0001144204-13-003214.txt : 20130122 0001144204-13-003214.hdr.sgml : 20130121 20130122063455 ACCESSION NUMBER: 0001144204-13-003214 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20130122 DATE AS OF CHANGE: 20130122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATOSSA GENETICS INC CENTRAL INDEX KEY: 0001488039 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 264753208 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-35610 FILM NUMBER: 13538895 BUSINESS ADDRESS: STREET 1: 4105 E MADISON STREET STREET 2: SUITE 320 CITY: SEATTLE STATE: WA ZIP: 98112 BUSINESS PHONE: 206 325 6086 MAIL ADDRESS: STREET 1: 4105 E MADISON STREET STREET 2: SUITE 320 CITY: SEATTLE STATE: WA ZIP: 98112 10-Q/A 1 v331106_10qa.htm FORM 10-Q/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)


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

For the quarterly period ended September 30, 2012


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

For the transition period from to

Commission file number: 001-3560

ATOSSA GENETICS INC.

(Exact name of registrant as specified in its charter)



Delaware		26-4753208
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

4105 E. Madison Street, Suite 320
Seattle, Washington		98112
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (206) 325-6086

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 o No þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No þ

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding at January 17, 2013 was 12,919,367.

TABLE OF CONTENTS


	ITEM 6. EXHIBITS
SIGNATURES
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

Explanatory Note

The sole purpose of this amendment to our Quarterly Report on Form 10-Q for the period ended September 30, 2012, filed with the Securities and Exchange Commission (the “SEC”) on December 21, 2012 (the “Form 10-Q”), is to furnish Exhibit 101 to that Form 10-Q which contains the XBRL (eXtensible Business Reporting Language) Interactive Data File for the financial statements and notes included in Part I, Item 1 of the Form 10-Q. As permitted by Rule 405(a)(2)(ii) of Regulation S-T, Exhibit 101 was required to be furnished by amendment within 30 days of the original filing date of the Form 10-Q.

No other changes have been made to the Form 10-Q and the Form 10-Q has not been updated to reflect events that may have occurred subsequent to the original filing date.

Pursuant to Rule 406T of Regulation S-T, the interactive data files contained in Exhibit 101 are not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under these sections.


ITEM 6.		EXHIBITS

Exhibit
Number			Description

	31.1		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
	31.2		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
	32.1		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
101.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Extension Schema 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


(1)		Previously filed or furnished, as applicable, as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2012 filed with the SEC on December 21, 2012.

SIGNATURES

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


	Atossa Genetics Inc.
Date: January 18, 2013	/s/ Steven C. Quay
	Steven C. Quay, M.D. Ph.D.
	President and Chief Executive Officer (On behalf of the Registrant)

	/s/ Kyle Guse
	Kyle Guse
	Chief Financial Officer, General Counsel and Secretary (As Principal Financial and Accounting Officer)

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Basis of Presentation: The accompanying consolidated financial statements include the financial statements of Atossa Genetics Inc. and its wholly-owned subsidiary NRLBH. All significant intercompany account balances and transactions have been eliminated in consolidation. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Recently Issued Accounting Pronouncements: The Company has adopted all recently issued accounting pronouncements that management believes to be applicable to the Company. The adoption of these accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

Revenue Recognition:   Overview The Company recognizes product and service revenue in accordance with GAAP when the following overall fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or the service has been performed, (iii) the Company’s price to the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is reasonably assured.   Product Revenue The Company recognizes revenue for sales of the MASCT kits and devices upon receipt of cash as the Company has an insufficient sales history on which to determine the collectability. Shipping documents and the completion of any customer acceptance requirements, when applicable, will be used to verify product delivery. The Company will assess whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Once a history of sales and collectability has been established, the company will recognize revenue on an accrual basis with an offsetting reserve for doubtful accounts based on the history during the initial sales period.   Service Revenue The Company records revenue for diagnostic testing on an accrual basis at the Medicare allowed and invoiced amount. Amounts invoiced above the Medicare amount, namely non-Medicare, are not recognized on an accrual basis and instead are recognized on a cash basis as received. Diagnostic testing revenue at the Medicare rate is recognized upon completion of the test, communication of results to the patient’s physician, and when collectability is reasonably assured. Customer purchase orders and/or contracts will generally be used to determine the existence of an arrangement. Once the Company has historical sales and can determine the proper amount to recognize as uncollectible, it will then begin to recognize the entire amount, both Medicare and non-Medicare billing on an accrual basis, with an offsetting allowance for doubtful accounts recorded based on history. The Company estimates it will utilize the diagnostic testing revenue history once it reaches 12 months of collection data to determine a proper allowance for doubtful accounts.

Cash and Cash Equivalents: Cash and cash equivalents include cash and all highly liquid instruments with original maturities of three months or less.   As of September 30, 2012 and December 31, 2011, $250,000 and $1,000,000 of cash was restricted as collateral for a commercial line of credit obtained from JPMorgan Chase Bank in September 2011 (see Note 8). These amounts were designated as restricted cash under current assets on our consolidated balance sheets.

Use of Estimates: The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

Accounts Receivable: Accounts receivable are recorded at net realizable value consisting of the carrying amount less allowance for doubtful accounts, as needed. We assess the collectability of accounts receivable based primarily upon the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends, and changes in customer payment patterns to evaluate the adequacy of these reserves.

Inventories: The Company’s inventories are stated at lower of cost or market. Cost is determined on a moving-average basis. Costs of inventories include purchase and related costs incurred in delivering the products to their present location and condition. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. Inherent in the lower of cost or market calculation are several significant judgments based on a review of the aging of the inventory, inventory movement of products, economic conditions, and replacement costs. Because the sales price of the MASCT System was substantially lower than its cost for the nine months ended September 30, 2012 and for the year ended December 31, 2011, resulting in the net realizable value of the MASCT System being determined at zero as of the balance sheet dates through taking the average sales price subtracted by selling expenses per unit, a $29,884 and $92,026 loss on reduction of inventory to the lower of cost or market was assessed and recorded as of and for the period and for the year then ended, respectively. Additionally, management periodically evaluates the composition of its inventories at least quarterly to identify slow-moving and obsolete inventories to determine if any valuation allowance is required. As of September 30, 2012 and December 31, 2011, management had identified no slow moving or obsolete inventory.   The Company provides ForeCYTE testing specimen collection kits to doctors with our MASCT System for doctors to collect specimens that are returned to the Company for diagnostic analysis. These collection kits are considered part of the MASCT System. During the initial marketing phase, the Company has decided to distribute the kits to customers at no cost and bundle them with the MASCT System, and has not intended to deem the kits as a primary product line due to their nominal cost and value per unit. As a result, the kits are immediately expensed and recorded as selling expense upon purchasing of the kits. For the nine months ended September 30, 2012 and for the year ended December 31, 2011, selling expense of $36,741 and $0 was recorded related to the ForeCYTE kits, respectively.

Property, plant, and equipment: Property, plant and equipment are stated at cost less accumulated depreciation.  Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized.  When property, plant and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations.   Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 74%;" nowrap="nowrap"> </td> <td style="border-bottom: windowtext 1pt solid; width: 26%;" nowrap="nowrap"> Useful Life (in years) </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: justify;">Machinery and equipment</td> <td style="text-align: center;">5</td> </tr> </table>

Intangible assets: For intangible assets subject to amortization, an impairment loss is recognized if the carrying amount of the intangible asset is not recoverable and exceeds fair value.  The carrying amount of the intangible asset is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. Intangible assets as of September 30, 2012 and December 31, 2011 were mainly software acquired for the purpose of managing laboratory results and patents acquired (see Note 7).

Research and Development Expenses: Research and development costs are generally expensed as incurred. The Company’s research and development expenses consist of costs incurred for internal and external research and development.

Share Based Payments: In December 2004, the Financial Accounting Standards Board, or the FASB, issued the Statement of Financial Accounting Standards, or SFAS, No. 123(R), “Share-Based Payment”, which replaces SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123(R) is now included in the FASB’s ASC Topic 718, “Compensation – Stock Compensation.” Under SFAS No. 123(R), companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees or independent contractors are required to provide services. Share-based compensation arrangements include stock options and warrants, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, or SAB 107, which expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provides the staff’s views regarding the valuation of share-based payment arrangements for public companies. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule amending the compliance dates for SFAS No. 123(R). Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS No. 123.   The Company has fully adopted the provisions of FASB ASC 718 and related interpretations as provided by SAB 107. As such, compensation cost is measured on the date of grant as the fair value of the share-based payments. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.

NOTE 1: NATURE OF OPERATIONS   The Company’s operations began in December 2008 with the negotiations for the acquisition of the Mammary Aspirate Specimen Cytology Test System, or the MASCT System, patent rights and assignments and the FDA clearance for marketing, which acquisition was completed in January 2009. Atossa Genetics Inc. (the “Company”) was incorporated on April 30, 2009 in the State of Delaware. The Company was formed to develop and market the MASCT System, a cellular and molecular diagnostic risk assessment product for the detection of pre-cancerous changes that could lead to breast cancer. The Company’s fiscal year ends on December 31st.   In December 2011 the Company established the National Reference Laboratory for Breast Health, or NRLBH, as a wholly-owned subsidiary. NRLBH is the Company’s CLIA-certified laboratory where the ForeCYTE and ArgusCYTE test specimens are examined for the presence of normal, pre-malignant, or malignant changes as determined by cytopathology and biomarkers that distinguish “usual” ductal hyperplasia, a benign condition, from atypical ductal hyperplasia, which may lead to cancer. These cytopathological results provide patients and physicians with information about the care path that should be followed, depending on the individual risk of future cancer as determined by the results.   In September 2012 the Company acquired the assets of Acueity Healthcare, Inc. (“Acueity”). The assets included six 510(k)-cleared medical devices, 35 issued patents (18 issued in the U.S. and 17 issued in foreign countries) and 41 patent applications (32 in the U.S. and 9 in foreign countries). The FDA-cleared, patented medical devices consist of microendoscopes, light sources, and biopsy tools. The microendoscopes are less than 0.9 mm outside diameter and can be inserted into a milk duct. This permits a physician to pass a microendoscope into the milk duct system of the breast and view the duct system via fiberoptic video images. Abnormalities that are visualized can then be biopsied from inside the duct with the biopsy tools that are inserted adjacent to the microendoscope. The patents relate to intraductal diagnostic and therapeutic devices and methods of use. The Company did not, however, acquire an inventory of these diagnostic tools, manufacturing capabilities or any personnel to market and sell the tools. The Company cannot provide any assurance that it will be successful commercializing these tools.   Development Stage Risk   From April 30, 2009 (inception) through September 30, 2012, the Company earned $384,886 in revenue from the sale of its MASCT System and laboratory services. The Company’s activities have been accounted for as those of a “Development Stage Enterprise” as set forth in Accounting Standards Codification (“ASC”) 915 “Development Stage Entities”, which was previously Statement of Financial Accounting Standards No. 7 (“SFAS 7”). Among the disclosures required by ASC 915 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of operations, stockholders’ equity and cash flows disclose activity since the date of the Company’s inception.   Since its inception, the Company has been dependent upon the receipt of capital investment to fund its continuing activities. In addition to the normal risks associated with a new business venture, there can be no assurance that the Company’s business plan will be successfully executed. The Company’s ability to execute its business plan will depend on its ability to obtain additional financing and achieve a profitable level of operations. There can be no assurance that sufficient financing will be obtained. Further, the Company cannot give any assurance that it will generate substantial revenue or that its business operations will prove to be profitable.

