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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Risks and Uncertainties [Policy Text Block]

Risks and Uncertainties

The Company is subject to a number of risks and uncertainties similar to those of other companies, such as those associated with the continued expansion of the Company’s sales and marketing network, technological developments, intellectual property protection, development of markets for new products and services offered by the Company, the economic health of principal customers of the Company, financial and operational risks associated with expansion of testing facilities used by the Company, government regulation (including, but

not

limited to, Food and Drug Administration regulations, Brazilian laws, proposed laws and regulations, and delays in implementation of laws and regulations), competition and general economic conditions.

Use of Estimates, Policy [Policy Text Block]

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates, including those related to bad debts, long-lived asset lives, income tax valuation and share based compensation, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash Equivalents

All highly liquid investments with original maturities of

days or less are considered cash equivalents. These consist of cash savings and certificates of deposits (CD’s). As of

December 31, 2017,

there were

$4.6

million of CD’s. As of

December 31, 2016

and

2015,

there were

investments classified as cash equivalents.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

The Company follows the provisions of Accounting Standards Codification (ASC)

820,

Fair Value Measurements and Disclosures

(“ASC

820”

), which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements and expands disclosures regarding fair value measurements. Fair value is defined under ASC

820

as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC

820

must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on

three

levels of inputs, of which the

first

two

are considered observable and the last unobservable, that

may

be used to measure fair value which are the following:

Level

– Quoted prices in active markets for identical assets or liabilities.

Level

– Inputs other than Level

that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data

Level

– Unobservable inputs that are supported by little or

market activity and that are significant to the fair value

A financial instrument’s level is based on the lowest level of any input that is significant to the fair value measurement.

Inventory, Policy [Policy Text Block]

Inventory

Some materials used in the provision of services to our customers are included in prepaid expenses and recorded to cost of revenues upon use. Most consumables such as chemicals, antibodies and tubes are expensed as purchased.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are provided over the estimated useful lives of the assets, using the straight-line method. Repair and maintenance costs are expensed as incurred. The estimated useful lives of the assets are:

Computer software (in years)	3	to	5
Office furniture and equipment (in years)	3	to	7
Laboratory equipment (in years)	5	to	7
Leasehold improvements (in years)		Lesser of estimated useful life or lease term

The Company recorded depreciation and amortization related to property and equipment and capitalized software of

$2.8

million,

$2.3

million, and

$1.7

million in

2017,

2016

and

2015

respectively. As of

December 31, 2017

and

2016,

there was approximately

$0.5

million and

$1.2

million of new equipment

not

placed in service, respectively.

Research, Development, and Computer Software, Policy [Policy Text Block]

Capitalized Software Development Costs

We capitalize costs related to significant software projects developed or obtained for internal use. Costs incurred during the preliminary project work stage or conceptual stage, such as determining the performance requirements, system requirements and data conversion, are expensed as incurred. Costs incurred in the application development phase, such as coding, testing for new software and upgrades that result in additional functionality, are capitalized and are amortized using the straight-line method over the useful life of the software for

years. Costs incurred during the post-implementation/operation stage, including training costs and maintenance costs, are expensed as incurred. In accordance with Company policy, during the years ended

December 31, 2017,

2016

and

2015,

we capitalized internally developed software costs of

$511,

$315

and

$364,

respectively. Amortization expense related to software development costs was

$418,

$435

and

$422

2017,

2016,

and

2015,

respectively. Determining whether particular costs incurred are more properly attributable to the preliminary or conceptual stage, and thus expensed, or to the application development phase, and thus capitalized and amortized, depends on subjective judgments about the nature of the development work, and our judgments in this regard

may

differ from those made by other companies. General and administrative costs related to developing or obtaining such software is expensed as incurred.

