the case of a warrant with a price protection provision, since the model is designed to be used when the inputs to the model are static throughout the life of a security. Due to the significant variance between the fair market value of the stock and the exercise price, the Black-Scholes option-pricing model resulted in a fair value that equals the current market value of the stock. As such, the fair value of the Class A, Class B and certain other common warrants was estimated to be $0.94 per share, which was the closing price of the common stock on December 31, 2015. The total fair value of these warrants at December 31, 2015 was $61,941.

Series C Warrants and Unit Purchase Option

Our Series C Warrants contain a cashless exercise provision using a predetermined Black Scholes Value. Such provision, if exercised by the holder, would require the Company to settle these warrants, at its option, either by cash payment or the granting of a variable number of common shares. This provision results in the potential for the Company to either have to net cash settle the warrant or potentially issue an indeterminate number of common shares which prohibits the Company from being able to conclude that the warrants are indexed to the Company’s own stock. Accordingly, the warrants and the unit purchase option are accounted for as derivative liabilities and are recorded at fair value at each reporting date with the change in fair value being recorded in earnings for the period.

The Series C Warrants have predetermined inputs to Black Scholes formula for the determination of the fair value of the warrant which the Company used for the calculation of the fair value of the Series C Warrants at December 31, 2015. The inputs to the Black-Scholes formula are a stock price volatility of 135.00%, the warrant life of 5 years, a risk free rate of 1.61%, the fair value of $153.00 of the equity stock underlying the option and the exercise price of $2.55. The total fair value of these warrants at December 31, 2015 was $12,404,503.

Convertible Notes Conversion Feature

The convertible notes issued on December 30, 2015 contain provisions that protect holders from future issuances of the Company’s common stock at prices below such convertible notes’ respective conversion price. These provisions could result in modification of the conversion price due to a future equity offering and as such the conversion feature cannot be considered indexed to the Company’s own stock. The note also provides that the Company will repay the principal amount at an initial conversion rate subject to certain adjustment with a floor price. These features represent an embedded derivative that requires bifurcation and was recorded at fair value at issuance and again at year end with the change in fair value being recorded in earnings for the period. The Company determined the fair value of the conversion feature using a binomial model with Monte Carlo simulation to reflect different scenarios where reset may be triggered using the following assumptions:

Trading price of common stock on measurement date	$0.94 - $1.10
Conversion price (1)	$0.87 - $1.03
Risk free interest rate (2)	0.86%
Conversion notes lives in years	1.33
Expected volatility (3)	215%
Expected dividend yield (4)	—
Expected probability of shareholder approval (5)	85%

(1) The conversion price of the convertible notes was calculated based the formula in the Notes agreement as of the respective measurement date

(2) The risk-free interest rate was determined by management using the 1.5-year Treasury Bill as of the respective measurement date.

(3) The volatility factor was estimated by using the historical volatilities of the Company’s trading history.

(4) Management determined the dividend yield to be 0% based upon its expectation that it will not pay dividends for the foreseeable future.

(5) Management has estimated a probability of 85% that shareholder approval will be obtained for the removal of the 19.9% conversion cap. This is based on past shareholder voting history and discussions with current shareholders and consultants.

Series D Warrants and Subordination Warrants

In connection with the issuance of convertible notes on December 30, 2015, the Company issued Series D Warrants to acquire 3,503,116 shares of common stock. In addition, the Company issued 105,510 shares of Subordination Warrants. The Company has determined that the provisions contained in the Series D Warrants and the Subordination Warrants could result in modification of the warrants exercise price resulting in a variable number of additional common shares that could be issued. These warrants also contain a provision for a one-time adjustment to the number of warrants issued. On December 31, 2016 the warrant share number for the Series D Warrants and the Subordination Warrants shall be increased by the difference, if positive, between the number of Series D Warrants and Subordination Warrants issued on the issuance date and 16.6%, in the case of the Series D Warrants, and 0.5%, in the case of the Subordination Warrants, of the number of shares of common stock actually outstanding or deemed to be outstanding on December 30, 2016. The issuance of shares of common stock upon conversion of the Notes is subject to an initial cap of 19.9% of the Company’s issued and outstanding shares of common stock on December 31, 2015 unless and until the Company’s shareholders approve removal of the cap (see NOTE 8 CONVERTIBLE NOTES PAYABLE).

These provisions represent a derivative liability that requires recording at fair value at issuance and again at year end with the change in fair value being recorded in earnings for the period. The Company used a binomial model with Monte Carlo simulation to reflect different scenarios where reset may be triggered and to project the range of the additional shares to be issued on December 31, 2016 due to the 16.6% and 0.5% requirement.

The fair values of the Series D Warrants and Subordination Warrants were determined using a binomial valuation model which included additional warrants to be issued on December 31, 2016 and the following assumptions:

Trading price of common stock on measurement date	$0.94 - $1.10
Conversion price (1)	$1.85
Risk free interest rate (2)	1.80%
Warrant lives in years	5.50
Expected volatility (3)	215%
Expected dividend yield (4)	—

(1) The exercise price of the Series D Warrants calculated by 120% of the arithmetic average of five weighted average price of the common stock on the five consecutive trading days prior to issuance date on December 30, 2015.

(2) The risk-free interest rate was determined by management using the 5-year Treasury Bill as of the respective measurement date.

(3) The volatility factor was estimated by using the historical volatilities of the Company’s trading history.

(4) Management determined the dividend yield to be 0% based upon its expectation that it will not pay dividends for the foreseeable future.

The following summarizes the total change in the value of the derivative liabilities during the years ended December 31, 2015 and 2014:

As of December 31, 2014:
Balance at January 1, 2014	$	—
Issuance of warrants and option		2,487,726
Exercise of warrants		(885,259	)
Change in fair value of warrant and option liability		8,396,169
Balance at December 31, 2014	$	9,998,636
As of December 31, 2015:
Balance at January 1, 2015	$	9,998,636
Issuance of warrants, unit purchase option and convertible note		56,026,979
Exercise and expiration of warrants and unit purchase option		(42,558,951	)
Change in fair value of warrant, option and conversion feature liability		19,714,808
Balance at December 31, 2015	$	43,181,472

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EMPLOYEE STOCK OPTIONS

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

EMPLOYEE STOCK OPTIONS

NOTE 13    EMPLOYEE STOCK OPTIONS

The Company has three stock based employee compensation plans, the 2006 Stock Option Plan, the 2014 Stock Option Plan, and the Omnibus Plan pursuant to which certain employees and non-employee directors have been granted options to purchase common stock. The Company had 792,534 and 703,034 employee stock options outstanding as of December 31, 2015 and 2014, respectively. All options vest in installments over a three to four year period and expire ten years from the date of grant.

During the year ended December 31, 2014, the Company awarded 619,781 common stock options to certain employees and non-employee directors under the 2014 Stock Option and Omnibus Option plans. The options have an exercise price ranging from $2.00 to $7.00 per option expire ten years from date of issuance and vest over a period of three to four years. Pursuant to the reverse stock split on December 11, 2015, the exchange ratio upon the exercise of the options was adjusted such that for every 60 options exercised, one share of common stock would be issued.

The Company accounts for employee stock options according to FASB ASC 718 which requires the Company to calculate the fair value of the stock options on the date of grant and amortize over the vesting period of the options. The Company determined the value of 483,000 options granted prior to our IPO in October 2014 to be nominal due to the fair value of the Company’s common stock as of the grant date being nominal as a result of the priority provisions of the preferred stock outstanding at the time. The Company determined the fair value of the remaining 136,784 stock options granted after our IPO in October 2014 to be $306,709 of which $54,394 was expensed in 2014 with the remainder to be expensed over the vesting term of the options.

Also in the year ended December 31, 2014, the Company completed a tender offer to eligible employees to exchange 103,250 employee stock options under the 2006 Stock Option Plan for new options under the 2014 Stock Option Plan. The new options have an exercise price of $3.50 per option with all other terms the same as the original terms under the 2006 Option Plan. Pursuant to the reverse stock split on December 11, 2015, the exchange ratio upon the exercise of the options was adjusted such that for every 60 options exercised, one share of common stock would be issued. These transactions are accounted for under the provisions of FASB ASC 718 as a modification of a stock based compensation award and require the Company to record an expense for the incremental fair value based on the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified. The Company used the Black-Scholes option valuation model to calculate the fair value of the stock options. The Company determined the incremental fair value of the options to be $223,031 which was expensed in 2014 as the options are fully vested.

The following is the range of the weighted average of the assumptions used in calculating the fair value of the options granted after our IPO in October 2014 and the options modified in 2014 using the Black-Scholes method:

Fair market value of one share of common stock	$ 296.40 - 316.80
Aggregate exercise price of 60 options	$ 210.00 - 354.60
Risk free rate	1.06% - 1.70%
Dividend yield	0.00%
Expected volatility	46.31% - 54.97%
Expected term	2.74 - 6.06 years

For the year ended December 31, 2015, the Company awarded 117,500 common stock options under the Omnibus Plan to certain employees and non-employee directors with an exercise price of $2.56 per option that expire in ten years and vest over a three and four year period. The Company determined the value of the 117,500 options granted during the year ended December 31, 2015 to be $268,202 of which $29,309 was expensed in 2015 with the remainder to be expensed over the vesting term of the options.

The following is the weighted average of the assumptions used in calculating the fair value of the options granted in 2015 using the Black-Scholes method:

Fair market value of one share of common stock	$ 153.60
Aggregate exercise price of 60 options	$ 153.60
Risk free rate	1.71%
Dividend yield	0.00%
Expected volatility	127.52%
Expected term	6.14 years

The following table summarizes the Company’s total option activity for the years ended December 31, 2015 and 2014:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
As of December 31, 2014:
Options outstanding as of January 1, 2014		115,750		$	30.00		6.3
Granted		619,784		$	2.86		9.4
Exercised		—			—		—
Forfeited/expired		(32,500	)	$	8.92		5.7
Options outstanding as of December 31, 2014		703,034		$	2.98		8.8	$	—
As of December 31, 2015:
Options outstanding as of January 1, 2015		703,034		$	2.98		8.8
Granted		117,500		$	2.56		9.6
Exercised		—			—		—
Forfeited/expired		(28,000	)	$	5.16		8.6
Options outstanding as of December 31, 2015		792,534		$	2.84		8.0	$	—

Outstanding and exercisable stock options as of December 31, 2015 and 2014 are as follows:

	Options Outstanding						Options Exercisable
	Number of Options Outstanding		Remaining Life (Years)		Exercise Price		Number of Options Exercisable		Exercise Price		Intrinsic Value
December 31, 2014		703,034		8.8	$	2.98		117,404	$	3.86	$	—
December 31, 2015		792,534		8.0	$	2.84		328,445	$	3.07	$	—

The estimated fair value of the Company stock options, less expected forfeitures, is amortized over the options vesting period on the straight-line basis. The Company recognized the following equity-based compensation expenses during the twelve months ended December 31, 2015 and 2014:

	December 31,
	2015		2014
Stock based compensation expense	$	110,123	$	297,244

As of December 31, 2015 and 2014, there were $408,907 and $252,315 of total unrecognized compensation cost with a remaining vesting period of 2.71 and 3.44 years, respectively.

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 14    RELATED PARTY TRANSACTIONS

The Company’s obligations pursuant to its sale-leaseback agreements described in NOTE 6 LEASE COMMITMENTS are secured by letters of credit (Letters of Credit) in an aggregate amount of $3,000,000. The Letters of Credit were issued by a bank at the behest of a non-profit foundation (the “Foundation”) and Spring Forth Investments. The Company is obligated to reimburse the Foundation and Spring Forth Investments for any draws made under the Letters of Credit pursuant to two reimbursement agreements between the Company and the Foundation and Spring Forth Investments dated October 30, 2013. Mr. Spafford, one of our directors, and his wife, Susan Spafford, have been designated by the Foundation as “Founding Trustees” under its bylaws and have authority to control certain activities of the Foundation. Our obligations under the reimbursement agreements are secured by a security interest in all of our assets pursuant to a Security Agreement dated October 30, 2013. As of December 31, 2015, no draws on the line of credit had taken place.

In February 2014, we issued a convertible promissory note with an 8% interest rate and 25,000 warrants to purchase common stock to Mr. Ashton. The consideration paid by Mr. Ashton for the note and warrants was $200,000. The maturity date for the promissory note was February 26, 2015, or upon or a qualified equity financing of at least $5 million. This financing was for general working capital purposes. The principal balance of this note, along with accrued interest of $6,751 converted to 8,270,027 Series D Units in July 2014 which separated into 8,270,027 shares of Series D Preferred Stock, 41,350 Class A warrants to purchase common stock exercisable at $4.92 per warrant which expire in July 2021 and 41,350 Class B warrants exercisable at $0.20 per warrant which expire in July 2021. Upon the closing of our IPO, the Series D Preferred Stock converted into 690 shares of common stock. The exercise price of the Class A warrants and Class B warrants has been adjusted pursuant to the price protection feature in the warrants and is currently at $0.03 for both the Class A warrants and Class B warrants. The exchange ratio for the Class A warrants and Class B warrants upon the exercise of the options is such that for every 60 options exercised, one share of common stock would be issued.

In March 2014, we issued a convertible promissory note with an 8% interest rate and 12,500 warrants to purchase common stock to DRS, LLC, an entity controlled by Mr. Spafford. The consideration paid by DRS, LLC for the note and warrants was $100,000. The maturity date for the promissory note was March 10, 2015, or upon a qualified equity financing of at least $5 million. This financing was for general working capital purposes. The principal balance of this note, along with accrued interest of $3,112 converted to 4,124,493 Series D Units in July 2014 which separated into 4,124,493 shares of Series D Preferred Stock, 20,622 Class A warrants to purchase common stock exercisable at $4.92 per warrant which expire in July 2021 and 20,622 Series B warrants exercisable at $0.20 per warrant which expire in July 2021. Upon the closing of our IPO, the Series D Preferred Stock converted into 344 shares of common stock. The exercise price of the Class A warrants and Class B warrants has been adjusted pursuant to the price protection feature in the warrants and is currently at $0.03 for both the Class A warrants and Class B warrants. The exchange ratio for the Class A warrants and Class B warrants upon the exercise of the options is such that for every 60 options exercised, one share of common stock would be issued.

In July 2014, the Company entered into a note agreement for $500,000 with Spring Forth Investments, LLC a company owned by Mr. Spafford. The maturity date for the note is July 18, 2015. The note pays interest at an annual rate of 20% and is paid monthly. The Company may extend the due date of the note to July 18, 2016 by giving notice no later than April 18, 2015 and paying an extension fee of $10,000. The Company prepaid the last three months of interest for a total of $25,000 at the time of issuance of the note. As additional consideration for the note, the Company issued 4,000,000 Series D preferred stock units at a value of $100,000 which separated into 4,000,000 shares of Series D preferred stock, 20,000 Class A warrants to purchase common stock exercisable at $4.92 per warrant and 20,000 Class B warrants to purchase common stock at $0.20 per share. The Series D preferred stock units were accounted as a debt discount to be amortized over the life of the note. As of December 31, 2015 the unamortized debt discount was $58,333. Upon the closing of our IPO, the 4,000,000 shares of Series D Preferred Stock converted into 334 shares of common stock. The exercise price of the Class A warrants and Class B warrants has been adjusted pursuant to the price protection feature in the warrants and is currently at $0.03 for both the Class A warrants and Class B warrants. The exchange ratio for the Class A warrants and Class B warrants upon the exercise of the options is such that for every 60 options exercised, one share of common stock would be issued.

In April 2014, the Company entered into two Financial Advisory Agency Agreements with Rona Capital, LLC, an entity owned by Jeffrey A. Rona. Mr. Rona became our Chief Financial Officer in October 2014. The first agreement was for financial advisory services related to the Company’s ongoing financing activities prior to the filing of an S-1 registration with the SEC. The Company agreed to pay Rona Capital $15,000 per month plus reasonable out-or-pocket expenses. In addition, the Company issued warrants to Rona Capital to purchase 7,200,000 Series D units which separated into 7,200,000 Series D Preferred Shares, 36,000 Class A warrants to purchase common stock exercisable at $4.92 per warrant and 36,000 Class B warrants to purchase common stock exercisable at $0.20 per warrant pursuant to the initial S-1 filing with the SEC. The Company also indemnified Rona Capital for claims arising from the agreement, subject to certain exceptions. This agreement terminated upon the final closing of the Series D Preferred Stock financing. Upon the closing of our IPO, the 7,200,000 shares of Series D Preferred Stock converted into 600 shares of common stock. The exercise price of the Class A warrants and Class B warrants has been adjusted pursuant to the price protection feature in the warrants and is currently at $0.03 for both the Class A warrants and Class B warrants. The exchange ratio for the Class A warrants and Class B warrants upon the exercise of the options is such that for every 60 options exercised, one share of common stock would be issued.