NOTE 2: GOING CONCERN   The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.   Management’s Plan to Continue as a Going Concern   In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (1) obtaining capital from the sale of its equity securities, (2) sales of the MASCT System and laboratory service revenue, and (3) short-term borrowings from banks, stockholders or other related party(ies) when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.   The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually to secure other sources of financing and attain profitable operations.

NOTE 3: SUMMARY OF ACCOUNTING POLICIES   The unaudited consolidated financial statements of Atossa Genetics Inc. have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, the information included in these interim consolidated financial statements reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year. The consolidated balance sheet information as of December 31, 2011 was derived from the Company’s audited consolidated financial statements. These interim consolidated financial statements should be read in conjunction with that report. Certain comparative amounts have been reclassified to conform to the current period's presentation.   Basis of Presentation: The accompanying consolidated financial statements include the financial statements of Atossa Genetics Inc. and its wholly-owned subsidiary NRLBH. All significant intercompany account balances and transactions have been eliminated in consolidation. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.   Recently Issued Accounting Pronouncements: The Company has adopted all recently issued accounting pronouncements that management believes to be applicable to the Company. The adoption of these accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.   Revenue Recognition:   Overview The Company recognizes product and service revenue in accordance with GAAP when the following overall fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or the service has been performed, (iii) the Company’s price to the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is reasonably assured.   Product Revenue The Company recognizes revenue for sales of the MASCT kits and devices upon receipt of cash as the Company has an insufficient sales history on which to determine the collectability. Shipping documents and the completion of any customer acceptance requirements, when applicable, will be used to verify product delivery. The Company will assess whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Once a history of sales and collectability has been established, the company will recognize revenue on an accrual basis with an offsetting reserve for doubtful accounts based on the history during the initial sales period.   Service Revenue The Company records revenue for diagnostic testing on an accrual basis at the Medicare allowed and invoiced amount. Amounts invoiced above the Medicare amount, namely non-Medicare, are not recognized on an accrual basis and instead are recognized on a cash basis as received. Diagnostic testing revenue at the Medicare rate is recognized upon completion of the test, communication of results to the patient’s physician, and when collectability is reasonably assured. Customer purchase orders and/or contracts will generally be used to determine the existence of an arrangement. Once the Company has historical sales and can determine the proper amount to recognize as uncollectible, it will then begin to recognize the entire amount, both Medicare and non-Medicare billing on an accrual basis, with an offsetting allowance for doubtful accounts recorded based on history. The Company estimates it will utilize the diagnostic testing revenue history once it reaches 12 months of collection data to determine a proper allowance for doubtful accounts.   Cash and Cash Equivalents: Cash and cash equivalents include cash and all highly liquid instruments with original maturities of three months or less.   As of September 30, 2012 and December 31, 2011, $250,000 and $1,000,000 of cash was restricted as collateral for a commercial line of credit obtained from JPMorgan Chase Bank in September 2011 (see Note 8). These amounts were designated as restricted cash under current assets on our consolidated balance sheets.   Use of Estimates: The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates.   Accounts Receivable: Accounts receivable are recorded at net realizable value consisting of the carrying amount less allowance for doubtful accounts, as needed. We assess the collectability of accounts receivable based primarily upon the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends, and changes in customer payment patterns to evaluate the adequacy of these reserves.   Inventories: The Company’s inventories are stated at lower of cost or market. Cost is determined on a moving-average basis. Costs of inventories include purchase and related costs incurred in delivering the products to their present location and condition. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. Inherent in the lower of cost or market calculation are several significant judgments based on a review of the aging of the inventory, inventory movement of products, economic conditions, and replacement costs. Because the sales price of the MASCT System was substantially lower than its cost for the nine months ended September 30, 2012 and for the year ended December 31, 2011, resulting in the net realizable value of the MASCT System being determined at zero as of the balance sheet dates through taking the average sales price subtracted by selling expenses per unit, a $29,884 and $92,026 loss on reduction of inventory to the lower of cost or market was assessed and recorded as of and for the period and for the year then ended, respectively. Additionally, management periodically evaluates the composition of its inventories at least quarterly to identify slow-moving and obsolete inventories to determine if any valuation allowance is required. As of September 30, 2012 and December 31, 2011, management had identified no slow moving or obsolete inventory.   The Company provides ForeCYTE testing specimen collection kits to doctors with our MASCT System for doctors to collect specimens that are returned to the Company for diagnostic analysis. These collection kits are considered part of the MASCT System. During the initial marketing phase, the Company has decided to distribute the kits to customers at no cost and bundle them with the MASCT System, and has not intended to deem the kits as a primary product line due to their nominal cost and value per unit. As a result, the kits are immediately expensed and recorded as selling expense upon purchasing of the kits. For the nine months ended September 30, 2012 and for the year ended December 31, 2011, selling expense of $36,741 and $0 was recorded related to the ForeCYTE kits, respectively.   Property, plant, and equipment: Property, plant and equipment are stated at cost less accumulated depreciation.  Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized.  When property, plant and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations.   Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 74%;" nowrap="nowrap"> </td> <td style="border-bottom: windowtext 1pt solid; width: 26%;" nowrap="nowrap"> Useful Life (in years) </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: justify;">Machinery and equipment</td> <td style="text-align: center;">5</td> </tr> </table>   Intangible assets: For intangible assets subject to amortization, an impairment loss is recognized if the carrying amount of the intangible asset is not recoverable and exceeds fair value.  The carrying amount of the intangible asset is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. Intangible assets as of September 30, 2012 and December 31, 2011 were mainly software acquired for the purpose of managing laboratory results and patents acquired (see Note 7).   Research and Development Expenses: Research and development costs are generally expensed as incurred. The Company’s research and development expenses consist of costs incurred for internal and external research and development.   Share Based Payments: In December 2004, the Financial Accounting Standards Board, or the FASB, issued the Statement of Financial Accounting Standards, or SFAS, No. 123(R), “Share-Based Payment”, which replaces SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123(R) is now included in the FASB’s ASC Topic 718, “Compensation – Stock Compensation.” Under SFAS No. 123(R), companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees or independent contractors are required to provide services. Share-based compensation arrangements include stock options and warrants, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, or SAB 107, which expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provides the staff’s views regarding the valuation of share-based payment arrangements for public companies. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule amending the compliance dates for SFAS No. 123(R). Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS No. 123.   The Company has fully adopted the provisions of FASB ASC 718 and related interpretations as provided by SAB 107. As such, compensation cost is measured on the date of grant as the fair value of the share-based payments. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.

NOTE 7: INTANGIBLE ASSET   Intangible assets consisted of the following:   <table align="center" style="width: 90%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 30,</td> <td style="font-weight: bold;" nowrap="nowrap"> </td> <td style="font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31,</td> <td style="font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">2011</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 64%;">Software</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">50,466</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">50,466</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Patents</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,674,853</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Less: Accumulated amortization</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(22,241</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(9,625</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">4,703,078</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">40,841</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>   Intangible asset amounted to $4,703,078 and $40,841 as of September 30, 2012 and December 31, 2011, respectively, and mainly consisted of patents acquired from Acueity in September 2012 in an asset purchase transaction and software previously acquired for the purpose of managing laboratory results. The acquired software in the amount of $50,466 for the purpose of managing laboratory results pursuant to a software installation agreement was entered into on June 8, 2011. The amortization period for the purchased software is 3 years. Amortization expense for the nine months ended September 30, 2012 and 2011 was $12,616 and $5,500, respectively.   Patents Patents amounted to $4,674,853 and $0 as of September 30, 2012 and December 31, 2011, respectively, and mainly consisted of patents acquired from Acueity on September 30, 2012 in an asset purchase transaction (see Note 15). Patents will be amortized based on their determined useful life, and tested annually for impairment. The amortization period is from 9 to 14 years. Amortization expense related to patents was $0 for the nine months ended September 30, 2012 and 2011, respectively.   Future estimated amortization expenses as of September 30, 2012 for the five succeeding years is as follows:   <table align="center" style="width: 85%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: bold;">As of September 30,</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">Amounts</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 77%;">2013</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 20%;">376,841</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2014</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">371,341</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2015</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">360,100</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2016</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">360,019</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2017</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">360,019</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Thereafter</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">2,874,758</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">4,703,078</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

NOTE 6: PROPERTY, PLANT, AND EQUIPMENT   Property, plant and equipment consisted of the following:   <table align="center" style="width: 90%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 30, 2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31, 2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 64%;">Machinery and equipment</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">86,465</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">86,465</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Less:  Accumulated depreciation</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(18,968</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(5,998</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Property, plant, and equipment, net</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">67,497</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">80,467</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>   Depreciation expense for the nine months ended September 30, 2012 and 2011 was $12,970 and $3,920, respectively.