Other Assets [Policy Text Block]

Other Assets

Other assets primarily consist of capitalized legal costs relating to patent applications. The Company amortizes these costs over the lesser of the legal life or estimated useful life of the patent from the date of grant of the applicable patent. The typical life is

twenty

years. As of

December 31, 2017,

2016,

and

2015

the Company had capitalized legal costs relating to outstanding patent applications of

$711,

$715

and

$670,

respectively. Amortization expense was

$37,

$36,

and

$32

2017,

2016

and

2015,

respectively. The amount of amortization related to patent applications is expected to remain below

$50

per year for the next

five

years.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company is in the business of performing drug testing services and reporting the results thereof. The Company’s services are primarily drug and alcohol testing for its customers for an agreed-upon fee per unit tested. The revenues are recognized when the drug test is performed and reported to the customer.

The Company records revenue for the shipping of samples from the customer or independent hair collection facility to the laboratory for customers that choose to use the Company’s shipping account. The Company also records revenue for the collection of the hair sample for customers that choose to have the Company manage this process at the same time the sample test is completed and results reported to the customer. The associated costs incurred in connection with these services is recorded as costs of revenue. The Company records revenue for these services on a gross basis as it has determined it is the principal under these arrangements.

The Company also provides expert testimony, when and if necessary, to support the results of the tests, which is generally billed separately and recognized as the services are provided.

Research and Development Expense, Policy [Policy Text Block]

Research and Development Expenses

The Company expenses all research and development costs as incurred.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes using the liability method pursuant to ASC

740,

“Income Taxes”

. Under this method, the Company recognizes deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. The Company evaluates uncertain tax positions annually and considers whether the amounts recorded for income taxes are adequate to address the Company’s tax risk profile. The Company analyzes the potential tax liabilities of specific transactions and tax positions based on management’s judgment as to the expected outcome. As of

December 31, 2016,

the Company early adopted ASU

2015

17,

Income Taxes - Balance Sheet Classification of Deferred Taxes

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk and Off-Balance Sheet Risk

The Company has

significant off-balance-sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially subject the Company to concentrations of credit risk are principally cash and accounts receivable. The Company’s policy is to place its cash in high quality financial institutions. At time, these deposits

may

exceed federally insured limits. The Company does

not

believe significant credit risk exists with respect to these institutions. Concentration of credit risk with respect to accounts receivable is limited to certain customers to whom the Company makes substantial sales. To reduce risk, the Company routinely assesses the financial strength of its customers and, as a consequence, believes that its accounts receivable credit risk exposure is limited. The Company maintains an allowance for potential credit losses but historically has

not

experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area. The Company does

not

require collateral.

Major Customers, Policy [Policy Text Block]

Significant Customers

The Company had

one

customer that exceeded

10%

of revenue for the years ended

December 31, 2017

and

2016.

There were

customers that exceeded

10%

of revenue for the year ended

December 31, 2015.

The Company had

one

customer that accounted for

23%,

34%

and

11%

of the total accounts receivable balance as of

December 31, 2017,

2016

and

2015

respectively.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income

The Company’s comprehensive income was

$5.9

million for the year ended

December 31, 2017

and includes the effect of foreign currency translation. Comprehensive income was the same as net income for the years ended

December 31, 2016

and

2015.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

The Company accounts for equity awards in accordance with ASC

718,

“

Compensation — Stock Compensation”

(”ASC

718”

). ASC

718

requires employee equity awards to be accounted for under the fair value method. It also requires the measurement of compensation cost at fair value on the date of grant and recognition of compensation expense over the service period for awards expected to vest. Accordingly, share-based compensation is measured at the grant date based on the fair value of the award. The Company uses the straight-line method to recognize share-based compensation over the service period of the award, which is generally equal to the vesting period. The Company uses the simplified approach to calculate the expected exercise date of options, which is

one

of the components used to determine the fair value of the options. This approach is used due to the small number of recipients receiving stock options

not

providing a reasonable basis for estimating expected term. In

2016,

the Company adopted ASU

2016

09,

Improvements to Employee Share-Based Payment Accounting

, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of related amounts within the statement of cash flows. As a result, we recognize the impact of forfeitures when they occur with

adjustment for estimated forfeitures and recognize excess tax benefits as a reduction of income tax expense regardless of whether the benefit reduces income taxes payable.