The Company also entered into a second Financial Advisory Agency Agreement with Rona Capital effective in June 2014, wherein Rona Capital provided the Company with financial advisory services related to the Company’s ongoing financing activities. The Company paid Rona Capital $15,000 per month and additional cash amounts on the achievement of specified milestones, including $50,000 upon the filing of an S-1 with the SEC and $100,000 upon the closing of an initial public offering.

In relation to the convertible note financing on December 30, 2015, the Foundation and Spring Forth investments agreed to enter into subordination agreements with the collateral agent in the convertible note financing whereby each agreed to subordinate their debt to the notes issued in the convertible note financing. As consideration for their agreement the Company issued them Subordination Warrants exercisable for 105,516 shares of common stock (see NOTE 11 WARRANTS).

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INCOME TAXES

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 15    INCOME TAXES

The Company utilizes the asset and liability approach to measuring deferred tax assets and liabilities based on temporary differences existing at each balance sheet date using currently enacted tax rates in accordance with FASB ASC 740. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The income tax expense for the years ended December 31, 2015 and 2014 consists of the following:

	2015		2014
Current
Federal	$	—	$	—
State and Local		1,250		5,297
		1,250		5,297
Deferred
Federal		—		—
State and Local		—		—
		—		—
	$	1,250	$	5,297

The following is a reconciliation of the reported amount of income tax expense (benefit) for the years ended December 31, 2015 and 2014 to the amount of income tax expenses that would result from applying the statutory rate to pretax income.

The components of the Company’s deferred tax assets for the years ended December 31, 2015 and 2014 are as follows:

	2015			2014
Deferred tax assets:
Net operating losses		4,194,990			18,229,887
Depreciation and amortization		(182,903	)		162,344
Allowance for doubtful accounts		6,324			2,035
Accrued vacation		112,892			85,081
Accrued personal property tax		4,083			4,048
Other		1,652			171
Total deferred tax assets		4,137,036			18,483,566
Less: Valuation allowance		(4,137,036	)		(18,483,566	)
Net deferred tax assets	$	—		$	—

Reconciliation of reported amount of income tax expense for the years ended December 31, 2015 and 2014 consists of the following:

	2015			2014
Benefit for income taxes computed at federal statutory rate	$	(19,685,292	)	$	(7,385,656	)
State income taxes, net of federal tax benefit		1,998,974			(407,156	)
Non-deductible expenses		12,902,916			3,024,860
NOL write off due to Section 382 limitation		23,200,232			—
Increase (decrease) in valuation allowance		(14,346,481	)		4,622,286
Other, net		(71,150	)		150,963
Provision for income taxes	$	1,250		$	5,297
Effective tax rate		(0.01	%)		(0.07	%)

As of December 31, 2015 the Company has generated operating losses. As a result the Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2015 and 2014. The valuation allowance decreased by $14,346,481 during the tax year ended December 31, 2015.

During 2015, the Corporation had a change of ownership for Internal Revenue Code purposes. The amount of the NOLs for federal and state purposes was reduced to the amount that can be used considering those limitations. The amount presented is reduced based on the section 382 limitation and the carryforward period as provided by the federal and state tax laws.

As of December 31, 2015 and 2014, the Company has a net operating loss carry forwards for Federal income tax purposes of $11.5 million and $51.8 million, respectively, which expire in varying amounts during the tax years 2025 and 2035. The Company has net operating loss carry forwards for State income tax purposes of $8.2 million and $32.5 million which expire in varying years from 2025 to 2035.

Under FASB ASC 740, tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of December 31, 2015 and 2014, the Company has no liabilities for unrecognized tax benefits.

The Company’s policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the years ended December 31, 2015, and 2014, the Company did not recognize any interest or penalties in its statement of operations, nor did it have any interest or penalties accrued in its balance sheet at December 31, 2015 and 2014 relating to unrecognized tax benefits.

The tax years 2012-2015 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which the Company is subject.

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LEGAL PROCEEDINGS

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

LEGAL PROCEEDINGS

NOTE 16    LEGAL PROCEEDINGS

The Company is not currently a party to any pending or threatened legal proceeding or regulatory or government investigations. We may become involved in litigation from time to time relating to claims arising in the ordinary course of our business. We do not believe that the ultimate resolution of such claims would have a material effect on our business, results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material effect on our business, results of operations, financial condition and cash flows.

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GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2015

Text Block [Abstract]

GEOGRAPHIC INFORMATION

NOTE 17    GEOGRAPHIC INFORMATION

The Company has both domestic (U.S.) and international customers for its products. Sales for the years ended December 31, 2015 and 2014 were as follows:

	2015		2014
Domestic sales	$	2,096,825	$	1,559,614
International sales		45,215		46,640
Total sales	$	2,142,040	$	1,606,254

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 18    SUBSEQUENT EVENTS

In January and February 2016, the Company issued 64,641,576 shares of common stock pursuant to the cashless exercise of 5,001,687 Series C Warrants, the conversion of 13,967 shares of Series E Preferred Stock and the exercise of 121,450 unit purchase options with the immediate conversion and exercise of the Series E Preferred Stock and Series C Warrants.

In January 2016, the Company settled the cashless exercise of 138,158 Series C Warrants with cash in the amount of $304,017.

On January 21, 2016 all outstanding Series C Warrants were mandatorily exercised utilizing the cashless provision of the warrants. As of March 1, 2016 there are 50,418 Series C Warrants that have yet to be delivered and upon delivery, the Company will issue 563,651 shares of common stock.

In February 2016, the Company entered into a settlement agreement with Dawson James Securities, Inc. (“Dawson James”) pursuant to a dispute related to an underwriting agreement. Dawson James has agreed to terminate its right of first refusal for a one time payment by the Company of $80,000. In addition, Dawson James has agreed to provide consulting services for a 12 month period in consideration of the Company paying them an aggregate consulting fee of $800,000 consisting of $200,000 paid upon execution of the agreement and $50,000 per month for 12 months.

In February 2016, the Company entered into amendment agreements with holders of the Notes and Series D Warrants. The amendments (i) reduced the number of shares of common stock required to be reserved for issuance upon the conversion of the Notes and exercise of the Series D Warrants from 120,000,000 to 85,000,000. The reduction will expire on April 1, 2016, and (ii) extend the deadline for filing the initial registration statement to register the common stock issuable upon conversion of the Notes and exercise of the Series D Warrants.

In February 2016 the Company completed a public offering of 39.2 million Units. Each Unit consisted of one share of common stock and 1.5 Series E Warrants, each whole Series E Warrant is to purchase one share of our common stock at $0.25 per Series E Warrants. The Company received approximately $6.3 million of gross proceeds and approximately $5.6 million of net proceeds. The Series E Warrants expire six years from the date of issuance but are not exercisable for one year and are subject to a vote of the shareholders and an increase in the number of authorized common stock that the Company can issue.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

These financial statements have been prepared to reflect the financial position, results of operations and cash flows of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Reverse Stock Split

Reverse Stock Split

On December 11, 2015, the Company effected a reverse stock split of the Company’s common stock whereby each sixty shares of common stock was replaced with one share of common stock (with no fractional shares issued). The par value of the common stock was adjusted from $0.001 per share to $0.0001 per share as a result of the reverse stock split. The authorized shares of the common stock were not adjusted. All common share and per share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split. The quantity of Series E Preferred Stock, Common Warrants, Class A, Class B, Series A, Series B and Series C Warrants as well as employee and other options were not included in the reverse stock split and their outstanding quantities have not been adjusted. However, the conversion and exchange ratios were adjusted as a result of the reverse stock split such that upon conversion each 60 shares of Series E Preferred Stock will be converted into four shares of common stock and upon exercise each 60 warrants or options will be converted into one share of common stock.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Such estimates include the warranty reserve, accounts receivable and inventory reserves, intangible assets and other long lived assets, legal and regulatory contingencies, income taxes, share based arrangements, the derivative liability and others. These estimates and assumptions are based on management’s best estimates and judgments. Actual amounts and results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers highly liquid investments with insignificant interest rate risk and original maturities to the Company of three months or less to be cash equivalents. Cash equivalents consist primarily of interest and non-interest bearing bank accounts held in checking, savings and money market accounts. These assets are generally available on a daily or weekly basis and are highly liquid in nature. If the balances are greater than $250,000, the Company does not have FDIC coverage on the entire amount of bank deposits.

Restricted Cash

Restricted Cash

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded as restricted cash on our balance sheet. On December 30, 2015, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued $22.1 million senior secured convertible notes and received $18.4 million in cash proceeds. Under the terms of the notes, at closing an initial tranche of $4.6 million was available for immediate use by the Company for general corporate purposes. The remaining cash proceeds of $13.8 million is available in three additional tranches that are subject to an account control agreement whereby the restrictions on the proceeds are terminated when the Company meets certain equity conditions (see NOTE 8 CONVERTIBLE NOTES PAYABLE). The restricted cash is deposited in an account that is not FDIC insured.

Accounts Receivable

Accounts Receivable

Accounts receivable are generated from the sale of single use diagnostic test cartridges to end users in the United States and to a network of distributors outside the United States. These accounts receivable are recorded at the invoiced amount, net of allowances for doubtful amounts. The Company routinely reviews outstanding accounts receivable balances for estimated uncollectible accounts and establishes or adjusts the allowances for doubtful accounts receivable using the specific identification method and records a reserve for amounts not expected to be fully recovered. Actual balances are not applied against the reserve until substantially all collection efforts have been exhausted. The Company does not have customer acceptance provisions, but it does provide its customers a limited right of return for defective diagnostic test cartridges.

The allowance for doubtful accounts at December 31, 2015 and 2014 was $16,892 and $5,482, respectively.

Inventories

Inventories

Inventories are stated at the lower of cost or market with cost determined according to the average cost method. Manufactured inventory consists of raw material, direct labor and manufacturing overhead cost components. The Company reviews the components of its inventory on a regular basis for excess and obsolete inventory and makes appropriate adjustments when necessary. Inventories consisted of the following at December 31, 2015 and 2014:

	December 31,
	2015		2014
Raw materials	$	758,870	$	360,019
Work-in-process		277,827		91,153
Finished goods		96,445		5,922
Total inventories	$	1,133,142	$	457,094

Property and Equipment

Property and Equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets (which range from three to ten years) using the straight-line method. Amortization of leasehold improvements is computed on the straight-line method over the shorter of the lease term or estimated useful lives of the assets. The analyzers that the Company manufactures and retains title over are placed with customers and are recorded in property and equipment under “Analyzers.” The materials used for the manufacture of the analyzers are recorded in property and equipment under “Construction in progress.” Major renewals and betterments are capitalized and depreciated over their estimated useful lives while minor expenditures for maintenance and minor repairs are charged to operations as incurred.

The Company classifies assets to be sold as assets held for sale when (i) Company management has approved and commits to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition and is ready for sale, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Assets classified as held for sale are recorded at the lower of the carrying amount or fair value less the cost to sell and are a component of prepaid and other current assets in the balance sheets. The Company did not have any assets classified as held for sale as of December 31, 2015 and 2014.

Intangible Assets

Intangible Assets

The Company records its intangible assets at cost which consist of two licensing and royalty agreements for certain intellectual property rights used in the development and manufacture of our products. These intangible assets are being amortized over an estimated useful life of seven years from the date that the technology licenses became effective. As of December 31, 2015 and 2014, intangible assets totaled $600,000 valued at cost, less accumulated amortization of $480,829 and $383,420, respectively. The Company recorded amortization associated with these agreements of $97,407 and $117,445 for the years ended December 31, 2015 and 2014, respectively.

Estimated future intangible asset amortization expense for the next five years are as follows:

Years ended December 31,
2016	$	76,580
2017		42,591
Total estimated amortization expense	$	119,171

Impairment of Long Lived Assets

Impairment of Long Lived Assets

Long-lived tangible assets, including property and equipment, and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The Company regularly evaluates whether events or circumstances have occurred that indicate possible impairment and relies on a number of factors, including expected future operating results, business plans, economic projections, and anticipated future cash flows. The Company uses an estimate of the future undiscounted net cash flows and comparisons to like-kind assets, as appropriate, of the related asset over the remaining life in measuring whether the assets are recoverable. Measurement of the amount of impairment, if any, is based upon the difference between the asset’s carrying value and estimated fair value. Fair value is determined through various valuation techniques, including cost-based, market and income approaches as considered necessary.

Derivative Instruments

Derivative Instruments

The Company accounts for derivative instruments under the provisions of ASC 815 Derivatives and Hedging. ASC 815 requires the Company to record derivative instruments at their fair value. Changes in the fair value of derivatives are recognized in earnings. As a result of certain terms, conditions and features included in certain common stock warrants granted by the Company as well as the conversion features in the convertible notes, those provisions are required to be accounted for as derivatives at estimated fair value, with changes in fair value recognized in earnings.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are:

Level 1—Quoted market prices in active markets for identical assets or liabilities;

Level 2—Significant other observable inputs (e.g. quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable, such as interest rate and yield curves, and market-corroborated inputs); and

Level 3—Unobservable inputs in which there is little or no market data, which require the reporting unit to develop its own assumptions.

The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy at December 31, 2015 and 2014 (see NOTE 12 DERIVATIVE LIABILITIES):

	Fair Value Measurements at December 31, 2015
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	—	$	—	$	26,592,532	$	26,592,532
Convertible notes payable	$	—	$	—	$	16,588,940	$	16,588,940
Total derivative liability	$	—	$	—	$	43,181,472	$	43,181,472

	Fair Value Measurements at December 31, 2014
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	—	$	—	$	9,998,636	$	9,998,636
Total derivative liability	$	—	$	—	$	9,998,636	$	9,998,636

The internal models used to determine fair value for these Level 3 instruments use certain significant unobservable inputs and their use requires determination of relevant inputs and assumptions. Accordingly, changes in these unobservable inputs may have a significant impact on fair value. Such inputs include risk free interest rate, expected average life, expected dividend yield, and expected volatility. These Level 3 liabilities would decrease (increase) in value based upon an increase (decrease) in risk free interest rate and expected dividend yield. Conversely, the fair value of these Level 3 liabilities would generally increase (decrease) in value if the expected average life or expected volatility were to increase (decrease).

Revenue Recognition

Revenue Recognition

The Company derives its product revenue from the sale of single use diagnostic test cartridges sold through our dedicated sales force, except in the European Union where the Company sells through a network of distributors. Product revenue is recognized when all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the products has occurred; (3) the selling price of the product is fixed or determinable; and (4) collectability of that price is reasonably assured. Change in title to the product and recognition of revenue from sales of diagnostic test cartridges occurs at the time of shipment. Shipping and handling fees and related freight costs and supplies for test kits are billed to customers. Additional costs associated with shipping products to customers are included as a component of cost of sales.

Research and Development Costs

Research and Development Costs

Research and development costs are charged to operations as incurred. Research and development costs include, among other things, salaries and wages for research scientists and staff (including stock-based compensation), materials and supplies used in the development of new products, developing and validating the manufacturing process, costs for clinical trials, and costs for research and development facilities and equipment.

Stock Based Compensation

Stock Based Compensation

The Company has accounted for stock-based compensation under the provisions of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 718, “Compensation—Stock Compensation”. This standard requires the Company to record an expense associated with the fair value of stock-based compensation over the requisite service period. The Company uses the Black-Scholes option valuation model to calculate the value of options at the date of grant. Option pricing models require the input of highly subjective assumptions, including the estimated fair value of the Company’s common stock on the date of grant, the expected term of the stock option, and the expected price volatility of the Company’s common stock over the period equal to the expected term of the grant. Changes in these assumptions can materially affect the fair value estimate. The Company estimates forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Financial Instruments and Concentration of Credit Risk

Financial Instruments and Concentration of Credit Risk

The Company’s financial instruments include cash and cash equivalents, accounts receivable, and accounts payable. The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value because of their immediate or short-term maturities.

All of the Company’s accounts receivable result from sales in the normal course of business to its customers primarily throughout the United States. The Company attempts to limit its credit risk by performing credit evaluations of new customers and maintaining adequate allowances for potential credit losses. As of December 31, 2015, 17% of the accounts receivable balance resulted from one customer. As of December 31, 2014, 30% of the accounts receivable balance resulted from one customer. Historically, the Company has not experienced any credit losses on such receivables. Allowances for bad debt in the amount of $16,892 and $5,482 were recorded against accounts receivable for the years ended December 31, 2015 and 2014, respectively. There was no bad debt for the year ended December 31, 2015. The Company cannot ensure that such losses will not be realized in the future.