NOTE 10: STOCKHOLDERS’ EQUITY   The Company is authorized to issue a total of 85,000,000 shares of stock consisting of 75,000,000 shares of Common Stock, par value $0.001 per share, and 10,000,000 shares of Preferred Stock, par value $0.001 per share.   Reverse Stock-Split   On September 28, 2010, the Board of Directors approved a 1-for-2.26332 reverse share split for all issued and outstanding shares of Common Stock, with no change to the par value of the Common Stock.   Prior Issuances of Common Stock   On April 30, 2009 (inception), the Company issued 1,767,316 shares (or 4,000,000 shares prior to the reverse stock-split on September 28, 2010) to Ensisheim Partners LLC, a related party to the Company through common ownership, for cash in the amount of $24,000, or $0.014 per share (or $0.006 per share prior to the reverse stock-split on September 28, 2010); 1,325,487 shares (or 3,000,000 shares prior to the reverse stock-split on September 28, 2010) to Manistee Ventures LLC, a related party to the Company through common ownership, for cash in the amount of $18,000, or $0.014 per share (or $0.006 per share prior to the reverse stock-split on September 28, 2010); and 883,662 shares (or 2,000,000 shares prior to the reverse stock-split on September 28, 2010) to the Chairman, CEO and President of the Company at that time for cash in the amount of $12,000, or $0.014 per share (or $0.006 per share prior to the reverse stock-split on September 28, 2010).   On July 28, 2009, the Company issued 39,765 shares (or 90,000 shares prior to the reverse stock-split on September 28, 2010) to a director of the Company for cash in the amount of $540, or $0.014 per share (or $0.006 per share prior to the reverse stock-split on September 28, 2010).   On December 28, 2009, the Company issued 883,658 shares (or 2,000,000 shares prior to the reverse stock-split on September 28, 2010) to Ensisheim Partners LLC for cash in the amount of $100,000, or $0.11 per share (or $0.05 per share prior to the reverse stock-split on September 28, 2010).   On January 21, 2010, the Company issued 866,007 shares (or 1,960,000 shares prior to the reverse stock-split on September 28, 2010) to forty-four (44) investors for cash in the amount of $98,000, or $0.11 per share (or $0.05 per share prior to the reverse stock-split on September 28, 2010).   On January 21, 2010, the Company issued 132,549 shares (or 300,000 shares prior to the reverse stock-split on September 28, 2010) to a servicer for effecting transactions intended to cause the Company to become a public company and to have its securities traded in the United States. The shares were issued at a value of $15,000, or $0.11 per share (or $0.05 per share prior to the reverse stock-split on September 28, 2010), the same price as the issuance of the 866,007 shares (or 1,960,000 shares prior to the reverse stock-split on September 28, 2010) for cash on the same date.   On January 21, 2010, the Company issued an additional 53,020 shares (or 120,000 shares prior to the reverse stock-split on September 28, 2010) to a shareholder who acquired 13,255 shares (or 30,000 shares prior to the reverse stock-split on September 28, 2010) for cash on the same date as one of the forty-four (44) investors. Those shares were issued to the shareholder for services to be performed, including investor relations, media relations, and corporate communications. Those shares were issued at a value of $6,000, or $0.11 per share (or $0.05 per share prior to the reverse stock-split on September 28, 2010), the same price as the issuance of the 866,007 shares (or 1,960,000 shares prior to the reverse stock-split on September 28, 2010) for cash on the same date.   On January 23, 2010, the Company issued 35,346 shares (or 80,000 shares prior to the reverse stock-split on September 28, 2010) to an investor for cash in the amount of $4,000, or $0.11 per share (or $0.05 per share prior to the reverse stock-split on September 28, 2010).   On April 27, 2010, the Company issued 13,256 shares (or 30,000 shares prior to the reverse stock-split on September 28, 2010) to a service provider for website development services pursuant to an original agreement between the Company and the web site developer executed on December 14, 2009 (the “measurement date”), where it was agreed at that time that, at the Company’s option, $50,000 would be paid or 13,256 shares (or 30,000 shares of common stock prior to the reverse stock-split on September 28, 2010) would be issued to the developer in exchange for his services.   On September 30, 2012, the Company issued 862,500 shares to the shareholders of Acueity as part of the consideration for the asset purchase (see Note 15). The shares were valued at $5.00 per share, the offering price of the then contemplated initial public offering, for which the registration statement on Form S-1 (File No. 333-179500) was subsequently declared effective by the Securities and Exchange Commission on November 7, 2012, and a prospectus was subsequently filed pursuant to Rule 424(b)(4) on November 9, 2012 (see Note 16), or $4,312,500 in total.   Private Placements and Warrants   On April 28, May 31, June 10, and June 23, 2011, pursuant to Securities Purchase Agreements with various investors (the “Investors”), the Company issued 5,256,800 shares of the Company’s common stock and 5,256,800 warrants (the “Investor Warrants”), each of which entitles the investors to purchase the Company’s common stock at $1.25 per share, for aggregate gross proceeds of $6,571,000 (the “Private Placement”).   Placement Agent Fees   In connection with the Private Placement, the Company paid Dawson James Securities, Inc. (the “Placement Agent”), a cash fee equal to 10% of the gross proceeds from sale of the common stocks and warrants, plus 3% non-accountable expense allowance, an aggregate of $857,230 (the “Placement Agent Fee”). In addition, the Company entered into Warrant Agreements with the placement agent pursuant to which the Placement Agent received 788,520 warrants (the “Placement Agent Warrants”), each of which entitles the Placement Agent to purchase one share of the Company’s common stock at $1.60 per share, plus an additional 788,520 warrants (the “Placement Agent Warrants”), each of which entitles the placement agent to purchase the Company’s common stock at $1.25 per share. The cash payment of $857,230 Placement Agent Fee and the $495,876 aggregated initial fair value of the Placement Agent Warrants (see Fair Value Considerations below) were directly attributable to an actual offering and were charged through additional paid-in capital in accordance with the SEC Staff Accounting Bulletin (SAB) Topic 5A.   Warrants   The Warrants, including the Investor Warrants and the Placement Agent Warrants, are exercisable at any time commencing after the earliest of the following to occur (the “Initial Exercise Date”):   <table style="width: 100%; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 3%;"> </td> <td style="width: 3%;">(a)</td> <td style="text-align: justify; width: 94%;">Six (6) months from the closing of the Company Initial Public Offering (initial public offering of the Company’s Common Stock registered under the Securities Act),</td> </tr> </table>   <table style="width: 100%; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 3%;"> </td> <td style="width: 3%;">(b)</td> <td style="text-align: justify; width: 94%;">The closing of a “fundamental transaction” (in case of any reclassification, capital reorganization, exchange of shares, liquidation, recapitalization or change of the Common Stock, or in case of any consolidation or merger of the Company with or into another corporation or entity, or in case of any sale, lease or conveyance to another corporation or entity of all or substantially all of the assets of the Company), or</td> </tr> </table>   <table style="width: 100%; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 3%;"> </td> <td style="width: 3%;">(c)</td> <td style="text-align: justify; width: 94%;">Closing of a “significant private financing” (sale of the Company’s securities primarily for capital raising purposes in a transaction or series of related transactions that is exempt from registration under the Securities Act and in which the Company issues securities representing at least 20% of the then outstanding capital stock of the Company, calculated assuming the conversion or exercise of all outstanding options, warrants and other securities convertible into or exercisable for capital stock of the Company).</td> </tr> </table>   The Warrants shall expire and no longer be exercisable on the fifth anniversary of the Initial Exercise Date (the “Expiration Date”). The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. The Warrants may be exercised for cash or, at the option of the Investor, may be exercised on a cashless basis. There are no redemption features embodied in the Warrants and they have met the conditions provided in current accounting standards for equity classification.   As a result of the amount of money raised in the Private Placement, the Private Placement constituted a “significant private financing” and the warrants became exercisable on June 30, 2011.   Fair Value Considerations   The Company’s accounting for the issuance of warrants to the Investors and the Placement Agent required the estimation of fair values of the financial instruments. The development of fair values of financial instruments requires the selection of appropriate methodologies and the estimation of often subjective assumptions. The Company selected the valuation techniques based upon consideration of the types of assumptions that market participants would likely consider in exchanging the financial instruments in market transactions. The warrants were valued using a Black-Scholes-Merton Valuation Technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments.   The Investor Warrants and the Placement Agent Warrants were initially valued at $1,808,025 or $0.344 per warrant, $228,712 or $0.290 per warrant, and $267,164 or $0.339 per warrant, respectively. The following tables reflect assumptions used to determine the fair value of the Warrants:   <table align="center" style="width: 95%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">April-June2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">December 2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" nowrap="nowrap">Fair Value Hierarchy Level</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Investor Warrants</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Placement Agent Warrants</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Placement Agent Warrants</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 40%;">Indexed shares</td> <td style="width: 1%;"> </td> <td style="text-align: center; width: 14%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;">5,256,800</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;">788,520</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;">788,520</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Exercise price</td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.60</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.60</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.25</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Significant assumptions:</td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-left: 9pt;">Stock price</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">0.906</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">0.906</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">0.906</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Remaining term</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6 years</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6 years</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6 years</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Risk free rate</td> <td> </td> <td style="text-align: center;">2</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2.49</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1.12</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1.12</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Expected volatility</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">53.55</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">54.21</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">54.21</td> <td style="text-align: left;">%</td> </tr> </table>   Fair value hierarchy of the above assumptions can be categorized as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(1)</td> <td style="width: 95%;">There were no Level 1 inputs.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: center;"> </td> <td> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: center;">(2)</td> <td style="text-align: justify;">Level 2 inputs include:</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%; font-family: symbol;">·</td> <td style="text-align: justify; width: 90%;">Risk-free rate- The risk-free rate of return reflects the interest rate for United States Treasury Note with similar time-to-maturity to that of the warrants.</td> </tr> </table>    <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(3)</td> <td style="text-align: justify; width: 95%;">Level 3 inputs include:</td> </tr> </table>    <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Stock price- The Company’s common stock was not publicly traded at the time the Warrants were issued.  Therefore, the stock price was determined implicitly from an iterative process in order for the combined fair value of the common stock and the warrants to equal the amount of proceeds received in the Private Placement, based upon the assumption that the Private Placement was the result of an arm’s length transaction.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;"> </td> <td style="text-align: justify;"> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;">·</td> <td style="text-align: justify;">Remaining term- The Company does not have a history to develop the expected term for its warrants.  Accordingly, the Company expected that the Initial Exercise Date to occur within one year from the date of issuance plus the contractual term in the calculations.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;"> </td> <td style="text-align: justify;"> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;">·</td> <td style="text-align: justify;">Expected volatility- We did not have a historical trading history sufficient to develop an internal volatility rate for use in the model.  As a result, as required by ASC 718-10-30, the Company has accounted for the warrants using the calculated value method.  The Company identified seven public entities in the similar industry for which share price information was available, and considered the historical volatilities of those public entities’ share prices in calculating the expected volatility appropriate to the Company.</td> </tr> </table>   Asset Purchase and Warrants   On September 30, 2012, pursuant to the asset purchase agreement with Acueity, the Company issued 862,500 shares of common stock and 325,000 warrants (“Acueity Warrants”) to the shareholders of Acueity, each of which entitles the recipients to subscribe for and purchase from the Company one share of the Company’s common stock at $5.00 per share (the “Exercise Price”), subject to a six-month lock up agreement.   Warrants   The Acueity Warrants are exercisable at any time commencing after September 30, 2012 (the “Issuance Date”) and shall expire and no longer be exercisable on the fifth anniversary of the Issuance Date (the “Expiration Date”). The Company may at any time during the term of the Acueity Warrants reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. The Acueity Warrants do not have a cashless exercise provision. There are no redemption features embodied in the Acueity Warrants and they have met the conditions provided in current accounting standards for equity classification.   Fair Value Considerations   The Company’s accounting for the issuance of the Acueity Warrants required the estimation of fair values of the financial instruments. The development of fair values of financial instruments requires the selection of appropriate methodologies and the estimation of often subjective assumptions. The Company selected the valuation techniques based upon consideration of the types of assumptions that market participants would likely consider in exchanging the financial instruments in market transactions. The warrants were valued using a Black-Scholes-Merton Valuation Technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments.   The Acueity Warrants were valued at $762,353 or $2.3457 per warrant. The following tables reflect assumptions used to determine the fair value of the Warrants:   <table align="center" style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" nowrap="nowrap">Fair Value Hierarchy Level</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Acueity Warrants</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 64%;">Indexed shares</td> <td style="width: 1%;"> </td> <td style="text-align: center; width: 17%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 15%;">325,000</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Exercise price</td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">5.00</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Significant assumptions:</td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-left: 9pt;">Stock price</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">5.00</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Remaining term</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">5 years</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Risk free rate</td> <td> </td> <td style="text-align: center;">2</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">0.62</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Expected volatility</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">56.54</td> <td style="text-align: left;">%</td> </tr> </table>   Fair value hierarchy of the above assumptions can be categorized as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(1)</td> <td style="width: 95%;">There were no Level 1 inputs.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: center;">(2)</td> <td style="text-align: justify;">Level 2 inputs include:</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Risk-free rate- The risk-free rate of return reflects the interest rate for United States Treasury Note with similar time-to-maturity to that of the warrants.</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(3)</td> <td style="text-align: justify; width: 95%;">Level 3 inputs include:</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Stock price- The Company’s common stock was not publicly traded at the time the Acueity Warrants were issued.  Therefore, the stock price was determined at the offering price of the then contemplated initial public offering, for which the registration statement on Form S-1 (File No. 333-179500) was subsequently declared effective by the Securities and Exchange Commission on November 7, 2012, and a prospectus was subsequently filed pursuant to Rule 424(b)(4) on November 9, 2012 (see Note 16).</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;"> </td> <td style="text-align: justify;"> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;">·</td> <td style="text-align: justify;">Remaining term- The Company does not have a history to develop the expected term for its warrants.  Accordingly, the Company expected that the Initial Exercise Date to occur within one year from the date of issuance plus the contractual term in the calculations.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;"> </td> <td style="text-align: justify;"> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;">·</td> <td style="text-align: justify;">Expected volatility- We did not have a historical trading history sufficient to develop an internal volatility rate for use in the model.  As a result, as required by ASC 718-10-30, the Company has accounted for the warrants using the calculated value method.  The Company identified seven public entities in the similar industry for which share price information was available, and considered the historical volatilities of those public entities’ share prices in calculating the expected volatility appropriate to the Company.</td> </tr> </table>   Stock Option and Incentive Plan   On September 28, 2010, the Board of Directors approved the adoption of the 2010 Stock Option and Incentive Plan, or the 2010 Plan, subject to stockholder approval, to provide for the grant of equity-based awards to employees, officers, non-employee directors and other key persons providing services to the Company. Awards of incentive options may be granted under the 2010 Plan until September 2020. No other awards may be granted under the 2010 Plan after the date that is 10 years from the date of stockholder approval. An aggregate of 1,000,000 shares (or 2,263,320 shares prior to the reverse stock-split on September 28, 2010) are reserved for issuance in connection with awards granted under the 2010 Plan, such number of shares to be subject to adjustment as provided in the plan and in any award agreements entered into by the Company under the plan, and upon the exercise or conversion of any awards granted under the plan.   On April 4, 2011, 45,000 non-qualified stock options were granted under the Plan to Dr. Tim Hunkapiller for being a member of the Company’s Scientific Advisory Board and consulting services to be provided to the Company.   On September 1, 2011, 219,000 incentive stock options were granted under the Plan to employees and officers and 200,000 non-qualified stock options were granted under the Plan to non-employee directors, respectively, for their employment with and services to be provided to the Company (see Note 14).   On April 30, 2012, 19,757 non-qualified stock options were granted under the Plan to members of the Board of Directors for their services provided to the Company.