Stock compensation expense by income statement account is as follows:

	Year Ended December 31,
	2017		2016		2015
Cost of revenues	$	71	$	88	$	101
General & administrative		398		420		433
Marketing and selling		55		116		108
Research and development		58		47		32
Total stock compensation	$	582	$	671	$	674

See Note

for additional information relating to the Company’s stock plan.

Earnings Per Share, Policy [Policy Text Block]

Basic and Diluted Net Income per Share

Basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares and dilutive common stock equivalents outstanding during the period. The number of dilutive common stock equivalents outstanding during the period has been determined in accordance with the treasury-stock method. Common equivalent shares consist of common stock issuable upon the exercise of outstanding options and the unvested portion of stock unit awards (“SUAs”).

Basic and diluted weighted average common shares outstanding are as follows:

	2017	2016	2015
Weighted average common shares outstanding, basic	5,480	5,447	5,405
Dilutive common equivalent shares	60	28	7
Weighted average common shares outstanding, assuming dilution	5,540	5,475	5,412

There were

options to purchase shares that were anti-dilutive for the years ended

December 31, 2017

and

2016.

For the year ended

December 31, 2015,

options to purchase

thousand common shares were outstanding but

not

included in the dilutive common equivalent share calculation as their effect would have been anti-dilutive.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Financial Instruments

Financial instruments include cash and accounts receivable and accounts payable. Estimated fair values of these financial instruments approximate carrying values due to their short-term nature. The Company has

three

outstanding equipment loans which have an interest rate of the

-day LIBOR rate +

2.00%,

and

one

equipment loan with an interest rate of the

-day LIBOR rate +

1.75%.

As there is a market interest rate, the carrying amount is fair value.

Basis of Presentation and Consolidation, Policy [Policy Text Block]

Basis of Preparation and Consolidation

The consolidated financial statements, include the financial statements of the Company and its subsidiaries have been prepared using accounting principles generally accepted in the United States (“U.S. GAAP”). The financial statements of the Company and its subsidiary companies have been consolidated on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. All intercompany transactions and balances have been eliminated.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

The functional currency of our Brazil subsidiary is the Brazilian Real. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the consolidated balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities that are in the functional currency is included as a component of shareholders’ equity in accumulated other comprehensive income (loss). The total change in foreign currency translation adjustment for the year ended

December 31, 2017

was (

$238

) thousand, or (

$157

) thousand net of taxes.

Segment Reporting, Policy [Policy Text Block]

Segment Reporting

The Company manages its operations as

one

segment, drug testing services. As a result, the financial information disclosed herein materially represents all of the financial information related to the Company’s principal operating segment. See Note

for geographic breakdown of revenue.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events

March 7, 2018,

the Company declared a quarterly dividend of

$0.15

per share for a total of

$824,

with a payment date of

March 29, 2018

to shareholders of record on

March 19, 2018.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

February 2016,

the FASB issued ASU

2016

02,

Leases

, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than

months. The new standard will become effective for fiscal years beginning after

December 15, 2018

and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impacts the adoption of this accounting guidance will have on its financial statements.

May 2014,

the FASB issued ASU

2014

09,

Revenue from Contracts with Customers

, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU

2014

is to recognize revenues 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

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 U.S. GAAP.

The standard’s implementation date, as amended by ASU

2015

14,

is effective for annual periods beginning after

December 15, 2017,

and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU

2014

recognized at the date of adoption (which includes additional footnote disclosures). We have done an analysis of the impact of our pending adoption of ASU

2014

on our financial statements and have determined the implementation of this standard will

not

have a material impact on the timing and measurement of revenue recognition. The Company intends to adopt the standard at the date required for public companies.