The Company’s customers consist of hospitals, clinics, laboratories and other healthcare providers in the United States, the European Union and New Zealand. For the year ended December 31, 2015, there were no customers that accounted for more than 10% of revenues. For the year ended December 31, 2014, 11% of revenues resulted from one customer who accounted for more than 10% of revenues.

Income Taxes

Income Taxes

The Company accounts for income taxes under FASB ASC 740, “Income Taxes”. Deferred income tax assets and liabilities are determined based upon 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. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized.

The tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained if the position were to be challenged by a taxing authority. The Company has examined the tax positions taken in its tax returns and determined that there are no uncertain tax positions. As a result, the Company has recorded no uncertain tax liabilities in its balance sheet.

Loss per Common Share

Loss per Common Share

Basic loss per share (“EPS”) is computed by dividing net loss, less cumulative preferred stock dividends for the period, including undeclared or unpaid cumulative dividends (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted EPS is computed by dividing net loss by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include convertible preferred stock, stock options and warrants. The number of potential common shares outstanding is computed using the treasury stock method.

As the Company has incurred losses for the years ended December 31, 2015 and 2014, the potentially dilutive shares are anti-dilutive and are thus not added into the loss per share calculations. As of December 31, 2015 and 2014, there were 27,468,018 and 102,516 potentially dilutive shares, respectively.

Reclassification

Reclassification

During 2015, the Company’s auditors identified a clerical error made by the Company during the preparation of the 2014 cash flow statement, wherein the amount for a certain fixed asset that was included in accounts payable had the sign inadvertently switched. The Company has corrected the presentation of the 2014 cash flows for this clerical item and in doing so, the statement of cash flows for 2014 was adjusted to increase net cash used in operating activities by $786,238, with a corresponding decrease in net cash used from investing activities. Other than the 2014 cash flow statement, no other cash flow statement for any annual or quarterly period, was impacted by this presentation correction. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly financial statements.

New Accounting Pronouncements

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-17, “Balance Sheet Classification of Deferred Taxes,” that requires companies to classify all deferred tax assets and liabilities, along with any valuation allowance, as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. During the fourth quarter of 2015, the Company elected early adoption of this standard as it improved the efficiency of the year end financial reporting process for income taxes and applied the changes retrospectively to all prior periods presented in its financial statements.

In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” that simplifies the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost or net realizable value test. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its financial statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of debt discounts or premiums. The ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. During the year 2015, the Company elected early adoption of this standard and applied the changes in its financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15 Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern. The update is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. During the year 2015, the Company elected early adoption of this standard and applied the changes in its financial statements and related disclosures.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. In April 2015, the FASB deferred the effective date of ASU 2014-09 to fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2014-09 on its financial statements and related disclosures.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Schedule of Inventories

Inventories consisted of the following at December 31, 2015 and 2014:

	December 31,
	2015		2014
Raw materials	$	758,870	$	360,019
Work-in-process		277,827		91,153
Finished goods		96,445		5,922
Total inventories	$	1,133,142	$	457,094

Estimated Future Intangible Asset Amortization Expense

Estimated future intangible asset amortization expense for the next five years are as follows:

Years ended December 31,
2016	$	76,580
2017		42,591
Total estimated amortization expense	$	119,171

Financial Liabilities Measured at Fair Value on a Recurring Basis

The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy at December 31, 2015 and 2014 (see NOTE 12 DERIVATIVE LIABILITIES):

	Fair Value Measurements at December 31, 2015
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	—	$	—	$	26,592,532	$	26,592,532
Convertible notes payable	$	—	$	—	$	16,588,940	$	16,588,940
Total derivative liability	$	—	$	—	$	43,181,472	$	43,181,472

	Fair Value Measurements at December 31, 2014
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	—	$	—	$	9,998,636	$	9,998,636
Total derivative liability	$	—	$	—	$	9,998,636	$	9,998,636

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PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment consisted of the following at December 31, 2015 and December 31, 2014:

	December 31,
	2015			2014
Construction in progress	$	680,679		$	1,133,654
Analyzers		5,045,481			1,139,352
Computers and office equipment		462,441			290,754
Machinery and equipment		2,372,558			1,060,993
Leasehold improvements		393,271			366,945
Furniture and fixtures		72,618			16,145
Equipment under capital lease		2,148,476			2,148,476
		11,175,522			6,156,319
Less: accumulated depreciation and amortization		(3,433,531	)		(1,918,852	)
Total property and equipment, net	$	7,741,991		$	4,237,467

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ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2015

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities consisted of the following as of December 31, 2015 and 2014:

	December 31,
	2015		2014
Accrued payroll	$	1,094,666	$	421,645
Royalties		75,642		166,540
Accrued interest		44,291		—
Accrued property and use tax		10,905		10,905
Other		87,645		13,269
Total accrued liabilities	$	1,313,149	$	612,359

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LEASE COMMITMENTS (Tables)

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Annual Future Minimum Lease Payments of Capital Leases

Annual future minimum lease payments of capital leases for the next five years are as follows:

Years ended December 31,
2016	$	1,694,006
2017		923,908
Total capital lease payments		2,617,914
Less amount representing interest		(461,078	)
Total future minimum lease payments		2,156,836
Less current portion of capital leases		(1,305,426	)
Long term portion of capital leases	$	851,410

Schedule of Operating Lease Commitments

Operating lease commitments for the next five years are as follows:

Years ended December 31,
2016	$	355,797
2017		246,255
2018		252,092
2019		259,132
2020		266,455
Total operating lease commitments	$	1,379,731

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NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Summary of Purchased Certain Machinery and Equipment under Two Note Payable Agreements

The Company purchased certain machinery and equipment under two note payable agreements which consist of the following as of December 31, 2015 and 2014:

	December 31,
	2015			2014
Note payable, 15.2% interest, monthly payments of $1,328, due February 6, 2016, secured by equipment	$	2,607		$	16,938
Note payable, 10.0% interest, monthly payments of $3,161, due January 1, 2016, secured by equipment		3,086			38,749
Total notes payable		5,693			55,687
Less: current portion of notes payable		(5,693	)		(49,994	)
Long term portion of notes payable	$	—		$	5,693

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CONVERTIBLE NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2015

Text Block [Abstract]

Summary of Convertible Notes Outstanding

The following table summarizes the convertible notes outstanding at December 31, 2015:

Convertible notes payable, principal	$	22,100,000
Debt discounts		(19,936,283	)
Net convertible note payable		2,163,717
Less current portion		(1,638,717	)
Convertible notes payable, long term	$	525,000

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WARRANTS (Tables)

12 Months Ended

Dec. 31, 2015

Schedule Of Warrants Outstanding and Exercisable

The following table outlines the warrants outstanding and exercisable as of December 31, 2014:

Warrants	Outstanding and Exercisable		Warrant Exercise Price	Common Stock Exchange Ratio	Total Shares of Common Stock Underlying the Warrant		Aggregate Exercise Price for One Common Share	Expiration
Class A		2,041,239	$4.92	60 : 1		34,021	$295.20	April 2021 - July 2021
Class B		1,645,845	$0.20	60 : 1		27,431	$12.00	April 2021 - July 2021
Series A		1,322,500	$7.00	60 : 1		22,042	$420.00	October 2015
Common		438,356	$2.00 - $32.00	60 : 1		7,306	$120.00 - $1,920.00	April 2016 - July 2021
Total Warrants		5,447,940				90,800

Assumptions used in Calculating Fair Value of Warrants Granted

The following is the weighted average of the assumptions used in calculating the fair value of the warrants at an exchange ratio of 60 warrants for one share of common stock after they were modified in September 2014 using the Black-Scholes method:

Fair market value of one share of common stock	$	296.40
Aggregate exercise price of 60 warrants	$	600.00
Risk free rate		0.61	%
Dividend yield		0.00	%
Expected volatility		37.23	%
Remaining contractual term		1.97 years

Summary of Stock Option Activity

The following table summarizes the Company’s total option activity for the years ended December 31, 2015 and 2014:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
As of December 31, 2014:
Options outstanding as of January 1, 2014		115,750		$	30.00		6.3
Granted		619,784		$	2.86		9.4
Exercised		—			—		—
Forfeited/expired		(32,500	)	$	8.92		5.7
Options outstanding as of December 31, 2014		703,034		$	2.98		8.8	$	—
As of December 31, 2015:
Options outstanding as of January 1, 2015		703,034		$	2.98		8.8
Granted		117,500		$	2.56		9.6
Exercised		—			—		—
Forfeited/expired		(28,000	)	$	5.16		8.6
Options outstanding as of December 31, 2015		792,534		$	2.84		8.0	$	—

Common Stock Warrants Activity

The following table summarizes the common stock warrant activity during the years ended December 31, 2015 and 2014:

	Common Stock Warrants			Weighted Average Exercise Price $		Weighted Average Remainder Contractual Term in Years
As of December 31, 2014:
Warrants outstanding as of January 1, 2014		274,420			8.00		4.2
Granted		5,331,520			3.91		5.5
Exercised		(158,000	)		0.20		6.6
Expired		—			—		—
Warrants outstanding as of December 31, 2014		5,447,940			4.17		4.9
As of December 31, 2015:
Warrants outstanding as of January 1, 2015		5,447,940			4.17		4.9
Granted		26,617,714			2.71		4.3
Exercised		(17,547,639	)		2.47		4.0
Expired		(1,298,418	)		2.48		3.4
Warrants outstanding as of December 31, 2015		13,219,597			2.71		4.7

Preferred A Stock Warrants

Summary of Stock Option Activity

The following table summarizes the Preferred A stock warrant activity during the year ended December 31, 2014:

	Preferred A Stock Warrants			Weighted Average Exercise Price		Weighted Average Remainder Contractual Term in Years
As of December 31, 2014:
Warrants outstanding as of January 1, 2014		2,231,727		$	0.16		3.1
Granted		—			—		—
Converted		(2,231,727	)		0.16		2.3
Expired		—			—		—
Warrants outstanding as of December 31, 2014		—		$	—		—

Preferred D Stock Warrants

Summary of Stock Option Activity

The following table summarizes the preferred D stock warrant activity during the year ended December 31, 2014:

	Preferred D Stock Warrants			Weighted Average Exercise Price		Weighted Average Remainder Contractual Term in Years
As of December 31, 2014:
Warrants outstanding as of January 1, 2014		—			—		—
Granted		7,200,000		$	0.025		6.8
Converted		(7,200,000	)	$	0.025		6.7
Expired		—			—		—
Warrants outstanding as of December 31, 2014		—		$	—		—

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DERIVATIVE LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Assumptions for Fair Value Measurement Model

The Company determined the fair value of the conversion feature using a binomial model with Monte Carlo simulation to reflect different scenarios where reset may be triggered using the following assumptions:

Trading price of common stock on measurement date	$0.94 - $1.10
Conversion price (1)	$0.87 - $1.03
Risk free interest rate (2)	0.86%
Conversion notes lives in years	1.33
Expected volatility (3)	215%
Expected dividend yield (4)	—
Expected probability of shareholder approval (5)	85%

(1) The conversion price of the convertible notes was calculated based the formula in the Notes agreement as of the respective measurement date

(2) The risk-free interest rate was determined by management using the 1.5-year Treasury Bill as of the respective measurement date.

(3) The volatility factor was estimated by using the historical volatilities of the Company’s trading history.

(4) Management determined the dividend yield to be 0% based upon its expectation that it will not pay dividends for the foreseeable future.

(5) Management has estimated a probability of 85% that shareholder approval will be obtained for the removal of the 19.9% conversion cap. This is based on past shareholder voting history and discussions with current shareholders and consultants.

The fair values of the Series D Warrants and Subordination Warrants were determined using a binomial valuation model which included additional warrants to be issued on December 31, 2016 and the following assumptions:

Trading price of common stock on measurement date	$0.94 - $1.10
Conversion price (1)	$1.85
Risk free interest rate (2)	1.80%
Warrant lives in years	5.50
Expected volatility (3)	215%
Expected dividend yield (4)	—

(1) The exercise price of the Series D Warrants calculated by 120% of the arithmetic average of five weighted average price of the common stock on the five consecutive trading days prior to issuance date on December 30, 2015.

(2) The risk-free interest rate was determined by management using the 5-year Treasury Bill as of the respective measurement date.

(3) The volatility factor was estimated by using the historical volatilities of the Company’s trading history.

(4) Management determined the dividend yield to be 0% based upon its expectation that it will not pay dividends for the foreseeable future.

Summary of Change in the Value of the Derivative Liabilities

The following summarizes the total change in the value of the derivative liabilities during the years ended December 31, 2015 and 2014:

As of December 31, 2014:
Balance at January 1, 2014	$	—
Issuance of warrants and option		2,487,726
Exercise of warrants		(885,259	)
Change in fair value of warrant and option liability		8,396,169
Balance at December 31, 2014	$	9,998,636
As of December 31, 2015:
Balance at January 1, 2015	$	9,998,636
Issuance of warrants, unit purchase option and convertible note		56,026,979
Exercise and expiration of warrants and unit purchase option		(42,558,951	)
Change in fair value of warrant, option and conversion feature liability		19,714,808
Balance at December 31, 2015	$	43,181,472

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EMPLOYEE STOCK OPTIONS (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Assumptions Used in Calculation of Fair Value of the Options Exchanged

The following is the range of the weighted average of the assumptions used in calculating the fair value of the options granted after our IPO in October 2014 and the options modified in 2014 using the Black-Scholes method:

Fair market value of one share of common stock	$ 296.40 - 316.80
Aggregate exercise price of 60 options	$ 210.00 - 354.60
Risk free rate	1.06% - 1.70%
Dividend yield	0.00%
Expected volatility	46.31% - 54.97%
Expected term	2.74 - 6.06 years

The following is the weighted average of the assumptions used in calculating the fair value of the options granted in 2015 using the Black-Scholes method:

Fair market value of one share of common stock	$ 153.60
Aggregate exercise price of 60 options	$ 153.60
Risk free rate	1.71%
Dividend yield	0.00%
Expected volatility	127.52%
Expected term	6.14 years

Summary of Stock Options Outstanding and Exercisable

Outstanding and exercisable stock options as of December 31, 2015 and 2014 are as follows:

	Options Outstanding						Options Exercisable
	Number of Options Outstanding		Remaining Life (Years)		Exercise Price		Number of Options Exercisable		Exercise Price		Intrinsic Value
December 31, 2014		703,034		8.8	$	2.98		117,404	$	3.86	$	—
December 31, 2015		792,534		8.0	$	2.84		328,445	$	3.07	$	—

Schedule of Equity-Based Compensation Expenses

The estimated fair value of the Company stock options, less expected forfeitures, is amortized over the options vesting period on the straight-line basis. The Company recognized the following equity-based compensation expenses during the twelve months ended December 31, 2015 and 2014:

	December 31,
	2015		2014
Stock based compensation expense	$	110,123	$	297,244

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax Expense

The income tax expense for the years ended December 31, 2015 and 2014 consists of the following:

	2015		2014
Current
Federal	$	—	$	—
State and Local		1,250		5,297
		1,250		5,297
Deferred
Federal		—		—
State and Local		—		—
		—		—
	$	1,250	$	5,297

Components of Deferred Tax Assets

The components of the Company’s deferred tax assets for the years ended December 31, 2015 and 2014 are as follows:

	2015			2014
Deferred tax assets:
Net operating losses		4,194,990			18,229,887
Depreciation and amortization		(182,903	)		162,344
Allowance for doubtful accounts		6,324			2,035
Accrued vacation		112,892			85,081
Accrued personal property tax		4,083			4,048
Other		1,652			171
Total deferred tax assets		4,137,036			18,483,566
Less: Valuation allowance		(4,137,036	)		(18,483,566	)
Net deferred tax assets	$	—		$	—

Reconciliation of Reported Amount of Income Tax Expense

Reconciliation of reported amount of income tax expense for the years ended December 31, 2015 and 2014 consists of the following:

	2015			2014
Benefit for income taxes computed at federal statutory rate	$	(19,685,292	)	$	(7,385,656	)
State income taxes, net of federal tax benefit		1,998,974			(407,156	)
Non-deductible expenses		12,902,916			3,024,860
NOL write off due to Section 382 limitation		23,200,232			—
Increase (decrease) in valuation allowance		(14,346,481	)		4,622,286
Other, net		(71,150	)		150,963
Provision for income taxes	$	1,250		$	5,297
Effective tax rate		(0.01	%)		(0.07	%)