NOTE 11: INCOME TAXES   The Company accounts for income taxes as outlined in ASC 740, “Income Taxes”, which was previously Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). Under the asset and liability method of SFAS 109, deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.   As a result of the Company’s cumulative losses, management has concluded that a full valuation allowance against the Company’s net deferred tax assets is appropriate. No income tax liabilities existed as of September 30, 2012 and December 31, 2011 due to the Company’s continuing operating losses.

NOTE 13: COMMITMENTS AND CONTINGENCIES   Lease Commitments   On September 29, 2010, the Company entered into a commercial lease agreement with CompleGen, Inc. for laboratory space located in Seattle, WA. The lease provides for monthly rent of $3,658 and a security deposit of $3,658. The lease terms are from September 29, 2010 through March 31, 2011, at which time the lease has converted to month to month unless two months’ prior written notice of the intent to terminate the agreement is given. The monthly rent for the lease increased to $4,267 commencing January 2012. For the nine months ended September 30, 2012, the Company incurred $38,403 of rent expense for the lease.   On March 4, 2011, the Company entered into a commercial lease agreement with Sanders Properties, LLC for office space located in Seattle, WA. The lease provides for monthly rent of $1,100 and a security deposit of $1,500. The lease terms are from April 1, 2011 through March 31, 2013. For the nine months ended September 30, 2012, the Company incurred $9,900 of rent expense for the lease.   On July 9, 2011, the Company entered into a commercial lease agreement with Sanders Properties, LLC for additional office space located in Seattle, WA. The lease provides for monthly rent of $600 and a security deposit of $1,200. The lease terms are from July 11, 2011 through July 31, 2012. For the nine months ended September 30, 2012, the Company incurred $4,200 of rent expense for the lease. This lease terminated on July 31, 2012 and was not renewed.   On September 27, 2011, the Company entered into another commercial lease agreement with Sanders Properties, LLC for additional office space located in Seattle, WA. The lease provides for monthly rent of $1,400 and a security deposit of $1,000. The lease terms are from October 1, 2011 to March 31, 2012. For the period of October 1, 2011 through March 31, 2012, the Company incurred $8,400 of rent expense for the lease. This lease terminated on March 31, 2012 and was not renewed.   On December 9, 2011, the Company entered into another commercial lease agreement with Fred Hutchinson Research Center for lab and office space located in Seattle, WA. The lease provides for monthly rent of $16,395 for the period from February 24, 2012 to August 31, 2012, $19,923 for the period from September 1, 2012 to August 31, 2013, and $20,548 for the period from September 1, 2013 to November 29, 2014. The security deposit of $32,789 was paid in March 2012 and recorded as Security Deposit on the consolidated balance sheet as of September 30, 2012. For the nine months ended September 30, 2012, the Company incurred $161,424 of rent expense for the lease, which included leasing office management expenses.   The future minimum lease payments due subsequent to September 30, 2012 under all non-cancelable operating leases for the next five years are as follows:   <table align="center" style="width: 85%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: bold;">As of September 30,</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">Amount</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 77%;">2013</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 20%;">246,296</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2014</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">246,575</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2015</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">41,096</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2016</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2017</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Thereafter</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold;">Total minimum lease payments</td> <td style="padding-bottom: 2.5pt; font-weight: bold;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; font-weight: bold;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; font-weight: bold;">533,967</td> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold;"> </td> </tr> </table>   Contingencies    On June 30, 2011, Robert Kelly, the Company’s former President, filed a counterclaim against the Company in an arbitration proceeding, alleging breach of contract in connection with the termination of a consulting agreement between Mr. Kelly (dba Pitslayer) and the Company. The consulting agreement was terminated by the Company in September 2010. Mr. Kelly seeks $450,000 in compensatory damages, which is the amount he claims would have been earned had the consulting agreement been fulfilled to completion. A hearing in the arbitration is currently set for March 2013 but may be delayed to accommodate other third party civil and criminal proceedings that have been brought against Mr. Kelly with respect to his prior employment and predating his service with the Company.    On December 11, 2012, Mr. Kelly filed a complaint in the United States District Court, Western Division of Washington seeking compensatory damages, interest and attorneys’ fees related to the termination of Mr. Kelly’s consulting contract and the rescission of shares issued to him.  The specific amount of damages sought is to be proven at trial and not specified.   The Company is reasonably confident in its defenses to Mr. Kelly’s claims.  Consequently, no provision or liability has been recorded for Mr. Kelly’s claims as of September 30, 2012.  However, it is at least reasonably possible that the Company’s estimate of liability may change in the near term. Any payments by reason of an adverse determination in this matter will be charged to earnings in the period of determination.

P5Y

NOTE 16: SUBSEQUENT EVENTS   On November 7, 2012, the Company’s registration statement on Form S-1 (File No. 333-179500) was declared effective by the Securities and Exchange Commission for the Company’s initial public offering. On November 9, 2012, pursuant to Rule 424(b)(4), the Company filed a prospectus for the initial public offering of 800,000 shares of its common stock with the offering price of $5.00 per share. As a result of the initial public offering, the Company received net proceeds of $3,455,000 after deducting underwriting discounts and commissions of approximately $545,000.   Management has evaluated subsequent events through December 14, 2012, the date which the consolidated financial statements were available to be issued. All subsequent events requiring recognition as of September 30, 2012 have been incorporated into these consolidated financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events”.

Prepaid expenses consisted of the following:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 30, 2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31, 2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 70%;">Prepaid payroll taxes</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">36,083</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">-</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Prepaid insurances</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,472</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">14,146</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Prepaid hardware/software maintenance and support service fee</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,420</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">12,850</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Prepaid rent</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">4,188</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">39,975</td> <td style="text-align: left; padding-bottom: 2.5pt;"></td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">31,184</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

NOTE 4: PREPAID EXPENSES   Prepaid expenses consisted of the following:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 30, 2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31, 2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 70%;">Prepaid payroll taxes</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">36,083</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">-</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Prepaid insurances</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,472</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">14,146</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Prepaid hardware/software maintenance and support service fee</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,420</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">12,850</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Prepaid rent</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">4,188</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">39,975</td> <td style="text-align: left; padding-bottom: 2.5pt;"></td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">31,184</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> 12850 1420

36083

14146

2472

4188

NOTE 15: ASSET PURCHASE   On September 30, 2012, the Company entered into an asset purchase agreement with Acueity Healthcare, Inc (“Acueity”) to acquire substantially all of the assets of Acueity. Through the asset purchase, the Company acquired six 510(k) FDA cleared patents, 35 issued patents (18 issued in the U.S. and 17 issued in foreign countries) and 41 patent applications (32 in the U.S. and 9 in foreign countries), and cash in the amount of $400,000; no liabilities were assumed in the transaction. In consideration for the assets, the Company issued 862,500 shares of common stock, valued at $5.00 per share, the offering price listed on the prospectus filed pursuant to Rule 424(b)(4) on November 9, 2012 (see Note 16), and warrants to purchase up to 325,000 shares of common stock at an exercise price of $5.00 per share, to the shareholders of Acueity, subject to a six-month lock up agreement. The warrants, which have a five-year term, do not have a cashless exercise provision. The warrants were valued at $2.3457 per warrant, using a Black-Scholes-Merton Valuation Technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk-free rates) necessary to determine the fair value of the warrants (see Note 10). There are no future financial obligations from the Company to Acueity from the commercialization of the acquired assets.

NOTE 12: CONCENTRATION OF CREDIT RISK   Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At September 30, 2012 and December 31, 2011, the Company had $418,570 and $2,660,821 in excess of the FDIC insured limit, respectively.

NOTE 9: ACCRUED EXPENSES   Accrued expenses consisted of the following:   <table align="center" style="width: 95%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 30, 2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31, 2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 64%;">Accrued expenses</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">1,744,555</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">201,113</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Accrued bonus payable</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">135,239</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">153,830</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Accrued payroll tax liabilities</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">7,951</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">87,386</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Accrued interest</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">599</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1,888,344</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">442,329</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

NOTE 5: RENTAL DEPOSITS   Rental deposits amounted to $1,500 and $2,200 as of September 30, 2012 and December 31, 2011, respectively, mainly consisted of the security deposits for office leases. The rental deposit in the amount of $1,500 as of September 30, 2012 consisted of one office lease with the lease term from April 1, 2011 to March 31, 2013 (see Note 13). The rental deposits of $2,200 as of December 31, 2012 consisted of two office leases separate from the one as of September 30, 2012, and the lease terms were from July 11, 2011 to July 31, 2012 and from October 1, 2011 to March 31, 2012 (see Note 13). Both were terminated on July 31, 2012 and March 31, 2012, respectively and were not renewed, and the security deposits have been received in full amount as of September 30, 2012. NOTE 8: LINE OF CREDIT   In June 2011, the Company entered into a commercial line of credit agreement with JPMorgan Chase Bank. The term of the loan started from June 28, 2011 with maturity date on June 28, 2012. On July 23, 2012, the Company entered into a business loan extension agreement with JPMorgan Chase Bank to extend the loan for three months from the original maturity date. The line of credit agreement provides for borrowings up to $1,000,000. The adjustable interest rate is a rate per annum equal to the sum of an index, which is the LIBOR Rate plus 1.914 percentage point(s). The outstanding balance of the line of credit was $250,000 and $1,000,000 as of September 30, 2012 and December 31, 2011, respectively. The adjustable annual interest rate for the line of credit was 2.9138% and 2.2070% as of September 30, 2012 and December 31, 2011, respectively. On October 22, 2012, the Company paid off the line of credit in full amount.   As of September 30, 2012 and December 31, 2011, $250,000 and $1,000,000 of cash was restricted as collateral for the commercial line of credit, respectively. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 74%;" nowrap="nowrap"> </td> <td style="border-bottom: windowtext 1pt solid; width: 26%;" nowrap="nowrap"> Useful Life (in years) </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: justify;">Machinery and equipment</td> <td style="text-align: center;">5</td> </tr> </table>