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GEOGRAPHIC INFORMATION (Tables)

12 Months Ended

Dec. 31, 2015

Text Block [Abstract]

Schedule of Domestic and International Customers Products Sales

The Company has both domestic (U.S.) and international customers for its products. Sales for the years ended December 31, 2015 and 2014 were as follows:

	2015		2014
Domestic sales	$	2,096,825	$	1,559,614
International sales		45,215		46,640
Total sales	$	2,142,040	$	1,606,254

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Description of Business - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2015
Description Of Business [Line Items]
Date of incorporation	Jun. 27, 2003
Nevada Corporation
Description Of Business [Line Items]
Date of merger	Aug. 29, 2008

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Summary of Significant Accounting Policies - Additional Information (Detail)			12 Months Ended
	Dec. 30, 2015 USD ($)	Dec. 11, 2015 $ / shares	Dec. 31, 2015 USD ($) Customer Agreement $ / shares shares	Dec. 31, 2014 USD ($) Customer $ / shares shares
Summary Of Significant Accounting Policies [Line Items]
Common Stock Per Share | $ / shares		$ 0.0001	$ 0.0001	$ 0.0001
Conversion and Exchange Ratio			The conversion and exchange ratios were adjusted as a result of the reverse stock split such that upon conversion each 60 shares of Series E Preferred Stock will be converted into four shares of common stock and upon exercise each 60 warrants or options will be converted into one share of common stock.
Cash, FDIC Insured Amount			$ 250,000
Proceeds from issuance of convertible notes payable			4,135,000	$ 100,000
Cash, Restricted			13,800,000
Allowance for doubtful accounts receivable, current			$ 16,892	5,482
Number of licensing and royalty agreements | Agreement			2
Intangible assets amortization period			7 years
Total intangible assets			$ 600,000	600,000
Accumulated amortization			480,829	383,420
Amortization of intangible assets			$ 97,407	$ 117,445
Dilutive shares excluded from computation of earnings per share | shares			27,468,018	102,516
Net cash used in operating activities			$ (20,669,754)	$ (12,397,418)
Accounts Receivable | Customer Concentration Risk
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage			17.00%	30.00%
Number of customers | Customer			1	1
Sales Revenue | Customer Concentration Risk
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage				11.00%
Number of customers | Customer			0	1
Senior Secured Convertible Note
Summary Of Significant Accounting Policies [Line Items]
Convertible notes payable, principal			$ 22,100,000
Securities Purchase Agreement | Senior Secured Convertible Note
Summary Of Significant Accounting Policies [Line Items]
Convertible notes payable, principal	$ 22,100,000
Note agreement carrying value	18,400,000
Subordination Warrants | Series D Warrant
Summary Of Significant Accounting Policies [Line Items]
Proceeds from issuance of convertible notes payable	4,600,000		$ 4,600,000
Cash, Restricted	$ 13,800,000
Common Stock
Summary Of Significant Accounting Policies [Line Items]
Reverse stock split ratio		0.01666667
Reverse stock split ratio, Description			Each sixty shares of common stock was replaced with one share of common stock
Scenario, Previously Reported
Summary Of Significant Accounting Policies [Line Items]
Common Stock Per Share | $ / shares		$ 0.001
Restatement Adjustment [Member]
Summary Of Significant Accounting Policies [Line Items]
Net cash used in operating activities			$ 786,238
Minimum
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of assets			3 years
Maximum
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of assets			10 years

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Schedule of Inventories (Detail) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 758,870	$ 360,019
Work-in-process	277,827	91,153
Finished goods	96,445	5,922
Total inventories	$ 1,133,142	$ 457,094

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Estimated Future Intangible Asset Amortization Expense (Detail) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
2016	$ 76,580
2017	42,591
Total estimated amortization expense	$ 119,171	$ 216,580

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Financial Liabilities Measured at Fair Value on a Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 43,181,472	$ 9,998,636
Convertible Notes Payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	16,588,940
Common Stock Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	26,592,532	9,998,636
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	0	0
Fair Value, Inputs, Level 1 | Convertible Notes Payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	0
Fair Value, Inputs, Level 1 | Common Stock Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	0	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	0	0
Fair Value, Inputs, Level 2 | Convertible Notes Payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	0
Fair Value, Inputs, Level 2 | Common Stock Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	43,181,472	9,998,636
Fair Value, Inputs, Level 3 | Convertible Notes Payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	16,588,940
Fair Value, Inputs, Level 3 | Common Stock Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 26,592,532	$ 9,998,636

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Going Concern - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Liquidity Disclosure Going Concern [Abstract]
Net loss	$ (57,899,169)	$ (21,727,818)
Accumulated deficit	$ (121,903,865)	$ (64,004,696)

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Schedule of Property and Equipment (Detail) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	$ 11,175,522	$ 6,156,319
Less: accumulated depreciation and amortization	(3,433,531)	(1,918,852)
Total property and equipment, net	7,741,991	4,237,467
Construction in Progress
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	680,679	1,133,654
Analyzers
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	5,045,481	1,139,352
Computers and office equipment
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	462,441	290,754
Machinery and Equipment
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	2,372,558	1,060,993
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	393,271	366,945
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	72,618	16,145
Equipment under capital lease
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	$ 2,148,476	$ 2,148,476

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Property and Equipment - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 1,612,086	$ 1,157,976
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Depreciation and amortization	1,514,679	1,040,531
Equipment under capital lease
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 1,199,183	$ 601,947

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Schedule of Accrued Liabilities (Detail) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Payables and Accruals [Abstract]
Accrued payroll	$ 1,094,666	$ 421,645
Royalties	75,642	166,540
Accrued interest	44,291
Accrued property and use tax	10,905	10,905
Other	87,645	13,269
Total accrued liabilities	$ 1,313,149	$ 612,359

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Lease Commitments - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2015 USD ($) ft²	Dec. 31, 2014 USD ($)
Operating Leased Assets [Line Items]
Proceeds from sale leaseback		$ 1,500,000
Capital lease obligations	$ 500,000
Sale-leaseback transaction lease term	At the end of each lease term, the leases shall automatically renew for twelve additional months at the current monthly rate unless the Company gives written notice 150 days prior to the end of the lease.
Amounts charged to expense under operating leases	$ 279,296	$ 293,773
Second Agreement
Operating Leased Assets [Line Items]
Sale-leaseback transaction agreement date	Apr. 30, 2014
Proceeds from sale leaseback	$ 1,500,000
Sale-leaseback transaction renewal period	24 months
Sale-leaseback transaction monthly payments	$ 64,665
Amortizing of capital lease	36 months
Period of future expense	12 months
First Agreement
Operating Leased Assets [Line Items]
Proceeds from sale leaseback	$ 2,500,000
Sale-leaseback transaction renewal period	36 months
Sale-leaseback transaction monthly payments	$ 74,875
Amortizing of capital lease	48 months
Sale-leaseback transaction renewal term	The Company shall have the opportunity to 1) repurchase the analyzers for a negotiated purchase price, not to exceed forty percent of their original cost; or 2) terminate the lease, return the property and enter into a new lease with new property that replaces the property of the old lease. Both the Company and the lessor shall have the right to reject any terms of option 1 or 2 and if rejected, the 12 month extension shall apply.
Building Space Lease
Operating Leased Assets [Line Items]
Area Of Leased Space | ft²	33,000
Operating Leases Monthly Base Rent Expense	$ 21,226
Lease Expiration Date	Apr. 30, 2016
Renewal Term	3 years
Office Space Lease
Operating Leased Assets [Line Items]
Area Of Leased Space | ft²	13,399
Operating Leases Monthly Base Rent Expense	$ 8,437
Aggregate lease, base	$ 1,231,526
Term of Contract	65 months

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Schedule of Annual Maturities of Capital Leases (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Leases [Abstract]
2016	$ 1,694,006
2017	923,908
Total capital lease payments	2,617,914
Less amount representing interest	(461,078)
Total future minimum lease payments	2,156,836
Less: current portion of capital leases	(1,305,426)
Long term portion of capital leases	851,410	$ 2,156,837
Total future minimum lease payments	$ 2,156,836

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Schedule of Operating Lease Commitments (Detail)	Dec. 31, 2015 USD ($)
Leases [Abstract]
2016	$ 355,797
2017	246,255
2018	252,092
2019	259,132
2020	266,455
Total operating lease commitments	$ 1,379,731

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Notes Payable - Summary of Purchased Certain Machinery and Equipment under Two Note Payable Agreements (Detail) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Total notes payable	$ 5,693	$ 55,687
Less: current portion of notes payable	(5,693)	(49,994)
Long term portion of notes payable		5,693
Note Payable, 15.2% Interest
Debt Instrument [Line Items]
Total notes payable	2,607	16,938
Note Payable, 10.0% Interest
Debt Instrument [Line Items]
Total notes payable	$ 3,086	$ 38,749

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Notes Payable - Summary of Purchased Certain Machinery and Equipment under Two Note Payable Agreements (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2015 USD ($)
Note Payable, 15.2% Interest
Debt Instrument [Line Items]
Notes payable, interest rate	15.20%
Notes payable, monthly payments	$ 1,328
Maturity date of notes	Feb. 06, 2016
Note Payable, 10.0% Interest
Debt Instrument [Line Items]
Notes payable, interest rate	10.00%
Notes payable, monthly payments	$ 3,161
Maturity date of notes	Jan. 01, 2016

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Convertible Notes Payable - Additional Information (Detail)		12 Months Ended
	Dec. 30, 2015 USD ($) $ / shares $ / Unit shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) shares	Feb. 28, 2015 shares
Debt Instrument [Line Items]
Warrants Exercisable | shares		13,219,597	5,447,940
Proceeds from issuance of convertible notes payable		$ 4,135,000	$ 100,000
Interest expense		11,757,445	1,136,054
Amortization of Discount costs		$ 122,050	$ 41,667
Outstanding warrants converted | shares		13,219,597	5,447,940
Loss on extinguishment of warrants		$ (4,038,063)
Series D Warrant
Debt Instrument [Line Items]
Exercise price | $ / shares		$ 1.85
Warrants Exercisable | shares		3,503,116
Outstanding warrants converted | shares		3,503,116
Series C Warrant
Debt Instrument [Line Items]
Exercise price | $ / shares		$ 2.55
Warrants Exercisable | shares		5,229,973		21,792,000
Outstanding warrants converted | shares		5,229,973
Securities Purchase Agreement
Debt Instrument [Line Items]
Note tranche receivable terms		The remaining cash purchase price of $13.8 million will be released to the Company in subsequent tranches subject to the following terms and conditions: (1) 25% will be released 30 trading days following the later of (x) the “Control Account Release Eligibility Date” and (ii) the first installment date under the Note, (2) 25% will be released 90 trading days following the Control Account Release Eligibility Date and (3) 25% will be released 120 trading days following the Control Account Release Eligibility Date.
Subordination Warrants | Series D Warrant
Debt Instrument [Line Items]
Proceeds from issuance of convertible notes payable	$ 4,600,000	$ 4,600,000
Remaining proceed from issuance of debt		13,800,000
Senior Secured Convertible Note
Debt Instrument [Line Items]
Convertible notes payable, principal		22,100,000
Debt instrument, original issue discount		$ 19,936,283
Debt Instrument Frequency Of Periodic Payment		The Company has agreed to make amortization payments with respect to the Notes in twelve (12) equal installments beginning four (4) months after the original date of issuance of December 30, 2015 (each, an “Installment Date”). On each installment date, assuming certain equity conditions are met, the installment payment shall automatically be converted into shares of Common Stock at (i) at 80% of the five day volume weighted average price of the common stock for the first four payments and (ii) at 85% of the five day volume weighted average price of the common stock for the last 8 payments with both conversion rates being subject to a floor conversion price of $0.20.
Senior Secured Convertible Note | Securities Purchase Agreement
Debt Instrument [Line Items]
Convertible notes payable, principal	$ 22,100,000
Debt instrument, number shares to be issued upon conversion | shares	11,945,946
Convertible debt, conversion price | $ / shares	$ 1.85
Price adjustment percentage	19.90%
Note agreement carrying value	$ 18,400,000
Senior Secured Convertible Note | Securities Purchase Agreement | Notes issued for cash
Debt Instrument [Line Items]
Convertible notes payable, principal	20,000,000
Note agreement carrying value	18,400,000
Debt instrument, original issue discount	$ 1,600,000	$ 20,000,000
Notes payable, interest rate	6.00%
Debt Issuance cost incurred	$ 568,685
Interest expense		10,594,182
Amortization of Discount costs		63,717
Senior Secured Convertible Note | Securities Purchase Agreement | Notes issued for cash | Embedded Derivative Financial Instruments [Member]
Debt Instrument [Line Items]
Convertible Debt, Fair Value Disclosures		14,788,365
Senior Secured Convertible Note | Securities Purchase Agreement | Notes issued upon exchange of outstanding Series C Warrants
Debt Instrument [Line Items]
Convertible notes payable, principal	$ 2,100,000
Conversion of stock, shares converted | shares	1,050,000
Exercise price | $ / shares	$ 2.00
Loss on extinguishment of warrants		4,038,063
Senior Secured Convertible Note | Securities Purchase Agreement | Notes issued upon exchange of outstanding Series C Warrants | Embedded Derivative Financial Instruments [Member]
Debt Instrument [Line Items]
Convertible Debt, Fair Value Disclosures		1,865,729
Senior Secured Convertible Note | Securities Purchase Agreement | Series D Warrant
Debt Instrument [Line Items]
Exercise price | $ / shares	$ 1.85
Common Stock, Capital Shares Reserved for Future Issuance | shares	120,000,000
Warrants Exercisable | shares	3,503,116
Weighted Average Remainder Contractual Term in Years, Exercised	5 years
Conversion feature, floor price | $ / Unit	1.16
Senior Secured Convertible Note | Securities Purchase Agreement | Series D Warrant | Notes issued for cash
Debt Instrument [Line Items]
Warrant, Fair Value Disclosures		13,637,132
Senior Secured Convertible Note | Securities Purchase Agreement | Series D Warrant | Notes issued upon exchange of outstanding Series C Warrants
Debt Instrument [Line Items]
Warrant, Fair Value Disclosures		2,412,574
Senior Secured Convertible Note | Securities Purchase Agreement | Series C Warrant | Notes issued upon exchange of outstanding Series C Warrants
Debt Instrument [Line Items]
Warrant, Fair Value Disclosures		$ 2,340,240
Outstanding warrants converted | shares		1,050,000

XML

Convertible Notes Payable - Summary of Convertible Notes Outstanding (Detail)	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Net convertible note payable	$ 2,163,717
Less current portion	(1,638,717)
Convertible notes payable, long term	525,000
Net convertible note payable	2,163,717
Senior Secured Convertible Note
Debt Instrument [Line Items]
Convertible notes payable, principal	22,100,000
Debt discounts	$ (19,936,283)

XML

Notes Payable - Related Party - Additional Information (Detail)		1 Months Ended				12 Months Ended
	Oct. 08, 2014 $ / shares shares	Apr. 30, 2015 USD ($)	Feb. 28, 2015 USD ($) $ / shares	Oct. 31, 2014	Jul. 31, 2014 USD ($) $ / shares shares	Dec. 31, 2015 $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 30, 2015 $ / shares	Mar. 31, 2015 $ / shares
Related Party Transaction [Line Items]
Warrants Exercisable						13,219,597	5,447,940
Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued							771
IPO | Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued	60,279
Series D Convertible Preferred Stock
Related Party Transaction [Line Items]
Conversion of preferred stock to common stock, conversion ratio				200	12,000
Class A Warrant
Related Party Transaction [Line Items]
Common stock exchange ratio						60	60
Preferred units issued as consideration, warrants price per share | $ / shares			$ 4.92			$ 0.03	$ 4.92	$ 0.03	$ 2.20
Warrants Exercisable						1,532,598	2,041,239
Class A Warrant | IPO
Related Party Transaction [Line Items]
Preferred units issued as consideration, warrants price per share | $ / shares	$ 7.00
Class B Warrant
Related Party Transaction [Line Items]
Common stock exchange ratio						60	60
Preferred units issued as consideration, warrants price per share | $ / shares						$ 0.03	$ 0.2	$ 0.03
Warrants Exercisable						1,310,956	1,645,845
Notes Payable To Related Party
Related Party Transaction [Line Items]
Convertible notes payable, principal | $					$ 500,000
Notes payable, interest rate					20.00%
Note maturity date description						The Company may extend the due date of the note to July 18, 2016 by giving notice no later than April 18, 2015
Note extension fee amount | $					$ 10,000
Notes, maturity date					Jul. 18, 2015
Prepaid interest | $					$ 25,000
Number of preferred units issued as consideration					4,000,000		4,000,000
Value of preferred units issued as consideration | $					$ 100,000		$ 100,000
Preferred units issued as consideration, series D preferred shares					4,000,000
Preferred units issued as consideration, price per share | $ / shares							$ 0.025
Notes Payable To Related Party | IPO | Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued						20,000
Notes Payable To Related Party | Series D Convertible Preferred Stock | IPO
Related Party Transaction [Line Items]
Conversion of stock, shares converted						4,000,000
Notes Payable To Related Party | Class A Warrant
Related Party Transaction [Line Items]
Preferred units issued as consideration, warrants price per share | $ / shares						$ 0.03	4.92
Warrants Exercisable					20,000
Notes Payable To Related Party | Class B Warrant
Related Party Transaction [Line Items]
Preferred units issued as consideration, warrants price per share | $ / shares						$ 0.03	$ 0.20
Warrants Exercisable					20,000
Spring Forth Investments, LLC
Related Party Transaction [Line Items]
Convertible notes payable, principal | $			$ 250,000
Notes payable, interest rate			12.00%
Note maturity date description						The loan had an interest rate of twelve percent (12%) per year and matured the earlier of (i) 90 days from the date of the loan agreement, or (ii) five days after the closing of a registered public offering of securities of the Company.
Debt instrument maturity period after loan agreement			90 days
Debt instrument maturity period after closing of registered public offering			5 days
Notes payable, interest rate | $		$ 4,192
Termination Fee | $		$ 12,500
Spring Forth Investments, LLC | Notes Payable To Related Party
Related Party Transaction [Line Items]
Convertible notes payable, principal | $					$ 500,000
Notes payable, interest rate					20.00%
Debt Instrument Frequency Of Periodic Payment						Monthly
Note maturity date description						The original maturity date for the note was July 18, 2015, which was extended by the Company to July 18, 2016 by giving notice and paying an extension fee of $10,000.
Note extension fee amount | $					$ 10,000
Notes, maturity date					Jul. 18, 2015	Jul. 18, 2016
Prepaid interest | $					$ 25,000
Number of preferred units issued as consideration					4,000,000
Value of preferred units issued as consideration | $					$ 100,000
Preferred units issued as consideration, series D preferred shares					4,000,000
Preferred units issued as consideration, price per share | $ / shares					$ 0.025
Spring Forth Investments, LLC | Notes Payable To Related Party | IPO
Related Party Transaction [Line Items]
Conversion of preferred stock to common stock, conversion ratio					12,000
Spring Forth Investments, LLC | Notes Payable To Related Party | IPO | Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued					334
Spring Forth Investments, LLC | Notes Payable To Related Party | Series D Convertible Preferred Stock | IPO
Related Party Transaction [Line Items]
Conversion of stock, shares converted					4,000,000
Spring Forth Investments, LLC | Notes Payable To Related Party | Class A Warrant
Related Party Transaction [Line Items]
Common stock exchange ratio					60
Warrants issued					20,000
Preferred units issued as consideration, warrants price per share | $ / shares					$ 295.20
Spring Forth Investments, LLC | Notes Payable To Related Party | Class B Warrant
Related Party Transaction [Line Items]
Common stock exchange ratio					60
Preferred units issued as consideration, warrants price per share | $ / shares					$ 12.00
Warrants Exercisable					20,000

XML

Common Stock - Additional Information (Detail)				1 Months Ended		12 Months Ended
	Dec. 11, 2015 $ / shares	Aug. 25, 2015 shares	Oct. 08, 2014 USD ($) $ / shares shares	Sep. 21, 2015 shares	Jun. 30, 2015 USD ($) shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 30, 2015 $ / shares	Mar. 31, 2015 $ / shares	Feb. 28, 2015 $ / shares shares
Class Of Stock [Line Items]
Common stock, shares authorized						200,000,000	50,000,000
Common stock, par value | $ / shares	$ 0.0001					$ 0.0001	$ 0.0001
Common stock, shares issued						10,390,408	84,777
Common stock, shares outstanding						10,390,408	84,777
Proceeds from Warrant | $						$ 3,161,220	$ 31,600
Warrants Exercisable						13,219,597	5,447,940
Warrants exercised by underwriter			172,500
Proceeds from Issuance of Initial Public Offering | $			$ 6,400,000
Proceeds from exercise of warrants | $							$ 31,600
Common shares issued upon cash less exercise of warrants						9,220
Proceeds from issuance of common stock | $							$ 6,375,837
Series A Convertible Preferred Stock
Class Of Stock [Line Items]
Conversion of stock, shares converted							9,250,000
Conversion of preferred stock to common stock, conversion ratio							771
Series E Convertible Preferred Stock
Class Of Stock [Line Items]
Conversion of stock, shares converted						2,650,403
Common shares issued upon exercise of warrants						176,695
Issuance of stock						14,750
Conversion of preferred stock to common stock, conversion ratio						15
Common Stock
Class Of Stock [Line Items]
Conversion of stock, shares issued							771
Conversion of preferred stock to common stock, conversion ratio	0.01666667
Common shares issued upon exercise of warrants							2,634
Issuance of stock						0	19,167
Common Stock | IPO
Class Of Stock [Line Items]
Conversion of stock, shares issued			60,279
Conversion of preferred stock to common stock, conversion ratio			12,000
Issuance of stock			19,167
Common Stock | Series E Convertible Preferred Stock
Class Of Stock [Line Items]
Conversion of stock, shares issued						176,695
Conversion of stock, shares converted						2,650,403
Conversion of preferred stock to common stock, conversion ratio						15
Convertible Preferred Stock | Series A Convertible Preferred Stock
Class Of Stock [Line Items]
Conversion of stock, shares converted							9,250,000
Conversion of preferred stock to common stock, conversion ratio							12,000
Series D Warrant
Class Of Stock [Line Items]
Shares issued price per share | $ / shares						$ 1.85
Warrants Exercisable						3,503,116
Series D Warrant | Common Stock
Class Of Stock [Line Items]
Shares issued price per share | $ / shares						$ 1.85
Warrants Exercisable						3,503,116
Class B Warrant
Class Of Stock [Line Items]
Common shares issued upon exercise of warrants							2,634
Warrants exercised							158,000
Proceeds from Warrant | $							$ 31,600
Shares issued price per share | $ / shares						$ 0.03	$ 0.2	$ 0.03
Warrants Exercisable						1,310,956	1,645,845
Cashless exercise of Warrants						334,889
Class A Warrant
Class Of Stock [Line Items]
Shares issued price per share | $ / shares						$ 0.03	$ 4.92	0.03	$ 2.20	$ 4.92
Warrants Exercisable						1,532,598	2,041,239
Cashless exercise of Warrants						508,641
Class A Warrant | IPO
Class Of Stock [Line Items]
Warrants issued during period			1,150,000
Number of shares can be converted description						In October 2014, the Company completed an IPO, whereby the Company sold 19,167 shares of its common stock and 1,150,000 Series A Warrants, which were sold in units of one share of common stock for every 60 units and one Series A Warrant at a public offering price of $7.00 per unit.
Shares issued price per share | $ / shares			$ 7.00
Common Warrants
Class Of Stock [Line Items]
Shares issued price per share | $ / shares								$ 0.03
Warrants Exercisable						463,356	438,356
Common Warrants | IPO | Underwriter Purchase Options
Class Of Stock [Line Items]
Warrants Exercisable			57,500
Series A Warrant
Class Of Stock [Line Items]
Common shares issued upon exercise of warrants						17,917
Warrants exercised						1,074,082
Proceeds from Warrant | $						$ 2,252,020
Shares issued price per share | $ / shares						$ 2.20	$ 7.00		$ 7.00
Warrants Exercisable							1,322,500
Proceeds from exercise of warrants | $						$ 2,252,020
Series B Warrant
Class Of Stock [Line Items]
Shares issued price per share | $ / shares						$ 8.75
Warrants Exercisable						1,074,082
Series C Warrant
Class Of Stock [Line Items]
Common shares issued upon exercise of warrants					6,400
Warrants exercised					384,000
Proceeds from Warrant | $					$ 979,200
Warrants issued during period		21,408,000
Shares issued price per share | $ / shares						$ 2.55
Warrants Exercisable						5,229,973				21,792,000
Proceeds from exercise of warrants | $						$ 979,200
Common shares issued upon cash less exercise of warrants						10,101,480
Cashless exercise of Warrants				15,128,027		15,630,027
Proceeds from issuance of common stock | $						$ 979,200
Series C Warrant | Cashless Exercise
Class Of Stock [Line Items]
Conversion of stock, shares converted						15,246,027
Issuance of stock						10,095,080
Series C Warrant | Warrant, Cash Exercise
Class Of Stock [Line Items]
Conversion of stock, shares converted						384,000
Issuance of stock						6,400
Series C Warrant | Series E Convertible Preferred Stock
Class Of Stock [Line Items]
Issuance of stock		2,676,000
Series C Warrant | Common Stock
Class Of Stock [Line Items]
Common shares issued upon exercise of warrants						6,400
Issuance of stock					6,400
Notes issued upon exchange of outstanding Series C Warrants | Securities Purchase Agreement | Series D Warrant
Class Of Stock [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance						120,000,000

XML

Preferred Stock - Additional Information (Detail)				1 Months Ended				12 Months Ended
	Dec. 11, 2015	Aug. 25, 2015 shares	Oct. 08, 2014 $ / shares shares	Jun. 30, 2015 USD ($) shares	Feb. 28, 2015 USD ($) $ / shares shares	Oct. 31, 2014	Jul. 31, 2014 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 30, 2015 $ / shares	Mar. 31, 2015 $ / shares
Class Of Stock [Line Items]
Preferred stock, shares authorized								5,000,000	5,000,000
Preferred stock, par value | $ / shares								$ 0.001	$ 0.001
Preferred stock, shares issued								88,347	0
Preferred Stock, Shares Outstanding								88,347	0
Proceeds from issuance of convertible preferred stock value | $					$ 21,800,000				$ 6,569,886
Preferred shares issued, price per share | $ / shares					$ 8.80
Warrants Exercisable								13,219,597	5,447,940
Conversion of preferred stock to common stock | $								$ 2,651	$ 18,846,539
Common stock, shares authorized								200,000,000	50,000,000
Preferred unit description								Each unit consisted of one share of our Series E Convertible Preferred Stock and eight Series C Warrants (the "Units").
Separation description								The original terms of the Units provided that shares of Series E Convertible Preferred Stock and the Series C Warrants would automatically separate on August 25, 2015. However, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate prior to August 25, 2015 if at any time after 30 days from February 25, 2015 the closing price of our common stock was greater than $240.00 per share for 20 consecutive trading days (the “Separation Trigger Date”). The Company refers to this separation herein as Early Separation. In the event of Early Separation, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate 15 days after the Separation Trigger Date. In June 2015, the above terms of the Series E Convertible Preferred Stock and Series C Warrants were each modified to allow for an optional early separation and conversion upon the cash exercise of all eight of the Series C Warrants within the Unit.
Proceeds from exercise of warrants | $								$ 3,161,220	$ 31,600
Preferred units outstanding		2,676,000
Convertible Notes Payable
Class Of Stock [Line Items]
Notes qualified for equity financing | $									$ 5,000,000
Notes Payable To Related Party
Class Of Stock [Line Items]
Number of preferred units issued as consideration							4,000,000		4,000,000
Value of preferred units issued as consideration | $							$ 100,000		$ 100,000
Preferred units issued as consideration, price per share | $ / shares									$ 0.025
Series C Warrant
Class Of Stock [Line Items]
Warrants Exercisable					21,792,000			5,229,973
Preferred units issued as consideration, warrants price per share | $ / shares								$ 2.55
Number of shares included in preferred unit					8
Separation description								The Series C Warrants have an exercise price of $153.00 per common share and will expire on February 25, 2020. The original terms of the Units provided that shares of Series E Convertible Preferred Stock and the Series C Warrants would automatically separate on August 25, 2015. However, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate prior to August 25, 2015 if at any time after 30 days from February 25, 2015 the closing price of our common stock was greater than $240.00 per share for 20 consecutive trading days (the “Separation Trigger Date”). The Company refers to this separation herein as Early Separation. In the event of Early Separation, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate 15 days after the Separation Trigger Date. In June 2015, the above terms of the Series E Convertible Preferred Stock and Series C Warrants were each modified to allow for an optional early separation and conversion upon the cash exercise of all eight of the Series C Warrants within the Unit.
Number of preferred units separated		2,676,000		48,000
Warrants exercised				384,000
Common shares issued upon exercise of warrants				6,400
Proceeds from exercise of warrants | $				$ 979,200
Number of warrants separated		21,408,000
Class A Warrant
Class Of Stock [Line Items]
Warrants Exercisable								1,532,598	2,041,239
Preferred units issued as consideration, warrants price per share | $ / shares					$ 4.92			$ 0.03	$ 4.92	$ 0.03	$ 2.20
Class A Warrant | Convertible Notes Payable
Class Of Stock [Line Items]
Warrants Exercisable							82,625
Preferred units issued as consideration, warrants price per share | $ / shares							$ 4.92
Class A Warrant | Notes Payable To Related Party
Class Of Stock [Line Items]
Warrants Exercisable							20,000
Preferred units issued as consideration, warrants price per share | $ / shares								$ 0.03	$ 4.92
Preferred units issued as consideration, warrants									20,000
Class B Warrant
Class Of Stock [Line Items]
Warrants Exercisable								1,310,956	1,645,845
Preferred units issued as consideration, warrants price per share | $ / shares								$ 0.03	$ 0.2	$ 0.03
Warrants exercised									158,000
Common shares issued upon exercise of warrants									2,634
Proceeds from exercise of warrants | $									$ 31,600
Class B Warrant | Convertible Notes Payable
Class Of Stock [Line Items]
Warrants Exercisable							82,625
Preferred units issued as consideration, warrants price per share | $ / shares							$ 0.20
Class B Warrant | Notes Payable To Related Party
Class Of Stock [Line Items]
Warrants Exercisable							20,000
Preferred units issued as consideration, warrants price per share | $ / shares								$ 0.03	$ 0.20
Preferred units issued as consideration, warrants									20,000
IPO | Class A Warrant
Class Of Stock [Line Items]
Preferred units issued as consideration, warrants price per share | $ / shares			$ 7.00
Underwriters Warrants
Class Of Stock [Line Items]
Exercised								14,750
Proceeds from Options Exercised | $								$ 162,250
Options Exercisable , Exercise Price | $ / shares								$ 11.00
Common Stock
Class Of Stock [Line Items]
Issuance of stock								0	19,167
Conversion of stock, shares issued									771
Conversion of preferred stock to common stock, conversion ratio	0.01666667
Common shares issued upon exercise of warrants									2,634
Exercised								0
Common Stock | Series C Warrant
Class Of Stock [Line Items]
Issuance of stock				6,400
Common shares issued upon exercise of warrants								6,400
Common Stock | IPO
Class Of Stock [Line Items]
Issuance of stock			19,167
Conversion of stock, shares issued			60,279
Conversion of preferred stock to common stock, conversion ratio			12,000
Common Stock | IPO | Notes Payable To Related Party
Class Of Stock [Line Items]
Conversion of stock, shares issued								20,000
Convertible Preferred Stock
Class Of Stock [Line Items]
Preferred stock, shares authorized								5,000,000	5,000,000
Preferred stock, par value | $ / shares								$ 0.001	$ 0.001
Issuance of stock					2,724,000
Series E Convertible Preferred Stock
Class Of Stock [Line Items]
Preferred stock, shares issued								88,347
Preferred Stock, Shares Outstanding								88,347
Issuance of stock								14,750
Conversion of preferred stock to common stock, conversion ratio								15
Conversion of stock, shares converted								2,650,403
Number of shares included in preferred unit					1
Number of preferred units separated		2,676,000
Common shares issued upon exercise of warrants								176,695
Preferred units outstanding								88,347
Series E Convertible Preferred Stock | Series C Warrant
Class Of Stock [Line Items]
Issuance of stock		2,676,000
Series E Convertible Preferred Stock | Common Stock
Class Of Stock [Line Items]
Conversion of preferred stock to common stock, conversion ratio								15
Conversion of stock, shares converted								2,650,403
Conversion of stock, shares issued								176,695
Series C Warrant
Class Of Stock [Line Items]
Issuance of stock								118,000
Series C Convertible Preferred Stock | Convertible Preferred Stock
Class Of Stock [Line Items]
Issuance of stock									14,888,211
Proceeds from issuance of convertible preferred stock value | $									$ 366,250
Preferred shares issued, price per share | $ / shares									$ 0.0246
Series D Convertible Preferred Stock
Class Of Stock [Line Items]
Proceeds from issuance of convertible preferred stock value | $									$ 6,203,636
Preferred shares issued, price per share | $ / shares									$ 0.025
Gross proceeds from issuance of convertible preferred stock value | $									$ 7,139,164
Convertible debt, amount converted | $							$ 400,000
Conversion of notes payable to preferred stock, accrued interest | $							$ 13,129
Convertible debt, conversion price | $ / shares							$ 0.025
Conversion of preferred stock to common stock, conversion ratio						200	12,000
Series D Convertible Preferred Stock | Class A Warrant | Convertible Notes Payable
Class Of Stock [Line Items]
Warrants Exercisable									1,427,832
Preferred units issued as consideration, warrants price per share | $ / shares									$ 4.92
Warrants granted as part of offering costs									466,436
Series D Convertible Preferred Stock | Class B Warrant | Convertible Notes Payable
Class Of Stock [Line Items]
Warrants Exercisable									1,427,832
Warrants granted as part of offering costs									251,216
Series D Convertible Preferred Stock | Series D Preferred Stock Warrant
Class Of Stock [Line Items]
Warrants granted as part of offering costs									7,200,000
Series D Convertible Preferred Stock | IPO | Notes Payable To Related Party
Class Of Stock [Line Items]
Conversion of stock, shares converted								4,000,000
Series D Convertible Preferred Stock | Convertible Preferred Stock
Class Of Stock [Line Items]
Issuance of stock									285,566,560
Preferred stock, shares issued									285,566,560
Stock issued during period upon conversion of debt, shares							16,525,121
Series A Convertible Preferred Stock
Class Of Stock [Line Items]
Conversion of preferred stock to common stock, conversion ratio									771
Conversion of stock, shares converted									9,250,000
Conversion of preferred stock to common stock | $									$ 1,480,000
Series A Convertible Preferred Stock | Convertible Preferred Stock
Class Of Stock [Line Items]
Conversion of stock, shares converted									9,250,000
Conversion of preferred stock to common stock, conversion ratio									12,000