Property, plant and equipment consisted of the following:   <table align="center" style="width: 90%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 30, 2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31, 2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 64%;">Machinery and equipment</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">86,465</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">86,465</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Less:  Accumulated depreciation</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(18,968</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(5,998</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Property, plant, and equipment, net</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">67,497</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">80,467</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

50466

4674853

9625

22241

86465

5998

18968

3920

12970

376841

371341

360100

360019

2874758

2010-12-31

2012-06-28

500000

The adjustable interest rate is a rate per annum equal to the sum of an index, which is the LIBOR Rate plus 1.914 percentage point(s)

0.022070

0.029138

Intangible assets consisted of the following:   <table align="center" style="width: 90%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 30,</td> <td style="font-weight: bold;" nowrap="nowrap"> </td> <td style="font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31,</td> <td style="font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">2011</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 64%;">Software</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">50,466</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">50,466</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Patents</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,674,853</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Less: Accumulated amortization</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(22,241</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(9,625</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">4,703,078</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">40,841</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

Future estimated amortization expenses as of September 30, 2012 for the five succeeding years is as follows:   <table align="center" style="width: 85%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: bold;">As of September 30,</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">Amounts</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 77%;">2013</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 20%;">376,841</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2014</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">371,341</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2015</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">360,100</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2016</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">360,019</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2017</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">360,019</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Thereafter</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">2,874,758</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">4,703,078</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

P3Y

P9Y

P14Y

5500

12616

Accrued expenses consisted of the following:   <table align="center" style="width: 95%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 30, 2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31, 2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 64%;">Accrued expenses</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">1,744,555</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">201,113</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Accrued bonus payable</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">135,239</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">153,830</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Accrued payroll tax liabilities</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">7,951</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">87,386</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Accrued interest</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">599</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1,888,344</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">442,329</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

201113 1744555

153830

135239

87386

7951

439

8959

599

5256800

788520

325000

1.6

1.25

5.00

1.25

6.00

1.25

0.906

5.00

7.00

0.906

5.00

P6Y

P3Y3M29D

P5Y7M24D

P5Y

P5Y3M22D

P5Y

0.0249

0.0112

0.0103

0.0108

0.0089

0.0226

0.0062

0.5355

0.5421

0.5859

0.539

0.6246

0.5412

0.5654

NOTE 14: RELATED PARTY TRANSACTIONS   Loans from Officer   On May 26, 2009, the Company borrowed $5,000 from its Chairman of the Board and Chief Executive Officer as a short-term, unsecured loan via verbal agreement and did not bear any interest. Commencing June 30, 2010, the loan was converted into a written Promissory Note bearing an annual interest rate of 10%, with a maturity date of December 31, 2010. This note was repaid in full on May 16, 2011 including approximately $439 of accrued interest.   On June 30, 2010, the Company borrowed an additional $100,000 from its Chairman of the Board and Chief Executive Officer pursuant to a promissory note. The loan under the note was funded to the Company on July 12, 2010. The note bears a 10% interest rate per annum and carries a $4,000 loan origination fee which is accreted to the loan balance throughout the life of the loan. The $4,000 loan origination fee was fully accreted to the loan balance as of March 31, 2011 and December 31, 2010, and recorded as interest expense for the year ended December 31, 2010. This note (including the $4,000 origination fee) was repaid in full on May 19, 2011 including approximately $8,959 in accrued interest.   On November 3, 2010, the Company entered into a line of credit agreement for borrowing up to $500,000 from its Chairman of the Board and Chief Executive Officer pursuant to a promissory note. The note bears a 10% interest rate per annum. An aggregate of $140,000 was funded to the Company under the line of credit as of March 31, 2011 which was repaid on May 31, 2011, including approximately $6,093 in accrued interest. As of December 31, 2011, the unpaid principal balance drawn from the line of credit was $5,078, which was fully repaid on March 31, 2012.   On July 30, 2012, the Company entered into a line of credit agreement for borrowing up to $500,000 from its Chairman of the Board and Chief Executive Officer pursuant to a promissory note. The note bears a 12% interest rate per annum. An aggregate of $79,300 was funded to the Company under the line of credit as of September 30, 2012, and the accrued interest was $1,153 as of September 30, 2012. The principal balance of $79,300 was fully repaid on October 11, 2012.   Exclusive License Agreement   On July 27, 2009, the Company entered into an exclusive license agreement with Ensisheim Partners LLC (“Ensisheim”), an entity solely owned by the Chairman and Chief Executive Officer of the Company and the Chief Technology Officer of the Company, who is also the Company’s Chairman and CEO’s wife. Pursuant to that agreement, Ensisheim granted the Company an exclusive, worldwide, perpetual, irrevocable, royalty-bearing, license to the MASCT System, with the right to grant and authorize sublicenses. The license agreement provided that the Company would pay Ensisheim a royalty equal to 2% of net sales revenue, with a minimum royalty of $12,500 per fiscal quarter during the term of the agreement, which would have increased to a minimum royalty of $25,000 per fiscal quarter beginning in the quarter in which the first commercial sale of a licensed product would have taken place. From inception through December 31, 2010, the Company had incurred $16,250 in patent-related expenses under the license agreement with Ensisheim.   On June 17, 2010, the Company and Ensisheim entered into an Assignment Agreement, whereby Ensisheim assigned to the Company all rights to the patents and patent applications underlying the MASCT System. Pursuant to the assignment, the Company will have all responsibility for prosecution, maintenance, and enforcement and will indemnify Ensisheim from any and all claims against the patent estate. Ensisheim retained no residual rights with respect to the patents and patent applications. In conjunction with the assignment, the Company terminated the exclusive license agreement between the Company and Ensisheim dated July 27, 2009. As a result of the termination, the Company has no further obligations with respect to royalty payments to Ensisheim due under the old licensing agreement. As a result, the $12,500 of patent royalty payable to Ensisheim recorded as accrued royalty payable at December 31, 2009 has been reversed through royalty expense during the second quarter of 2010.   Commercial Lease Agreement   On December 24, 2009, the Company entered into a commercial lease agreement with Ensisheim for office space located in Seattle, Washington. The lease provided for annual rent of $13,200, plus applicable sales tax. From inception through December 31, 2009, the Company incurred $248 of rent expense for the lease with security deposit of $1,100. For the period of January 1, 2010 through June 30, 2010, the Company incurred $6,600 of rent expense for the lease. On July 15, 2010 the Company and Ensisheim terminated the lease, effective July 1, 2010 and the Company commenced use of the facility rent free until April 1, 2011 when the commercial lease agreement the Company entered into with Sanders Properties, LLC became effective (see Note 13). The $1,100 security deposit paid to Ensisheim was received as of September 30, 2012.   Executive Compensation   On May 19, 2010, the Company entered into employment agreements with three executives, including its Chief Executive Officer, its former President, and its Chief Technology Officer. The annual base salaries under each agreement were calculated based on combined consideration of the success of capital raise and the operating results of the Company, and capped at $360,000, $350,000, and $250,000, respectively for the three executives.   On July 22, 2010, in connection with the resignation and departure of Robert L. Kelly, the President and a director, the Company entered into a consulting agreement with a limited liability company controlled by Mr. Kelly. Under the agreement, the Company was to receive consulting services relating to capital raising and investor relations. The agreement was terminated by the Company in September 2010, through which time a total of $30,000 consulting expense had been paid.   On July 22, 2010, the Company restated and amended the employment agreements with its CEO and CTO. The agreements modified the base annual salary amounts to $250,000 and $200,000, respectively, effective retroactively to May 19, 2010. For the year ended December 31, 2011, the total amount of salaries and bonuses of the CEO and CTO was $693,048, of which $492,095 was recorded to research and development expense. For the nine months ended September 30, 2012, salaries and bonuses of CEO and CTO amounted to $269,438 and $200,550, of which $134,719 and $200,550 were recorded to research and development expense, respectively.   Share-Based Compensation   The amended employment agreement with the CEO, entered into on July 22, 2010, granted options to purchase 250,000 shares (or 565,830 shares prior to the reverse stock-split on September 28, 2010) at a price of $5.00 per share, in consideration of his service to the Company. Of these options, 25% (or 62,500 shares) vested on December 31, 2010 with the remaining 75% (or 187,500 shares) to vest in equal quarterly installments over the next three years so long as the executive remains employed with the company. These options have five-year contractual terms.   The amended employment agreement with the CTO, entered into on July 22, 2010, granted options to purchase 100,000 shares (or 226,332 shares prior to the reverse stock-split on September 28, 2010) at a price of $5.00 per share in consideration of her service to the Company. Of these options, 25% (or 25,000 shares) vested on December 31, 2010 with the remaining 75% (or 75,000 shares) to vest in equal quarterly installments over the next three years so long as the executive remains employed with the company. These options have five-year contractual terms.   On April 4, 2011, 45,000 non-qualified stock options were granted under the 2010 Stock Option and Incentive Plan to Dr. Tim Hunkapiller for being a member of the Company’s Scientific Advisory Board and consulting services to be provided to the Company, at an exercise price of $1.25 per share. These options have a ten-year contractual term and shall vest as follows:   <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(i)</td> <td style="text-align: justify;">11,250 option shares shall vest ninety (90) days after the date of grant;</td> </tr> </table> <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(ii)</td> <td style="text-align: justify;">11,000 option shares shall vest one hundred and eighty (180) days after the date of grant;</td> </tr> </table> <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(iii)</td> <td style="text-align: justify;">11,500 option shares shall vest two hundred and seventy (270) days after the date of grant;</td> </tr> </table> <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(iv)</td> <td style="text-align: justify;">11,250 option shares shall vest three hundred and sixty (360) days after the date of grant.</td> </tr> </table>   On September 1, 2011, 219,000 incentive stock options were granted under the 2010 Stock Option and Incentive Plan to employees and officers as part of their employment agreements, at an exercise price of $1.25 per share. These options have a ten-year contractual term and shall vest and become exercisable as follows:   <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(i)</td> <td style="text-align: justify;">twenty-five percent (25%) of the underlying shares on the first anniversary of the date of grant; and</td> </tr> </table> <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(ii)</td> <td style="text-align: justify;">one-forty eighth (1/48) of the underlying shares monthly thereafter.</td> </tr> </table>   On September 1, 2011, 200,000 non-qualified stock options were granted under the 2010 Stock Option and Incentive Plan to non-employee directors for services to be provided to the Company, at an exercise price of $1.25 per share. These options have a ten-year contractual term and shall vest and become exercisable as follows:   <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(i)</td> <td style="text-align: justify;">80,000 option shares shall vest on September 1, 2011;</td> </tr> </table> <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(ii)</td> <td style="text-align: justify;">30,000 options shares shall vest on December 1, 2011;</td> </tr> </table> <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(iii)</td> <td style="text-align: justify;">30,000 options shares shall vest on March 1, 2012;</td> </tr> </table> <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(iv)</td> <td style="text-align: justify;">30,000 options shares shall vest on June 1, 2012;</td> </tr> </table> <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="width: 0.5in;">(v)</td> <td style="text-align: justify;">30,000 options shares shall vest on September 1, 2012.</td> </tr> </table>   On April 30, 2012, 19,757 non-qualified stock options were granted under the 2010 Stock Option and Incentive Plan to non-employee directors for serving as directors of the Company, at an exercise price of $6.00 per share. These options have a ten-year contractual term and shall vest and become exercisable in full immediately as of the grant date.   In accordance with the guidance provided in ASC Topic 718, Stock Compensation (formerly SFAS 123R), the compensation costs associated with these options are recognized, based on the grant-date fair values of these options, over the requisite service period, or vesting period. Accordingly, the Company recognized a compensation expense of $96,251 for the nine months ended September 30, 2012.   The Company estimated the fair value of these options using the Black-Scholes-Merton option pricing model based on the following weighted-average assumptions:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">CEO & CTO</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">Dr. Hunkapiller</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">Employees & Officers</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">Non-employee Directors</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">Non-employee Directors</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Date of grant</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">22-Jul-10</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">4-Apr-11</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1-Sep-11</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1-Sep-11</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">30-Apr-12</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: white; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Fair value of common stock on date of grant</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$ </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">2.756</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(B)</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$ </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.906</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(C)</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$ </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.906</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(C)</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.906</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(C)</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">6.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(D)</td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-indent: -0.1in; padding-left: 0.1in; width: 35%; font-size: 8pt;">Exercise price of the options</td> <td style="width: 1%; font-size: 8pt;"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">5.00</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">1.25</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">1.25</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">1.25</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">6.00</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: white; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Expected life of the options (years)</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">3.33</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">5.31</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">5.65</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">5.65</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">5.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Dividend yield</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> </tr> <tr style="background-color: white; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Expected volatility</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">58.59</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">54.12</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">53.90</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">53.90</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">62.46</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Risk-free interest rate</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1.03</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">2.26</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1.08</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1.08</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.89</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> </tr> <tr style="background-color: white; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Expected forfeiture per year (%)</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap"></td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(A) </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Weighted-average fair value of the options (per unit)</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.6744</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.3729</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.3579</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.3579</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">3.0367</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> </tr> </table>    <table style="width: 100%; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: justify; padding-bottom: 0px; width: 1px; padding-top: 0px;"></td> <td style="text-align: justify; padding-bottom: 0px; width: 20px; padding-top: 0px;">(A)</td> <td style="text-align: left; padding-bottom: 0px; padding-top: 0px;">0.00% for the first year after the grant date, and 2.50% for every three months thereafter.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: justify; padding-bottom: 0px; padding-right: 0px; padding-top: 0px;"></td> <td style="text-align: justify; padding-bottom: 0px; padding-right: 0px; padding-top: 0px;">(B)</td> <td style="text-align: left; padding-bottom: 0px; padding-right: 0px; padding-top: 0px;">The fair value of the Company’s common stock was derived implicitly from the public offering filed in March 2010 at $3.00 per share and from the terms of an underwritten offering contemplated in July 2010 at $6.00 per Unit that was filed in October 2010, with $2.756 per share being allocated to common stock using an iterative approach in order for the combined fair value of the common stock and warrants to equal the amount of consideration to be received in the offering.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: justify; padding-bottom: 0px; padding-top: 0px;"></td> <td style="text-align: justify; padding-bottom: 0px; padding-top: 0px;">(C)</td> <td style="text-align: left; padding-bottom: 0px; padding-top: 0px;">The fair value of the Company’s common stock was derived implicitly from the Private Placement during April through June 2011 at $1.25 per Unit, wherein one Unit was comprised of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $1.60 per share.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: justify; padding-bottom: 0px; padding-top: 0px;"></td> <td style="text-align: justify; padding-bottom: 0px; padding-top: 0px;">(D)</td> <td style="text-align: left; padding-bottom: 0px; padding-top: 0px;">The fair value of the Company’s common stock was derived implicitly from the public offering filed in February 2012 at $6.00 per share.</td> </tr> </table>    In October 2010, the Company filed a Registration Statement on Form S-1 with the SEC. However, the market for early stage investments in medical technology transactions had deteriorated between mid-2010 and early 2011. In addition, the Company’s ability to negotiate with potential investors was limited. The Company’s cash position had also diminished since the summer of 2010 and the founders of the Company were unable to finance the Company at the level needed for growth. The withdrawal of the Registration Statement in February 2011 further weakened the impression of the Company in the market. The fair value of the Company’s common stock decreased from $2.756 in 2010 to $0.906 in 2011 primarily because the grants in 2011 relied on the arm’s-length negotiation of the private placement financing (for illiquid stock) as opposed to relying on an anticipated initial public offering (of publicly-traded stock), as was the case in 2010. The private placement transactions were between the company and over 200 accredited investors and ascribed a value of $0.906 to the Company’s common stock.   Fair value hierarchy of the above assumptions can be categorized as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(1)</td> <td style="width: 95%;">There were no Level 1 inputs.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: center;">(2)</td> <td style="text-align: justify;">Level 2 inputs include:</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Risk-free rate- The risk-free rate of return reflects the interest rate for United States Treasury Note with similar time-to-maturity to that of the options.</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(3)</td> <td style="text-align: justify; width: 95%;">Level 3 inputs include:</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Expected lives- The expected lives of options granted were derived from the output of the option valuation model and represented the period of time that options granted are expected to be outstanding.</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Expected forfeitures per year- The expected forfeitures are estimated at the dates of grant and will be revised in subsequent periods pursuant to actual forfeitures, if significantly different from the previous estimates.</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Expected volatility- We did not have a historical trading history sufficient to develop an internal volatility rate for use in the model.  As a result, as required by ASC 718-10-30, the Company has accounted for the options using the calculated value method.  The Company identified seven public entities in the similar industry for which share price information was available, and considered the historical volatilities of those public entities’ share prices in calculating the expected volatility appropriate to the Company.</td> </tr> </table>   The estimates of fair value from the model are theoretical values of stock options and changes in the assumptions used in the model could result in materially different fair value estimates. The actual value of the stock options will depend on the market value of the Company’s common stock when the stock options are exercised.   Notwithstanding that the fair market value of the Company’s common stock in September 2011 was $0.906 per share, the Company filed a Registration Statement on Form S-1 in February 2012 to offer shares of its common stock at $5.00 to $7.00 per share. This increase in share value is justified by the accomplishments achieved by the Company between September 2011 and February 2012. Specifically, the MASCT System manufacturing had been completed, supplies for the Field Experience Trial were completed and the Company had established an FDA-compliant inventory and warehousing facility. Further, the National Reference Laboratory for Breast Health, the Company’s wholly-owned subsidiary, was established as a Delaware corporation, was equipped and staffed, and the protocols and procedures needed to be a CLIA-registered facility were put in place. Moreover, the ForeCYTE test, which involves cytopathology and five biomarkers of hyperplasia and one biomarker of sample integrity, was completed, tested, and validated to CLIA standards. Computer hardware and software was acquired, set up, made operational, and the ForeCYTE report template, with unique reporting information for the requesting physician and a patient letter template, were created. The company explored and identified a technology for the ArgusCYTE test, negotiated a supply agreement with the supplier, and tested and validated the test. An ArgusCYTE report template was also established and a new reporting scheme invented and a patent application filed.   Further, the Company negotiated the acquisition of the FullCYTE Microcatheter System from Hologics, reestablished the supply chain and began preparing for a commercial launch later in 2012 or early 2013. In doing so, the Company increased its U.S. patent portfolio from 5 to 31 and its total portfolio of patents and applications to over 120. The Hologic patent estate also contains the key patents that permit microcatheter-based intraductal treatment of cancer and pre-cancer. The Company also prepared marketing documents for the launch of the ForeCYTE and ArgusCYTE tests, which occurred in December 2011. The Company launched a clinical trial of the FullCYTE microcatheter to establish the feasibility of performing Next Generation Sequencing on the samples obtained with the microcatheter, negotiated the acquisition of the NextCYTE technology, and is conducting a study of the utility of the technology in providing superior information in the setting of cancer diagnosis and treatment selection.   The Company also established third-party relationships to perform the reimbursement billing in anticipation of the commercial launch and to permit electronic remittance of testing revenue. The Company launched a Field Test Experience limited launch of both the ForeCYTE and ArgusCYTE tests on schedule in December 2011 and has seen significant market acceptance of both tests from the doctors and clinics using the tests. The Company passed a CLIA inspection and became CLIA-certified, has obtained several state licenses and has pending applications in all remaining states where licensure is required. Finally, the Board of Directors and scientific advisory board were each strengthened with the addition of key new executives and scientists.   The Board of Directors considered each of the foregoing achievements, and considered input from the Company’s investment bankers, in determining that the value of the Company supports a valuation of $5.00 to $7.00 per share of the Company’s common stock when the Company filed its initial Registration Statement on Form S-1 in February 2012.   Options issued and outstanding as of September 30, 2012 and their activities during the nine months then ended are as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Number of Underlying Shares</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Weighted- Average Exercise Price Per Share</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Weighted- Average Contractual Life Remaining in Years</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 55%;">Outstanding as of January 1, 2012</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;">608,000</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">3.41</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;"> </td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-left: 9pt;">Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">19,757</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6.00</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-left: 9pt;">Expired</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 1pt; padding-left: 9pt;">Forfeited</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="text-align: right; padding-bottom: 1pt;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="text-align: right; padding-bottom: 1pt;"> </td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Outstanding as of September 30, 2012</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">627,757</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">3.49</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">5.51</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Exercisable as of September 30, 2012</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">508,632</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">3.21</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">6.02</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Vested and expected to vest (1)</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">624,049</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">3.50</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">5.49</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>   (1) Includes vested shares and unvested shares after a forfeiture rate is applied.   As of September 30, 2012 and December 31, 2011, the aggregate intrinsic value of options outstanding, exercisable, and vested and expected to vest was $389,053 and $329,053, respectively.   A summary of the status of the Company’s unvested shares as of September 30, 2012 and changes during the period then ended is presented below:   <table align="center" style="width: 95%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" nowrap="nowrap">Unvested Shares</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Shares</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Weighted- Average Grant- Date Fair Value</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: justify; width: 70%; font-weight: normal;">Unvested as of January 1, 2012</td> <td style="width: 1%; font-weight: normal;"> </td> <td style="text-align: left; width: 1%; font-weight: normal;"> </td> <td style="text-align: right; width: 12%; font-weight: normal;">289,250</td> <td style="text-align: left; width: 1%; font-weight: normal;"> </td> <td style="width: 1%; font-weight: normal;"> </td> <td style="text-align: left; width: 1%; font-weight: normal;">$</td> <td style="text-align: right; width: 12%; font-weight: normal;">159,013</td> <td style="text-align: left; width: 1%; font-weight: normal;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: justify; padding-left: 9pt; font-weight: normal;">Granted</td> <td style="font-weight: normal;"> </td> <td style="text-align: left; font-weight: normal;"> </td> <td style="text-align: right; font-weight: normal;">19,757</td> <td style="text-align: left; font-weight: normal;"> </td> <td style="font-weight: normal;"> </td> <td style="text-align: left; font-weight: normal;"> </td> <td style="text-align: right; font-weight: normal;">60,000</td> <td style="text-align: left; font-weight: normal;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: justify; padding-left: 9pt; font-weight: normal;">Vested</td> <td style="font-weight: normal;"> </td> <td style="text-align: left; font-weight: normal;"> </td> <td style="text-align: right; font-weight: normal;">(189,882</td> <td style="text-align: left; font-weight: normal;">)</td> <td style="font-weight: normal;"> </td> <td style="text-align: left; font-weight: normal;"> </td> <td style="text-align: right; font-weight: normal;">(141,761</td> <td style="text-align: left; font-weight: normal;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: justify; padding-bottom: 1pt; padding-left: 9pt; font-weight: normal;">Forfeited</td> <td style="padding-bottom: 1pt; font-weight: normal;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: normal;"> </td> <td style="border-bottom: black 1pt solid; text-align: right; font-weight: normal;">-</td> <td style="text-align: left; padding-bottom: 1pt; font-weight: normal;"> </td> <td style="padding-bottom: 1pt; font-weight: normal;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: normal;"> </td> <td style="border-bottom: black 1pt solid; text-align: right; font-weight: normal;">-</td> <td style="text-align: left; padding-bottom: 1pt; font-weight: normal;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: justify; padding-bottom: 2.5pt; font-weight: normal;">Unvested as of September 30, 2012</td> <td style="padding-bottom: 2.5pt; font-weight: normal;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; font-weight: normal;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right; font-weight: normal;">119,125</td> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: normal;"> </td> <td style="padding-bottom: 2.5pt; font-weight: normal;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; font-weight: normal;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; font-weight: normal;">77,252</td> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: normal;"> </td> </tr> </table>