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Warrants - Warrants Outstanding and Exercisable (Detail)	12 Months Ended
	Dec. 31, 2015 $ / shares shares	Dec. 31, 2014 $ / shares shares	Dec. 30, 2015 $ / shares	Mar. 31, 2015 $ / shares	Feb. 28, 2015 $ / shares shares
Class Of Warrant Or Right [Line Items]
Warrants outstanding	13,219,597	5,447,940
Warrants Exercisable	13,219,597	5,447,940
Share of Common stock underlying Warrant	3,768,879	90,800
Class A Warrant
Class Of Warrant Or Right [Line Items]
Warrants outstanding	1,532,598	2,041,239
Warrants Exercisable	1,532,598	2,041,239
Exercise price | $ / shares	$ 0.03	$ 4.92	$ 0.03	$ 2.20	$ 4.92
Common stock exchange ratio	60	60
Share of Common stock underlying Warrant	25,566	34,021
Exercise Price Per One Common Share | $ / shares	$ 1.85	$ 295.20
Class B Warrant
Class Of Warrant Or Right [Line Items]
Warrants outstanding	1,310,956	1,645,845
Warrants Exercisable	1,310,956	1,645,845
Exercise price | $ / shares	$ 0.03	$ 0.2	0.03
Common stock exchange ratio	60	60
Share of Common stock underlying Warrant	21,862	27,431
Exercise Price Per One Common Share | $ / shares	$ 1.85	$ 12.00
Series A Warrant
Class Of Warrant Or Right [Line Items]
Warrants outstanding		1,322,500
Warrants Exercisable		1,322,500
Exercise price | $ / shares	$ 2.20	$ 7.00		$ 7.00
Common stock exchange ratio		60
Share of Common stock underlying Warrant		22,042
Exercise Price Per One Common Share | $ / shares		$ 420.00
Warrants Expiration		2015-10
Common Warrants
Class Of Warrant Or Right [Line Items]
Warrants outstanding	463,356	438,356
Warrants Exercisable	463,356	438,356
Exercise price | $ / shares			$ 0.03
Common stock exchange ratio	60	60
Share of Common stock underlying Warrant	7,735	7,306
Series B Warrant
Class Of Warrant Or Right [Line Items]
Warrants outstanding	1,074,082
Warrants Exercisable	1,074,082
Exercise price | $ / shares	$ 8.75
Common stock exchange ratio	60
Share of Common stock underlying Warrant	17,917
Exercise Price Per One Common Share | $ / shares	$ 525.00
Series C Warrant
Class Of Warrant Or Right [Line Items]
Warrants outstanding	5,229,973
Warrants Exercisable	5,229,973				21,792,000
Exercise price | $ / shares	$ 2.55
Common stock exchange ratio	60
Share of Common stock underlying Warrant	87,167
Exercise Price Per One Common Share | $ / shares	$ 153.00
Warrants Expiration	2017-01
Series D Warrant
Class Of Warrant Or Right [Line Items]
Warrants outstanding	3,503,116
Warrants Exercisable	3,503,116
Exercise price | $ / shares	$ 1.85
Common stock exchange ratio	1
Share of Common stock underlying Warrant	3,503,116
Exercise Price Per One Common Share | $ / shares	$ 1.85
Warrants Expiration	2021-06
Subordination
Class Of Warrant Or Right [Line Items]
Warrants outstanding	105,516
Warrants Exercisable	105,516
Exercise price | $ / shares	$ 1.85
Common stock exchange ratio	1
Share of Common stock underlying Warrant	105,516
Exercise Price Per One Common Share | $ / shares	$ 1.85
Warrants Expiration	2021-06
Minimum | Class A Warrant
Class Of Warrant Or Right [Line Items]
Warrants Expiration	2021-04	2021-04
Minimum | Class B Warrant
Class Of Warrant Or Right [Line Items]
Warrants Expiration	2021-04	2021-04
Minimum | Common Warrants
Class Of Warrant Or Right [Line Items]
Exercise price | $ / shares	$ 0.03	$ 2
Exercise Price Per One Common Share | $ / shares	$ 1.85	$ 120
Warrants Expiration	2016-04	2016-04
Minimum | Series B Warrant
Class Of Warrant Or Right [Line Items]
Warrants Expiration	2021-03
Maximum | Class A Warrant
Class Of Warrant Or Right [Line Items]
Warrants Expiration	2021-07	2021-07
Maximum | Class B Warrant
Class Of Warrant Or Right [Line Items]
Warrants Expiration	2021-07	2021-07
Maximum | Common Warrants
Class Of Warrant Or Right [Line Items]
Exercise price | $ / shares	$ 32.00	$ 32
Exercise Price Per One Common Share | $ / shares	$ 1,920	$ 1,920
Warrants Expiration	2021-07	2021-07
Maximum | Series B Warrant
Class Of Warrant Or Right [Line Items]
Warrants Expiration	2021-07

XML

Warrants - Additional Information (Detail)	1 Months Ended			12 Months Ended
	Oct. 31, 2014 shares	Sep. 30, 2014 USD ($) shares	Jul. 31, 2014	Dec. 31, 2015 USD ($) shares	Dec. 31, 2014 USD ($) shares	Dec. 31, 2013 shares
Class Of Warrant Or Right [Line Items]
Warrants outstanding				13,219,597	5,447,940
Warrants previously issued		157,093
Fair value of warrant expensed | $		$ 25,061		$ 19,714,808	$ 8,396,169
Series A Convertible Preferred Stock
Class Of Warrant Or Right [Line Items]
Warrants issued	2,231,727
Conversion of preferred stock to common stock, conversion ratio					771
Series D Convertible Preferred Stock
Class Of Warrant Or Right [Line Items]
Warrants issued	7,200,000
Conversion of preferred stock to common stock, conversion ratio	200		12,000
Common Stock Warrants
Class Of Warrant Or Right [Line Items]
Warrants issued upon conversion	47,158
Class A And Class B Warrants
Class Of Warrant Or Right [Line Items]
Warrants granted					2,855,664
Warrants Issued Convertible Notes Payable
Class Of Warrant Or Right [Line Items]
Common stock warrants granted with nominal value					1,048,698
Preferred D Stock Warrants
Class Of Warrant Or Right [Line Items]
Warrants outstanding					0	0
Warrants granted					7,200,000
Warrants issued					7,200,000
Common Stock Warrants
Class Of Warrant Or Right [Line Items]
Warrants outstanding				13,219,597	5,447,940	274,420
Warrants granted				26,617,714	5,331,520
Common Stock Warrants | IPO
Class Of Warrant Or Right [Line Items]
Warrants granted	57,500
Series A Warrants | IPO
Class Of Warrant Or Right [Line Items]
Warrants granted	1,322,500

XML

Warrants - Schedule of Assumptions Used in Calculation of Fair Value of the Options Exchanged (Detail) - Warrant	1 Months Ended
	Sep. 30, 2014 $ / shares
Class Of Warrant Or Right [Line Items]
Fair market value of one share of common stock	$ 296.40
Aggregate exercise price of 60 warrants	$ 600.00
Risk Free Rate	0.61%
Dividend yield	0.00%
Expected volatility	37.23%
Contractual Term	1 year 11 months 19 days

XML

Warrants - Preferred A Stock Warrants Activity (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Class Of Warrant Or Right [Line Items]
Warrants, Beginning Balance	5,447,940
Warrants, Ending Balance	13,219,597	5,447,940
Preferred A Stock Warrants
Class Of Warrant Or Right [Line Items]
Warrants, Beginning Balance		2,231,727
Warrants granted		0
Warrants Converted		(2,231,727)
Warrants Expired		0
Warrants, Ending Balance
Weighted Average Exercise Price, Warrants Outstanding Beginning Balance	$ 0	$ 0.16
Weighted Average Exercise Price, Granted		0
Weighted Average Exercise Price, Converted		0.16
Weighted Average Exercise Price, Expired		0
Weighted Average Exercise Price, Warrants Outstanding Ending Balance		$ 0
Weighted Average Remainder Contractual Term in Years, Warrants Outstanding		3 years 1 month 6 days
Weighted Average Remainder Contractual Term in Years, Converted		2 years 3 months 18 days

XML

Warrants - Preferred D Stock Warrants Activity (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Class Of Warrant Or Right [Line Items]
Warrants, Beginning Balance	5,447,940
Warrants, Ending Balance	13,219,597	5,447,940
Preferred D Stock Warrants
Class Of Warrant Or Right [Line Items]
Warrants, Beginning Balance	0	0
Warrants granted		7,200,000
Warrants Converted		(7,200,000)
Warrants Expired		0
Warrants, Ending Balance		0
Weighted Average Exercise Price, Warrants Outstanding Beginning Balance	$ 0	$ 0
Weighted Average Exercise Price, Granted		0.025
Weighted Average Exercise Price, Converted		0.025
Weighted Average Exercise Price, Expired		0
Weighted Average Exercise Price, Warrants Outstanding Ending Balance		$ 0
Weighted Average Remainder Contractual Term in Years, Warrants Outstanding		0 years
Warrants Weighted Average Remainder Contractual Terms Granted		6 years 9 months 18 days
Weighted Average Remainder Contractual Term in Years, Converted		6 years 8 months 12 days
Weighted Average Remainder Contractual Term in Years, Expired		0 years
Weighted Average Remainder Contractual Term in Years, Warrants Outstanding		0 years

XML

Warrants - Class A Warrants - Additional Information (Detail) - Class A Warrant - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 30, 2015	Mar. 31, 2015	Feb. 28, 2015	Dec. 31, 2014
Class Of Warrant Or Right [Line Items]
Cashless exercise of Warrants	508,641
Issuance of common stock upon exercise of warrants under cashless exercise provision	3,936
Exercise price	$ 0.03	$ 0.03	$ 2.20	$ 4.92	$ 4.92

XML

Warrants - Class B Warrants - Additional Information (Detail) - Class B Warrant - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 30, 2015	Dec. 31, 2014
Class Of Warrant Or Right [Line Items]
Cashless exercise of Warrants	334,889
Issuance of common stock upon exercise of warrants under cashless exercise provision	5,284
Exercise price	$ 0.03	$ 0.03	$ 0.2

XML

Warrants - Series A Warrants - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Mar. 31, 2015
Class Of Warrant Or Right [Line Items]
Proceeds from exercise of warrants	$ 3,161,220	$ 31,600
Series A Warrant
Class Of Warrant Or Right [Line Items]
Warrants exercised	1,074,082
Proceeds from exercise of warrants	$ 2,252,020
Issuance of common stock upon exercise of warrants under cashless exercise provision	17,917
Warrants Expiration Date	Oct. 15, 2015
Number of warrants expired	248,418
Exercise price	$ 2.20	$ 7.00	$ 7.00

XML

Warrants - Series B Warrants - Additional Information (Detail) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Class Of Warrant Or Right [Line Items]
Warrants Exercisable	13,219,597	5,447,940
Series B Warrant
Class Of Warrant Or Right [Line Items]
Warrants Exercisable	1,074,082
Weighted Average Remainder Contractual Term in Years, Exercised	6 years
Percentage of public offering price	125.00%
Series A Warrant
Class Of Warrant Or Right [Line Items]
Warrants Exercisable		1,322,500
Warrants exercised	1,074,082

XML

Warrants - Series C Warrants - Additional Information (Detail) - USD ($)		1 Months Ended			12 Months Ended
	Aug. 25, 2015	Sep. 21, 2015	Jun. 30, 2015	Feb. 28, 2015	Dec. 31, 2015	Dec. 31, 2014
Class Of Warrant Or Right [Line Items]
Warrants Exercisable					13,219,597	5,447,940
Separation description					The original terms of the Units provided that shares of Series E Convertible Preferred Stock and the Series C Warrants would automatically separate on August 25, 2015. However, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate prior to August 25, 2015 if at any time after 30 days from February 25, 2015 the closing price of our common stock was greater than $240.00 per share for 20 consecutive trading days (the “Separation Trigger Date”). The Company refers to this separation herein as Early Separation. In the event of Early Separation, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate 15 days after the Separation Trigger Date. In June 2015, the above terms of the Series E Convertible Preferred Stock and Series C Warrants were each modified to allow for an optional early separation and conversion upon the cash exercise of all eight of the Series C Warrants within the Unit.
Proceeds from exercise of warrants					$ 3,161,220	$ 31,600
Warrants outstanding					13,219,597	5,447,940
Series E Convertible Preferred Stock
Class Of Warrant Or Right [Line Items]
Number of preferred units separated	2,676,000
Shares, new Issues					14,750
Common Stock
Class Of Warrant Or Right [Line Items]
Shares, new Issues					0	19,167
Share issued upon exercise of option					0
Series C Warrant
Class Of Warrant Or Right [Line Items]
Warrants Exercisable				21,792,000	5,229,973
Warrants expire period				2020-02
Separation description					The Series C Warrants have an exercise price of $153.00 per common share and will expire on February 25, 2020. The original terms of the Units provided that shares of Series E Convertible Preferred Stock and the Series C Warrants would automatically separate on August 25, 2015. However, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate prior to August 25, 2015 if at any time after 30 days from February 25, 2015 the closing price of our common stock was greater than $240.00 per share for 20 consecutive trading days (the “Separation Trigger Date”). The Company refers to this separation herein as Early Separation. In the event of Early Separation, the shares of Series E Convertible Preferred Stock and the Series C Warrants would separate 15 days after the Separation Trigger Date. In June 2015, the above terms of the Series E Convertible Preferred Stock and Series C Warrants were each modified to allow for an optional early separation and conversion upon the cash exercise of all eight of the Series C Warrants within the Unit.
Number of preferred units separated	2,676,000		48,000
Warrants exercised			384,000
Proceeds from exercise of warrants			$ 979,200
Warrants Issued	21,408,000
Cashless exercise of Warrants		15,128,027			15,630,027
Issuance of common stock upon exercise of warrants under cashless exercise provision		9,899,174			9,962,354
Warrants outstanding					5,229,973
Payable on exercise of warrants under cashless exercise provision					$ 11,700,000
Series C Warrant | Underwriter Purchase Options
Class Of Warrant Or Right [Line Items]
Options exercised					14,750
Proceeds from Options Exercised					$ 162,250
Share issued upon exercise of option					195,906
Warrant or Right, Issued in Period					118,000
Series C Warrant | Series E Convertible Preferred Stock
Class Of Warrant Or Right [Line Items]
Shares, new Issues	2,676,000
Series C Warrant | Common Stock
Class Of Warrant Or Right [Line Items]
Shares, new Issues			6,400