2010-07-22 2011-09-01 2011-09-01 2012-04-30 2011-04-04 0.00 0.00 0.00 0.00 0.00 0.6744 0.3579 0.3579 3.0367 0.3729

3.00

6.00

2.756

0.906

0.00

85000000

608000

627757

100000

565830

226332

219000

45000

219000

200000

19757

508632

25000

624049

3.41

3.49

3.21

3.5

P5Y6M4D

P6Y0M7D

P5Y5M26D

53020 120000 0.10 0.03

289250

119125

19757

-189882

1-for-2.26332

1767316

1325487

883662

39765

883658

866007

13255

35346

24000

18000

12000

540

100000

98000

6000

4000

0.014

0.11

5.00

132549

862500

800000

15000

13256

862500

5256800

788520

325000

1.25

6571000

857230

1.60 1.25 5.00

1808025

228712

267164

762353

1000000

2263320

159013 77252 60000 -141761 0

5000

0.10

100000

4000

6093 1153

0.10

0.12

140000

79300

5078

79300

0.02 12500 25000 16250 13200 1100

248

6600

38403

9900

4200

8400

161424

360000 350000 250000 250000 200000 693048 492095 269438 200550 134719 200550

(i) 11,250 option shares shall vest ninety (90) days after the date of grant; (ii) 11,000 option shares shall vest one hundred and eighty (180) days after the date of grant; (iii) 11,500 option shares shall vest two hundred and seventy (270) days after the date of grant; (iv) 11,250 option shares shall vest three hundred and sixty (360) days after the date of grant.

(i) twenty-five percent (25%) of the underlying shares on the first anniversary of the date of grant; and (ii) one-forty eighth (1/48) of the underlying shares monthly thereafter.

(i) 80,000 option shares shall vest on September 1, 2011; (ii) 30,000 options shares shall vest on December 1, 2011; (iii) 30,000 options shares shall vest on March 1, 2012; (iv) 30,000 options shares shall vest on June 1, 2012; (v) 30,000 options shares shall vest on September 1, 2012.

P10Y

P5Y

P10Y

0.00% for the first year after the grant date, and 2.50% for every three months thereafter.

329053

389053

329053

389053

329053

389053

A summary of the status of the Company’s unvested shares as of September 30, 2012 and changes during the period then ended is presented below:   <table align="center" style="width: 95%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" nowrap="nowrap">Unvested Shares</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Shares</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Weighted- Average Grant- Date Fair Value</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: justify; width: 70%; font-weight: normal;">Unvested as of January 1, 2012</td> <td style="width: 1%; font-weight: normal;"> </td> <td style="text-align: left; width: 1%; font-weight: normal;"> </td> <td style="text-align: right; width: 12%; font-weight: normal;">289,250</td> <td style="text-align: left; width: 1%; font-weight: normal;"> </td> <td style="width: 1%; font-weight: normal;"> </td> <td style="text-align: left; width: 1%; font-weight: normal;">$</td> <td style="text-align: right; width: 12%; font-weight: normal;">159,013</td> <td style="text-align: left; width: 1%; font-weight: normal;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: justify; padding-left: 9pt; font-weight: normal;">Granted</td> <td style="font-weight: normal;"> </td> <td style="text-align: left; font-weight: normal;"> </td> <td style="text-align: right; font-weight: normal;">19,757</td> <td style="text-align: left; font-weight: normal;"> </td> <td style="font-weight: normal;"> </td> <td style="text-align: left; font-weight: normal;"> </td> <td style="text-align: right; font-weight: normal;">60,000</td> <td style="text-align: left; font-weight: normal;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: justify; padding-left: 9pt; font-weight: normal;">Vested</td> <td style="font-weight: normal;"> </td> <td style="text-align: left; font-weight: normal;"> </td> <td style="text-align: right; font-weight: normal;">(189,882</td> <td style="text-align: left; font-weight: normal;">)</td> <td style="font-weight: normal;"> </td> <td style="text-align: left; font-weight: normal;"> </td> <td style="text-align: right; font-weight: normal;">(141,761</td> <td style="text-align: left; font-weight: normal;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: justify; padding-bottom: 1pt; padding-left: 9pt; font-weight: normal;">Forfeited</td> <td style="padding-bottom: 1pt; font-weight: normal;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: normal;"> </td> <td style="border-bottom: black 1pt solid; text-align: right; font-weight: normal;">-</td> <td style="text-align: left; padding-bottom: 1pt; font-weight: normal;"> </td> <td style="padding-bottom: 1pt; font-weight: normal;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: normal;"> </td> <td style="border-bottom: black 1pt solid; text-align: right; font-weight: normal;">-</td> <td style="text-align: left; padding-bottom: 1pt; font-weight: normal;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: justify; padding-bottom: 2.5pt; font-weight: normal;">Unvested as of September 30, 2012</td> <td style="padding-bottom: 2.5pt; font-weight: normal;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; font-weight: normal;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right; font-weight: normal;">119,125</td> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: normal;"> </td> <td style="padding-bottom: 2.5pt; font-weight: normal;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; font-weight: normal;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; font-weight: normal;">77,252</td> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: normal;"> </td> </tr> </table>

The Company estimated the fair value of these options using the Black-Scholes-Merton option pricing model based on the following weighted-average assumptions:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">CEO & CTO</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">Dr. Hunkapiller</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">Employees & Officers</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">Non-employee Directors</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-size: 8pt; font-weight: bold;" colspan="2" nowrap="nowrap">Non-employee Directors</td> <td style="text-align: center; padding-bottom: 1pt; font-size: 8pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Date of grant</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">22-Jul-10</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">4-Apr-11</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1-Sep-11</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1-Sep-11</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">30-Apr-12</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: white; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Fair value of common stock on date of grant</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$ </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">2.756</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(B)</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$ </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.906</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(C)</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$ </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.906</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(C)</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.906</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(C)</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">6.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(D)</td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-indent: -0.1in; padding-left: 0.1in; width: 35%; font-size: 8pt;">Exercise price of the options</td> <td style="width: 1%; font-size: 8pt;"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">5.00</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">1.25</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">1.25</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">1.25</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; width: 10%; font-size: 8pt;" nowrap="nowrap">6.00</td> <td style="text-align: left; width: 1%; font-size: 8pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: white; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Expected life of the options (years)</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">3.33</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">5.31</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">5.65</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">5.65</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">5.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Dividend yield</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> </tr> <tr style="background-color: white; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Expected volatility</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">58.59</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">54.12</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">53.90</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">53.90</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">62.46</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Risk-free interest rate</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1.03</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">2.26</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1.08</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">1.08</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.89</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> </tr> <tr style="background-color: white; font-size: 8pt; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Expected forfeiture per year (%)</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap"></td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">(A) </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.00</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">%</td> </tr> <tr style="background-color: #ccffcc; font-size: 8pt; vertical-align: bottom;"> <td style="text-indent: -0.1in; padding-left: 0.1in; font-size: 8pt;">Weighted-average fair value of the options (per unit)</td> <td style="font-size: 8pt;"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.6744</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.3729</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.3579</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">0.3579</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> <td style="font-size: 8pt;" nowrap="nowrap"> </td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap">$</td> <td style="text-align: right; font-size: 8pt;" nowrap="nowrap">3.0367</td> <td style="text-align: left; font-size: 8pt;" nowrap="nowrap"> </td> </tr> </table>    <table style="width: 100%; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: justify; padding-bottom: 0px; width: 1px; padding-top: 0px;"></td> <td style="text-align: justify; padding-bottom: 0px; width: 20px; padding-top: 0px;">(A)</td> <td style="text-align: left; padding-bottom: 0px; padding-top: 0px;">0.00% for the first year after the grant date, and 2.50% for every three months thereafter.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: justify; padding-bottom: 0px; padding-right: 0px; padding-top: 0px;"></td> <td style="text-align: justify; padding-bottom: 0px; padding-right: 0px; padding-top: 0px;">(B)</td> <td style="text-align: left; padding-bottom: 0px; padding-right: 0px; padding-top: 0px;">The fair value of the Company’s common stock was derived implicitly from the public offering filed in March 2010 at $3.00 per share and from the terms of an underwritten offering contemplated in July 2010 at $6.00 per Unit that was filed in October 2010, with $2.756 per share being allocated to common stock using an iterative approach in order for the combined fair value of the common stock and warrants to equal the amount of consideration to be received in the offering.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: justify; padding-bottom: 0px; padding-top: 0px;"></td> <td style="text-align: justify; padding-bottom: 0px; padding-top: 0px;">(C)</td> <td style="text-align: left; padding-bottom: 0px; padding-top: 0px;">The fair value of the Company’s common stock was derived implicitly from the Private Placement during April through June 2011 at $1.25 per Unit, wherein one Unit was comprised of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $1.60 per share.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: justify; padding-bottom: 0px; padding-top: 0px;"></td> <td style="text-align: justify; padding-bottom: 0px; padding-top: 0px;">(D)</td> <td style="text-align: left; padding-bottom: 0px; padding-top: 0px;">The fair value of the Company’s common stock was derived implicitly from the public offering filed in February 2012 at $6.00 per share.</td> </tr> </table>

Options issued and outstanding as of September 30, 2012 and their activities during the nine months then ended are as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Number of Underlying Shares</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Weighted- Average Exercise Price Per Share</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Weighted- Average Contractual Life Remaining in Years</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 55%;">Outstanding as of January 1, 2012</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;">608,000</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">3.41</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;"> </td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-left: 9pt;">Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">19,757</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6.00</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-left: 9pt;">Expired</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 1pt; padding-left: 9pt;">Forfeited</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="text-align: right; padding-bottom: 1pt;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="text-align: right; padding-bottom: 1pt;"> </td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Outstanding as of September 30, 2012</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">627,757</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">3.49</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">5.51</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Exercisable as of September 30, 2012</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">508,632</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">3.21</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">6.02</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Vested and expected to vest (1)</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">624,049</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">3.50</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="text-align: right; padding-bottom: 2.5pt;">5.49</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>   (1) Includes vested shares and unvested shares after a forfeiture rate is applied.