XML

Warrants - Series D Warrants - Additional Information (Detail)				12 Months Ended
	Dec. 31, 2016	Dec. 30, 2016	Dec. 30, 2015 $ / shares $ / Unit shares	Dec. 31, 2015 $ / shares $ / Unit shares	Dec. 31, 2014 shares
Class Of Warrant Or Right [Line Items]
Warrants Exercisable				13,219,597	5,447,940
Senior Secured Convertible Note | Securities Purchase Agreement
Class Of Warrant Or Right [Line Items]
Percentage of common stock outstanding			19.90%
Series D Warrant
Class Of Warrant Or Right [Line Items]
Warrants Exercisable				3,503,116
Exercise price | $ / shares				$ 1.85
Series D Warrant | Senior Secured Convertible Note | Securities Purchase Agreement
Class Of Warrant Or Right [Line Items]
Warrants Exercisable			3,503,116
Exercise price | $ / shares			$ 1.85
Conversion feature, floor price | $ / Unit			1.16
Series D Warrant | Scenario, Forecast
Class Of Warrant Or Right [Line Items]
Percentage of common stock outstanding		16.60%
Series D Warrant | Scenario, Forecast | Senior Secured Convertible Note | Securities Purchase Agreement
Class Of Warrant Or Right [Line Items]
Percentage of common stock outstanding	16.60%
Series D Warrant | Common Stock
Class Of Warrant Or Right [Line Items]
Warrants Exercisable				3,503,116
Exercise price | $ / shares				$ 1.85
Exercise period				5 years
Description of warrant terms				Each Series D Warrant will be exercisable initially at an exercise price of $1.85 per share, subject to adjustments for certain dilutive events and subject to an exercise price floor equal to $1.16 per share.
Series D Warrant | Common Stock | Minimum
Class Of Warrant Or Right [Line Items]
Conversion feature, floor price | $ / Unit				1.16

XML

Warrants - Subordination Warrants - Additional Information (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Class Of Warrant Or Right [Line Items]
Warrants Exercisable	13,219,597	5,447,940
Subordination Warrants | Common Stock
Class Of Warrant Or Right [Line Items]
Warrants Exercisable	105,516
Exercise price	$ 1,850,000
Exercise period	5 years
Description of warrant terms	On December 31, 2016, the number of warrants issuable upon exercise of the Subordination Warrants will be increased to equal the difference, if positive, obtained by subtracting (x) the shares of common stock issuable under the Subordination Warrants on the date of issuance from (y) 0.5% of the sum of the number of shares of common stock actually outstanding on December 31, 2016, plus the number of shares of common stock deemed to be outstanding pursuant to all outstanding options or convertible securities of the Company. Each Subordination Warrant is exercisable by the holder beginning six months after December 30, 2015 and continuing for a period five years thereafter. Each Subordination Warrant will be exercisable initially at a price of $1.85 per share, subject to adjustments for certain dilutive events (same as the Series D Warrants) and subject to an exercise price floor equal to the Series D Warrant exercise floor price of $1.16 per share.
Subordination Warrants | Common Stock | Minimum
Class Of Warrant Or Right [Line Items]
Exercise price	$ 1.16

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Warrants - Common Warrants - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Class Of Warrant Or Right [Line Items]
Warrant issuance and modifications	$ 612,006	$ 25,063
Common Stock Warrants
Class Of Warrant Or Right [Line Items]
Weighted Average Exercise Price, Granted	$ 2.71	$ 3.91
Warrants granted	26,617,714	5,331,520
Common Stock Warrants | Consultant [Member]
Class Of Warrant Or Right [Line Items]
Weighted Average Exercise Price, Granted	$ 2.56
Warrants granted	25,000
Warrants Expiration	2020-08
Warrant issuance and modifications	$ 54,489
Stock price volatility	127.37%
Warrant life	5 years
Risk Free Rate	1.53%
Closing price of common stock	$ 153.60
Exercise Price	$ 153.60

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Warrants - Common Stock Warrants Activity (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Class Of Warrant Or Right [Line Items]
Warrants, Beginning Balance	5,447,940
Warrants, Ending Balance	13,219,597	5,447,940
Common Stock Warrants
Class Of Warrant Or Right [Line Items]
Warrants, Beginning Balance	5,447,940	274,420
Warrants granted	26,617,714	5,331,520
Warrants Exercised	(17,547,639)	(158,000)
Warrants Expired	1,298,418
Warrants, Ending Balance	13,219,597	5,447,940	274,420
Weighted Average Exercise Price, Warrants Outstanding Beginning Balance	$ 4.17	$ 8.00
Weighted Average Exercise Price, Granted	2.71	3.91
Weighted Average Exercise Price, Exercised	2.47	0.20
Weighted Average Exercise Price, Expired	2.48
Weighted Average Exercise Price, Warrants Outstanding Ending Balance	$ 2.71	$ 4.17	$ 8.00
Warrants Weighted Average Remainder Contractual Terms Granted	4 years 3 months 18 days	5 years 6 months
Weighted Average Remainder Contractual Term in Years, Exercised	4 years	6 years 7 months 6 days
Weighted Average Remainder Contractual Term in Years, Expired	3 years 4 months 24 days	0 years
Weighted Average Remainder Contractual Term in Years, Warrants Outstanding	4 years 8 months 12 days	4 years 10 months 24 days	4 years 2 months 12 days

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Warrants - underwriters Unit Purchase Options - Additional Information (Detail) - USD ($)	1 Months Ended		12 Months Ended
	Jun. 30, 2015	Feb. 28, 2015	Dec. 31, 2015
Series C Warrant
Class Of Warrant Or Right [Line Items]
Warrants exercised	384,000
Exercise price			$ 2.55
Number of shares included in preferred unit		8
Underwriters Unit Purchase Option
Class Of Warrant Or Right [Line Items]
Warrants exercised			14,750
Exercise price		$ 11.00	$ 11.00
Weighted Average Remainder Contractual Term in Years, Exercised		5 years
Percentage of public offering price		125.00%
Aggregate number of units purchased		5.00%
Aggregate number of units Sold		136,200
Underwriters Unit Purchase Option | Series C Warrant
Class Of Warrant Or Right [Line Items]
Warrants exercised			118,000
Number of shares included in preferred unit		8
Warrant exercise for cash			$ 162,250
Warrants and rights outstanding			121,450

XML

Derivative Liabilities - Additional Information (Detail) - USD ($)					12 Months Ended
		Dec. 30, 2016	Dec. 31, 2015	Dec. 30, 2015	Dec. 31, 2015	Mar. 31, 2015	Feb. 28, 2015	Dec. 31, 2014
Derivative [Line Items]
Valuation method					The Black-Scholes option-pricing model
Derivative liability fair value			$ 43,181,472		$ 43,181,472			$ 9,998,636
Maximum
Derivative [Line Items]
Percentage of common stock outstanding				19.90%
Common Stock
Derivative [Line Items]
Valuation method				Binomial model with Monte Carlo simulation
Common Stock | Subordination Warrants
Derivative [Line Items]
Warrants issued				105,510
Scenario, Forecast | Common Stock | Subordination Warrants
Derivative [Line Items]
Percentage of common stock outstanding		0.50%
Class A Warrant
Derivative [Line Items]
Fair Market Value				$ 1.85
Warrant, exercise price			$ 0.03	0.03	$ 0.03	$ 2.20	$ 4.92	$ 4.92
Warrant, fair value					0.94
Class B Warrant
Derivative [Line Items]
Fair Market Value				1.85
Warrant, exercise price			0.03	0.03	0.03			0.2
Warrant, fair value					0.94
Common Warrants
Derivative [Line Items]
Fair Market Value				1.85
Warrant, exercise price				$ 0.03
Warrant, fair value					0.94
Common Warrants | Maximum
Derivative [Line Items]
Warrant, exercise price			$ 32.00		$ 32.00			$ 32
Class A And Class B Warrants
Derivative [Line Items]
Derivative liability fair value			$ 61,941		$ 61,941
Series C Warrant
Derivative [Line Items]
Fair Market Value			$ 153.00		$ 153.00
Warrant, exercise price			$ 2.55		$ 2.55
Valuation method					Black Scholes formula
Derivative liability fair value			$ 12,404,503		$ 12,404,503
Expected volatility					135.00%
Contractual Term					5 years
Risk Free Rate					1.61%
Exercise Price			$ 2.55		$ 2.55
Series D Warrant
Derivative [Line Items]
Warrant, exercise price			$ 1.85		$ 1.85
Derivative liability fair value			$ 43,181,472		$ 43,181,472			$ 9,998,636
Warrant to acquire common stock				3,503,116
Series D Warrant | Subordination Warrants
Derivative [Line Items]
Expected volatility	[1]		215.00%
Contractual Term			5 years 6 months
Risk Free Rate	[2]		1.80%
Exercise Price	[3]		$ 1.85		$ 1.85
Series D Warrant | Subordination Warrants | Maximum
Derivative [Line Items]
Fair Market Value			1.10		1.10
Series D Warrant | Common Stock
Derivative [Line Items]
Warrant, exercise price			$ 1.85		$ 1.85
Series D Warrant | Scenario, Forecast
Derivative [Line Items]
Percentage of common stock outstanding		16.60%

[1] The volatility factor was estimated by using the historical volatilities of the Company's trading history.

[2] The risk-free interest rate was determined by management using the 5-year Treasury Bill as of the respective measurement date.

[3] The exercise price of the Series D Warrants calculated by 120% of the arithmetic average of five weighted average price of the common stock on the five consecutive trading days prior to issuance date on December 30, 2015.

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Derivative Liabilities - Assumptions Used to Calculate Fair Value (Detail) - $ / shares		Dec. 31, 2015	Dec. 30, 2015
Series D Warrant
Fair Value Assumptions and Methodology for Liabilities [Abstract]
Expected dividend yield			0.00%
Series D Warrant | Subordination Warrants
Fair Value Assumptions and Methodology for Liabilities [Abstract]
Conversion price	[1]	$ 1.85
Risk free interest rate	[2]	1.80%
Contractual Term		5 years 6 months
Expected volatility	[3]	215.00%
Series D Warrant | Subordination Warrants | Minimum
Fair Value Assumptions and Methodology for Liabilities [Abstract]
Trading price of common stock on measurement date		$ 0.94
Series D Warrant | Subordination Warrants | Maximum
Fair Value Assumptions and Methodology for Liabilities [Abstract]
Trading price of common stock on measurement date		$ 1.10
Convertible Notes Payable
Fair Value Assumptions and Methodology for Liabilities [Abstract]
Risk free interest rate	[4]		0.86%
Contractual Term			1 year 3 months 29 days
Expected volatility	[3]		215.00%
Expected dividend yield			0.00%
Expected probability of Shareholder approval	[5]		85.00%
Convertible Notes Payable | Minimum
Fair Value Assumptions and Methodology for Liabilities [Abstract]
Trading price of common stock on measurement date	[6]		$ 0.94
Conversion price			0.87
Convertible Notes Payable | Maximum
Fair Value Assumptions and Methodology for Liabilities [Abstract]
Trading price of common stock on measurement date	[6]		1.10
Conversion price			$ 1.03

[1] The exercise price of the Series D Warrants calculated by 120% of the arithmetic average of five weighted average price of the common stock on the five consecutive trading days prior to issuance date on December 30, 2015.

[2] The risk-free interest rate was determined by management using the 5-year Treasury Bill as of the respective measurement date.

[3] The volatility factor was estimated by using the historical volatilities of the Company's trading history.

[4] The risk-free interest rate was determined by management using the 1.5-year Treasury Bill as of the respective measurement date.

[5] Management has estimated a probability of 85% that Shareholder approval will be obtained for the removal of the 19.9% conversion cap. This is based on past Shareholder voting history and discussions with current Shareholders and consultants.

[6] The conversion price of the convertible notes was calculated based the formula in the Notes agreement as of the respective measurement date

XML

Derivative Liabilities - Assumptions Used to Calculate Fair Value (Parenthetical) (Detail)			12 Months Ended
		Dec. 30, 2015	Dec. 31, 2015
Maximum
Derivative [Line Items]
Percentage of common stock outstanding		19.90%
Series D Warrant
Derivative [Line Items]
Dividend yield		0.00%
Debt instrument, conversion feature			The exercise price of the Series D Warrants calculated by 120% of the arithmetic average of five weighted average price of the common stock on the five consecutive trading days prior to issuance date on December 30, 2015.
Conversion feature, threshold consecutive trading days			5 days
Series D Warrant | US Treasury Bill Securities [Member]
Derivative [Line Items]
Contractual Term		5 years
Convertible Notes Payable
Derivative [Line Items]
Contractual Term		1 year 3 months 29 days
Dividend yield		0.00%
Expected probability of Shareholder approval	[1]	85.00%
Convertible Notes Payable | US Treasury Bill Securities [Member]
Derivative [Line Items]
Contractual Term		1 year 6 months
Convertible Notes Payable | Maximum
Derivative [Line Items]
Percentage of common stock outstanding		19.90%

[1] Management has estimated a probability of 85% that Shareholder approval will be obtained for the removal of the 19.9% conversion cap. This is based on past Shareholder voting history and discussions with current Shareholders and consultants.

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Derivative Liabilities - Summary of Change in the Value of the Warrant Derivative Liability (Detail) - USD ($)	1 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014
Derivative [Line Items]
Balance at beginning of period		$ 9,998,636
Change in fair value of warrant and option liability	$ 25,061	19,714,808	$ 8,396,169
Balance at end of period		43,181,472	9,998,636
Series D Warrant
Derivative [Line Items]
Balance at beginning of period		9,998,636
Issuance of warrants and option		56,026,979	(2,487,726)
Exercise and expiration of warrants and unit purchase option		(42,558,951)	(885,259)
Change in fair value of warrant and option liability		19,714,808	(8,396,169)
Balance at end of period		$ 43,181,472	$ 9,998,636

XML

Employee Stock Options - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2015 USD ($) CompensationPlan $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 31, 2013 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based Compensation Expense | $	$ 110,123	$ 297,244
Unrecognized compensation cost related to stock option | $	$ 408,907	$ 252,315
Remaining vesting period of stock option	2 years 8 months 16 days	3 years 5 months 9 days
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of stock options, outstanding	792,534	703,034	115,750
Stock options, maturity period	10 years
Number of stock based compensation plans | CompensationPlan	3
Options, Grants in Period, Exercise Price | $ / shares	$ 2.56	$ 2.86
Deferred Compensation | $	$ 306,709
Share-based Compensation Expense | $		$ 54,394
Number of stock options, granted	117,500	619,784
Employee Stock Option | Pre IPO
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of stock options, outstanding	483,000
Employee Stock Option | Post IPO
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of stock options, outstanding	136,784
Employee Stock Option | Two Thousand Six Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based Payment Award, Options, Grants in Period		103,250
Employee Stock Option | Two Thousand Fourteen Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options, Grants in Period, Exercise Price | $ / shares		$ 3.50
Share-based Compensation Expense | $		$ 223,031
Number of stock options, granted		103,250
Valuation Method	Black-Scholes method
Employee Stock Option | 2014 and Omnibus Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of stock options, granted		619,781
Stock options, conversion	0.016666667
Employee Stock Option | Omnibus Plans [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options, Grants in Period, Exercise Price | $ / shares	$ 2.56
Deferred Compensation | $	$ 268,202
Share-based Compensation Expense | $	$ 29,309
Number of stock options, granted	117,500
Valuation Method	Black-Scholes method
Options expiration period	10 years
Employee Stock Option | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Option vesting period	3 years
Employee Stock Option | Minimum | 2014 and Omnibus Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options, Grants in Period, Exercise Price | $ / shares		$ 2.00
Employee Stock Option | Minimum | Omnibus Plans [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Option vesting period	3 years
Employee Stock Option | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Option vesting period	4 years
Employee Stock Option | Maximum | 2014 and Omnibus Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options, Grants in Period, Exercise Price | $ / shares		$ 7.00
Employee Stock Option | Maximum | Omnibus Plans [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Option vesting period	4 years

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Employee Stock Options - Schedule of Assumption for Stock Option Valuation (Detail) - Employee Stock Option - Two Thousand Fourteen Plan [Member]	12 Months Ended
	Dec. 31, 2015 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Risk free rate, minimum	1.06%
Risk free rate, maximum	1.70%
Dividend yield	0.00%
Expected volatility, minimum	46.31%
Expected volatility, maximum	54.97%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Fair market value of one share of common stock	$ 296.40
Aggregate exercise price of 60 options	$ 210.00
Expected term, maximum	2 years 8 months 27 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Fair market value of one share of common stock	$ 316.80
Aggregate exercise price of 60 options	$ 354.60
Expected term, maximum	6 years 22 days

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Employee Stock Options - Schedule of Assumptions Used in Calculation of Fair Value of the Options Exchanged (Detail) - Employee Stock Option - Omnibus Plans [Member]	12 Months Ended
	Dec. 31, 2015 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Fair market value of one share of common stock	$ 153.60
Aggregate exercise price of 60 options	$ 153.60
Risk free rate	1.71%
Dividend yield	0.00%
Expected volatility	127.52%
Expected term	6 years 1 month 21 days

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Employee Stock Options - Summary of Stock Option Activity (Detail) - Employee Stock Option - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of stock options, outstanding	703,034	115,750
Number of options, Granted	117,500	619,784
Number of options, exercised	0	0
Number of options, forfeited/expired	(28,000)	(32,500)
Number of stock options, outstanding	792,534	703,034	115,750
Number of stock options, outstanding	703,034	115,750
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Balance	$ 2.98	$ 30.00
Weighted Average Exercise Price, granted	2.56	2.86
Weighted Average Exercise Price, exercise	0	0
Weighted Average Exercise Price, forfeited/expired	5.16	8.92
Balance	$ 2.84	$ 2.98	$ 30.00
Number of options, Granted	117,500	619,784
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted average remaining contractual term in Years, granted	9 years 7 months 6 days	9 years 4 months 24 days
Weighted average remaining contractual term in Years, forfeited/expired	8 years 7 months 6 days	5 years 8 months 12 days
Weighted average remaining contractual term in Years, outstanding	8 years	8 years 9 months 18 days	6 years 3 months 18 days
Balance	$ 0	$ 0
Number of options, exercised	0	0
Number of options, forfeited/expired	(28,000)	(32,500)
Number of stock options, outstanding	792,534	703,034	115,750

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Employee Stock Options - Summary of Stock Options Outstanding and Exercisable (Detail) - Employee Stock Option - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of stock options, outstanding	792,534	703,034	115,750
Options Outstanding , Remaining Life (Years)	8 years	8 years 9 months 18 days	6 years 3 months 18 days
Options Outstanding , Exercise Price	$ 2.84	$ 2.98	$ 30.00
Options Exercisable , Number of Options Exercisable	328,445	117,404
Options Exercisable , Exercise Price	$ 3.07	$ 3.86
Options Exercisable , Intrinsic Value	$ 0	$ 0

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Employee Stock Options - Schedule of Equity-Based Compensation Expenses (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock based compensation expense	$ 110,123	$ 297,244

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Related Party Transactions - Additional Information (Detail)		1 Months Ended						12 Months Ended
	Oct. 08, 2014 $ / shares shares	Oct. 31, 2014	Jul. 31, 2014 USD ($) $ / shares shares	Jun. 30, 2014 USD ($)	Apr. 30, 2014 USD ($) $ / shares shares	Mar. 31, 2014 USD ($) $ / shares shares	Feb. 28, 2014 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 30, 2015 $ / shares	Mar. 31, 2015 $ / shares	Feb. 28, 2015 $ / shares
Related Party Transaction [Line Items]
Warrants Exercisable								13,219,597	5,447,940
Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued									771
IPO | Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued	60,279
Series D Convertible Preferred Stock
Related Party Transaction [Line Items]
Convertible debt, amount converted | $			$ 400,000
Conversion of preferred stock to common stock, conversion ratio		200	12,000
Sale Leaseback Obligations
Related Party Transaction [Line Items]
Letter of credit | $								$ 3,000,000
Sale Leaseback Obligations | Letter of Credit
Related Party Transaction [Line Items]
Line of credit, amount drawn | $								$ 0
Class A Warrant
Related Party Transaction [Line Items]
Warrants Exercisable								1,532,598	2,041,239
Exercise Price of Warrants or Rights | $ / shares								$ 0.03	$ 4.92	$ 0.03	$ 2.20	$ 4.92
Share price | $ / shares										1.85
Class A Warrant | IPO
Related Party Transaction [Line Items]
Exercise Price of Warrants or Rights | $ / shares	$ 7.00
Class B Warrant
Related Party Transaction [Line Items]
Warrants Exercisable								1,310,956	1,645,845
Exercise Price of Warrants or Rights | $ / shares								$ 0.03	$ 0.2	0.03
Share price | $ / shares										$ 1.85
Subordination Warrants | Common Stock
Related Party Transaction [Line Items]
Warrants Exercisable								105,516
Convertible Promissory Notes
Related Party Transaction [Line Items]
Maturity date of notes							Feb. 26, 2015
Notes qualified for equity financing | $							$ 5,000,000
Convertible Promissory Notes | IPO | Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued							690
Convertible Promissory Notes | Series D Convertible Preferred Stock
Related Party Transaction [Line Items]
Shares issued upon conversion of debt							8,270,027
Convertible Promissory Notes | Class A Warrant
Related Party Transaction [Line Items]
Warrants Exercisable							41,350
Exercise Price of Warrants or Rights | $ / shares							$ 4.92
Convertible Promissory Notes | Class A Warrant | Common Stock
Related Party Transaction [Line Items]
Exercise Price of Warrants or Rights | $ / shares							$ 0.03
Convertible Promissory Notes | Class B Warrant
Related Party Transaction [Line Items]
Warrants Exercisable							41,350
Exercise Price of Warrants or Rights | $ / shares							$ 0.20
Convertible Promissory Notes | Class B Warrant | Common Stock
Related Party Transaction [Line Items]
Exercise Price of Warrants or Rights | $ / shares							$ 0.03
Convertible Promissory Notes | Accrued Interest
Related Party Transaction [Line Items]
Convertible debt, amount converted | $							$ 6,751
Second Financial Advisory Agency Agreement
Related Party Transaction [Line Items]
Financial advisory fees | $				$ 15,000	$ 15,000
Fee paid upon the filling of S-1 with SEC | $								$ 50,000
Fee payment upon closure of initial public offering | $								$ 100,000
Second Financial Advisory Agency Agreement | IPO
Related Party Transaction [Line Items]
Conversion of preferred stock to common stock, conversion ratio					200
Second Financial Advisory Agency Agreement | IPO | Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued					600
Second Financial Advisory Agency Agreement | Series D Convertible Preferred Stock
Related Party Transaction [Line Items]
Number of preferred units issued as consideration					7,200,000
Second Financial Advisory Agency Agreement | Series D Convertible Preferred Stock | IPO
Related Party Transaction [Line Items]
Conversion of stock, shares converted					7,200,000
Second Financial Advisory Agency Agreement | Class A Warrant
Related Party Transaction [Line Items]
Warrants Exercisable					36,000
Exercise Price of Warrants or Rights | $ / shares					$ 4.92
Second Financial Advisory Agency Agreement | Class A Warrant | IPO
Related Party Transaction [Line Items]
Exercise Price of Warrants or Rights | $ / shares					$ 0.03
Exchange ratio of options exercised to common stock					60
Second Financial Advisory Agency Agreement | Class B Warrant
Related Party Transaction [Line Items]
Warrants Exercisable					36,000
Exercise Price of Warrants or Rights | $ / shares					$ 0.20
Second Financial Advisory Agency Agreement | Class B Warrant | IPO
Related Party Transaction [Line Items]
Exercise Price of Warrants or Rights | $ / shares					$ 0.03
Exchange ratio of options exercised to common stock					60
Notes Payable To Related Party
Related Party Transaction [Line Items]
Interest rate on notes			20.00%
Maturity date of notes			Jul. 18, 2015
Convertible notes payable, principal | $			$ 500,000
Note maturity date description								The Company may extend the due date of the note to July 18, 2016 by giving notice no later than April 18, 2015
Note extension fee amount | $			10,000
Prepaid interest | $			$ 25,000
Number of preferred units issued as consideration			4,000,000						4,000,000
Value of preferred units issued as consideration | $			$ 100,000						$ 100,000
Preferred units issued as consideration, series D preferred shares			4,000,000
Notes payable - related party, discount | $								$ 58,333
Notes Payable To Related Party | IPO | Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued								20,000
Notes Payable To Related Party | Series D Convertible Preferred Stock | IPO
Related Party Transaction [Line Items]
Conversion of stock, shares converted								4,000,000
Notes Payable To Related Party | Class A Warrant
Related Party Transaction [Line Items]
Warrants Exercisable			20,000
Preferred units issued as consideration, warrants									20,000
Exercise Price of Warrants or Rights | $ / shares								$ 0.03	$ 4.92
Exchange ratio of options exercised to common stock								60
Notes Payable To Related Party | Class A Warrant | Common Stock
Related Party Transaction [Line Items]
Share price | $ / shares			$ 4.92
Notes Payable To Related Party | Class B Warrant
Related Party Transaction [Line Items]
Warrants Exercisable			20,000
Preferred units issued as consideration, warrants									20,000
Exercise Price of Warrants or Rights | $ / shares								$ 0.03	$ 0.20
Exchange ratio of options exercised to common stock								60
Notes Payable To Related Party | Class B Warrant | Common Stock
Related Party Transaction [Line Items]
Share price | $ / shares			$ 0.20
Ryan Ashton, Chief Executive Officer | Convertible Promissory Notes
Related Party Transaction [Line Items]
Interest rate on notes							8.00%
Warrants Exercisable							25,000
Preferred units issued as consideration, warrants							200,000
Spring Forth Investments and the Bourne Spafford Charitable Trust | Convertible Promissory Notes
Related Party Transaction [Line Items]
Interest rate on notes						8.00%
Warrants Exercisable						12,500
Preferred units issued as consideration, warrants						100,000
Maturity date of notes						Mar. 10, 2015
Notes qualified for equity financing | $						$ 5,000,000
Spring Forth Investments and the Bourne Spafford Charitable Trust | Convertible Promissory Notes | IPO | Common Stock
Related Party Transaction [Line Items]
Conversion of stock, shares issued						344
Spring Forth Investments and the Bourne Spafford Charitable Trust | Convertible Promissory Notes | Series D Convertible Preferred Stock
Related Party Transaction [Line Items]
Shares issued upon conversion of debt						4,124,493
Spring Forth Investments and the Bourne Spafford Charitable Trust | Convertible Promissory Notes | Class A Warrant
Related Party Transaction [Line Items]
Warrants Exercisable						20,622
Exercise Price of Warrants or Rights | $ / shares						$ 4.92
Spring Forth Investments and the Bourne Spafford Charitable Trust | Convertible Promissory Notes | Class A Warrant | IPO
Related Party Transaction [Line Items]
Exercise Price of Warrants or Rights | $ / shares						$ 0.03
Spring Forth Investments and the Bourne Spafford Charitable Trust | Convertible Promissory Notes | Class B Warrant
Related Party Transaction [Line Items]
Warrants Exercisable						20,622
Exercise Price of Warrants or Rights | $ / shares						$ 0.20
Spring Forth Investments and the Bourne Spafford Charitable Trust | Convertible Promissory Notes | Class B Warrant | IPO
Related Party Transaction [Line Items]
Exercise Price of Warrants or Rights | $ / shares						$ 0.03
Spring Forth Investments and the Bourne Spafford Charitable Trust | Convertible Promissory Notes | Accrued Interest
Related Party Transaction [Line Items]
Convertible debt, amount converted | $						$ 3,112

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Income Tax Expense (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Current
Federal	$ 0	$ 0
State and Local	1,250	5,297
Current income tax expense benefit	1,250	5,297
Deferred
Federal	0	0
State and Local	0	0
Deferred income tax expense benefit	0	0
Provision for income taxes	$ 1,250	$ 5,297

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Components of Deferred Tax Assets (Detail) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets:
Net operating losses	$ 4,194,990	$ 18,229,887
Depreciation and amortization		162,344
Depreciation and amortization	(182,903)
Allowance for doubtful accounts	6,324	2,035
Accrued vacation	112,892	85,081
Accrued personal property tax	4,083	4,048
Other	1,652	171
Total deferred tax assets	4,137,036	18,483,566
Less: Valuation allowance	(4,137,036)	(18,483,566)
Net deferred tax assets	$ 0	$ 0

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Reconciliation of Reported Amount of Income Tax Expense (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Benefit for income taxes computed at federal statutory rate	$ (19,685,292)	$ (7,385,656)
State income taxes, net of federal tax benefit	(1,998,974)	(407,156)
Non-deductible expenses	12,902,916	3,024,860
NOL write off due to Section 382 limitation	23,200,232
Increase (decrease) in valuation allowance	(14,346,481)	4,622,286
Other, net	(71,150)	150,963
Provision for income taxes	$ 1,250	$ 5,297
Effective tax rate	(0.01%)	(0.07%)

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Income Tax - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Taxes [Line Items]
Increase in valuation allowance	$ 14,346,481
Unrecognized tax benefits	0	$ 0
Unrecognized tax benefits income tax penalties and interest recognized	0	0
Unrecognized tax benefits income tax penalties and interest accrued	0	0
Federal
Income Taxes [Line Items]
Net operating loss carry forwards	$ 11,500,000	51,800,000
Net tax operating losses, expiration	Expire in varying amounts during the tax years 2025 and 2035.
Federal | Earliest Tax Year [Member]
Income Taxes [Line Items]
Tax years open to examination	2012
Federal | Latest Tax Year [Member]
Income Taxes [Line Items]
Tax years open to examination	2015
State
Income Taxes [Line Items]
Net operating loss carry forwards	$ 8,200,000	$ 32,500,000
Net tax operating losses, expiration	Expire in varying years from 2025 to 2035.

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Schedule of Domestic and International Customers Products Sales (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Schedule Of Geographical Information [Line Items]
Total sales	$ 2,142,040	$ 1,606,254
Domestic (U.S.)
Schedule Of Geographical Information [Line Items]
Total sales	2,096,825	1,559,614
International
Schedule Of Geographical Information [Line Items]
Total sales	$ 45,215	$ 46,640

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Subsequent Events - Additional Information (Detail) - USD ($)		1 Months Ended		2 Months Ended	12 Months Ended
	Oct. 08, 2014	Feb. 29, 2016	Jan. 31, 2016	Feb. 29, 2016	Dec. 31, 2015	Dec. 31, 2014	Mar. 01, 2016
Subsequent Event [Line Items]
Proceeds from exercise of warrants					$ 3,161,220	$ 31,600
Warrants yet to deliver					13,219,597	5,447,940
Warrants Exercisable					13,219,597	5,447,940
Proceeds from Issuance of Initial Public Offering	$ 6,400,000
Common Stock
Subsequent Event [Line Items]
Shares issued, IPO					0	19,167
IPO | Common Stock
Subsequent Event [Line Items]
Shares issued, IPO	19,167
Series D Convertible Preferred Stock
Subsequent Event [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance					120,000,000
Subsequent Event
Subsequent Event [Line Items]
Cashless exercise of warrants				64,641,576
Consulting services for settlement of disputes		$ 80,000
Consulting fee incurred		800,000		$ 800,000
Consulting fee, paid		$ 200,000
Subsequent Event | IPO
Subsequent Event [Line Items]
Shares issued, IPO		39,200,000
Proceeds from Issuance of Initial Public Offering, gross		$ 6,300,000
Proceeds from Issuance of Initial Public Offering		$ 5,600,000
Subsequent Event | IPO | Common Stock
Subsequent Event [Line Items]
Number of shares included in preferred unit		1		1
Subsequent Event | Purchased Options [Member]
Subsequent Event [Line Items]
Conversion of stock, shares converted				121,450
Subsequent Event | Monthly Payment
Subsequent Event [Line Items]
Consulting fee incurred		$ 50,000		$ 50,000
Subsequent Event | Series C Convertible Preferred Stock
Subsequent Event [Line Items]
Cashless exercise of Warrants				5,001,687
Conversion of stock, shares converted			138,158
Proceeds from exercise of warrants			$ 304,017
Warrants yet to deliver							50,418
Warrants Exercisable							563,651
Subsequent Event | Series E Convertible Preferred Stock
Subsequent Event [Line Items]
Conversion of stock, shares converted				13,967
Subsequent Event | Series D Convertible Preferred Stock
Subsequent Event [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance		85,000,000		85,000,000
Subsequent Event | Series E Warrants [Member] | IPO
Subsequent Event [Line Items]
Number of shares included in preferred unit		1.5		1.5
Closing price of common stock		$ 0.25		$ 0.25
Warrants expiration		6 years