250000

2660821

418570

3658 1100 600 1400

450000

246296

246575

41096

533967

The future minimum lease payments due subsequent to September 30, 2012 under all non-cancelable operating leases for the next five years are as follows:   <table align="center" style="width: 85%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; text-align: left; font-weight: bold;">As of September 30,</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">Amount</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 77%;">2013</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 20%;">246,296</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2014</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">246,575</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2015</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">41,096</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2016</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2017</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Thereafter</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold;">Total minimum lease payments</td> <td style="padding-bottom: 2.5pt; font-weight: bold;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; font-weight: bold;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; font-weight: bold;">533,967</td> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold;"> </td> </tr> </table>

325000 5.00 P5Y 2.3457

400000

545000

3455000

10-Q false 2012-09-30 ATOSSA GENETICS INC 0001488039 Smaller Reporting Company The following tables reflect assumptions used to determine the fair value of the Warrants:   <table align="center" style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">September 2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" nowrap="nowrap">Fair Value Hierarchy Level</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Acueity Warrants</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 64%;">Indexed shares</td> <td style="width: 1%;"> </td> <td style="text-align: center; width: 17%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 15%;">325,000</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Exercise price</td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">5.00</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Significant assumptions:</td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-left: 9pt;">Stock price</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">5.00</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Remaining term</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">5 years</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Risk free rate</td> <td> </td> <td style="text-align: center;">2</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">0.62</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Expected volatility</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">56.54</td> <td style="text-align: left;">%</td> </tr> </table>   Fair value hierarchy of the above assumptions can be categorized as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(1)</td> <td style="width: 95%;">There were no Level 1 inputs.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: center;">(2)</td> <td style="text-align: justify;">Level 2 inputs include:</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Risk-free rate- The risk-free rate of return reflects the interest rate for United States Treasury Note with similar time-to-maturity to that of the warrants.</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(3)</td> <td style="text-align: justify; width: 95%;">Level 3 inputs include:</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Stock price- The Company’s common stock was not publicly traded at the time the Acueity Warrants were issued.  Therefore, the stock price was determined at the offering price of the then contemplated initial public offering, for which the registration statement on Form S-1 (File No. 333-179500) was subsequently declared effective by the Securities and Exchange Commission on November 7, 2012, and a prospectus was subsequently filed pursuant to Rule 424(b)(4) on November 9, 2012 (see Note 16).</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;"> </td> <td style="text-align: justify;"> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;">·</td> <td style="text-align: justify;">Remaining term- The Company does not have a history to develop the expected term for its warrants.  Accordingly, the Company expected that the Initial Exercise Date to occur within one year from the date of issuance plus the contractual term in the calculations.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;"> </td> <td style="text-align: justify;"> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;">·</td> <td style="text-align: justify;">Expected volatility- We did not have a historical trading history sufficient to develop an internal volatility rate for use in the model.  As a result, as required by ASC 718-10-30, the Company has accounted for the warrants using the calculated value method.  The Company identified seven public entities in the similar industry for which share price information was available, and considered the historical volatilities of those public entities’ share prices in calculating the expected volatility appropriate to the Company.</td> </tr> </table> The following tables reflect assumptions used to determine the fair value of the Warrants:   <table align="center" style="width: 95%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="text-align: center; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">April-June2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">December 2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" nowrap="nowrap">Fair Value Hierarchy Level</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Investor Warrants</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Placement Agent Warrants</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Placement Agent Warrants</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 40%;">Indexed shares</td> <td style="width: 1%;"> </td> <td style="text-align: center; width: 14%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;">5,256,800</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;">788,520</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 12%;">788,520</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Exercise price</td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.60</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.60</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.25</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Significant assumptions:</td> <td> </td> <td style="text-align: center;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-left: 9pt;">Stock price</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">0.906</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">0.906</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">0.906</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Remaining term</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6 years</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6 years</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6 years</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Risk free rate</td> <td> </td> <td style="text-align: center;">2</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2.49</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1.12</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1.12</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-left: 9pt;">Expected volatility</td> <td> </td> <td style="text-align: center;">3</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">53.55</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">54.21</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">54.21</td> <td style="text-align: left;">%</td> </tr> </table>   Fair value hierarchy of the above assumptions can be categorized as follows:   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(1)</td> <td style="width: 95%;">There were no Level 1 inputs.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: center;"> </td> <td> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: center;">(2)</td> <td style="text-align: justify;">Level 2 inputs include:</td> </tr> </table>   <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%; font-family: symbol;">·</td> <td style="text-align: justify; width: 90%;">Risk-free rate- The risk-free rate of return reflects the interest rate for United States Treasury Note with similar time-to-maturity to that of the warrants.</td> </tr> </table>    <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: center; width: 5%;">(3)</td> <td style="text-align: justify; width: 95%;">Level 3 inputs include:</td> </tr> </table>    <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="text-align: right; width: 5%;"> </td> <td style="text-align: center; width: 5%;">·</td> <td style="text-align: justify; width: 90%;">Stock price- The Company’s common stock was not publicly traded at the time the Warrants were issued.  Therefore, the stock price was determined implicitly from an iterative process in order for the combined fair value of the common stock and the warrants to equal the amount of proceeds received in the Private Placement, based upon the assumption that the Private Placement was the result of an arm’s length transaction.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;"> </td> <td style="text-align: justify;"> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;">·</td> <td style="text-align: justify;">Remaining term- The Company does not have a history to develop the expected term for its warrants.  Accordingly, the Company expected that the Initial Exercise Date to occur within one year from the date of issuance plus the contractual term in the calculations.</td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;"> </td> <td style="text-align: justify;"> </td> </tr> <tr style="vertical-align: top;"> <td style="text-align: right;"> </td> <td style="text-align: center;">·</td> <td style="text-align: justify;">Expected volatility- We did not have a historical trading history sufficient to develop an internal volatility rate for use in the model.  As a result, as required by ASC 718-10-30, the Company has accounted for the warrants using the calculated value method.  The Company identified seven public entities in the similar industry for which share price information was available, and considered the historical volatilities of those public entities’ share prices in calculating the expected volatility appropriate to the Company.</td> </tr> </table>

2013-03-31

2012-07-31

2012-03-31

2014-11-30

Stock price- The Company's common stock was not publicly traded at the time the Warrants were issued. Therefore, the stock price was determined implicitly from an iterative process in order for the combined fair value of the common stock and the warrants to equal the amount of proceeds received in the Private Placement, based upon the assumption that the Private Placement was the result of an arm's length transaction. Stock price- The Company's common stock was not publicly traded at the time the Acueity Warrants were issued. Therefore, the stock price was determined at the offering price of the then contemplated initial public offering, for which the registration statement on Form S-1 (File No. 333-179500) was subsequently declared effective by the Securities and Exchange Commission on November 7, 2012, and a prospectus was subsequently filed pursuant to Rule 424(b)(4) on November 9, 2012 (see Note 16). Remaining term- The Company does not have a history to develop the expected term for its warrants. Accordingly, the Company expected that the Initial Exercise Date to occur within one year from the date of issuance plus the contractual term in the calculations. Risk-free rate- The risk-free rate of return reflects the interest rate for United States Treasury Note with similar time-to-maturity to that of the warrants. Expected volatility- We did not have a historical trading history sufficient to develop an internal volatility rate for use in the model. As a result, as required by ASC 718-10-30, the Company has accounted for the warrants using the calculated value method. The Company identified seven public entities in the similar industry for which share price information was available, and considered the historical volatilities of those public entities' share prices in calculating the expected volatility appropriate to the Company. 0.00% for the first year after the grant date, and 2.50% for every three months thereafter. The fair value of the Company's common stock was derived implicitly from the public offering filed in March 2010 at $3.00 per share and from the terms of an underwritten offering contemplated in July 2010 at $6.00 per Unit that was filed in October 2010, with $2.756 per share being allocated to common stock using an iterative approach in order for the combined fair value of the common stock and warrants to equal the amount of consideration to be received in the offering. The fair value of the Company's common stock was derived implicitly from the Private Placement during April through June 2011 at $1.25 per Unit, wherein one Unit was comprised of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $1.60 per share. The fair value of the Company's common stock was derived implicitly from the public offering filed in February 2012 at $6.00 per share. Includes vested shares and unvested shares after a forfeiture rate is applied. 0001488039us-gaap:SubsequentEventMember2012-01-012012-09-30 0001488039us-gaap:SubsequentEventMember2012-09-30 1 0001488039atos:InvestorWarrantsMember2011-12-31 0001488039atos:LeaseAgreement2010Member2012-01-012012-09-30 0001488039atos:LeaseAgreementMarch2011Memberatos:SandersPropertiesLlcMember2012-01-012012-09-30 0001488039atos:LeaseAgreementJuly2011Memberatos:SandersPropertiesLlcMember2012-01-012012-09-30 0001488039atos:LeaseAgreementSeptember2011Memberatos:SandersPropertiesLlcMember2011-10-012012-03-31 0001488039atos:LeaseAgreementDecember2011Memberatos:FredHutchinsonResearchCenterMember2012-01-012012-09-30 0001488039atos:LeaseAgreement2010Memberatos:ComplegenIncMember2010-09-012010-09-29 2012 Q3 atos --12-31 00014880392012-07-012012-07-23

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Property, Plant and Equipment, Net Total Fixed Assets Total Fixed Assets Total Fixed Assets Property, plant, and equipment, net Other Assets, Noncurrent [Abstract] Other Assets Security Deposit Security Deposit Security deposit Finite-Lived Intangible Assets, Net Intangible assets, net Intangible assets, net Other Assets, Noncurrent Total Other Assets Total Other Assets Total Other Assets Assets Total Assets Total Assets Total Assets Liabilities and Equity [Abstract] Liabilities and Stockholders' Equity Line of Credit, Current Line of Credit Accounts Payable, Current Accounts payable Accrued Liabilities, Current Accrued expenses Accrued Liabilities, Current Notes Payable, Related Parties Note payable - related party Liabilities, Current Total Current Liabilities Total Current Liabilities Total Current Liabilities Stockholders' Equity Attributable To Parent [Abstract] Stockholders' Equity Preferred Stock, Value, Issued Preferred stock - $.001 par value; 10,000,000 shares authorized, 0 shares issued and outstanding Common Stock, Value, Issued Common stock - $.001 par value; 75,000,000 shares authorized, 12,119,367 shares issued and outstanding Additional Paid In Capital Additional paid-in capital Retained Earnings (Accumulated Deficit) Accumulated deficit Stockholders' Equity Attributable To Parent Total Stockholders' Equity (Deficit) Total Stockholders' Equity (Deficit) Total Stockholders' Equity (Deficit) Liabilities and Equity Total Liabilities and Stockholders' Equity Total Liabilities and Stockholders' Equity Total Liabilities and Stockholders' Equity Preferred Stock, Par or Stated Value Per Share Preferred stock, par value (in dollars per share) Preferred Stock, Shares Authorized Preferred stock, shares authorized Preferred Stock, Shares Issued Preferred stock, shares issued Preferred Stock, Shares Outstanding Preferred stock, shares outstanding Common Stock, Par or Stated Value Per Share Common stock, par value (in dollars per share) Common Stock, Shares Authorized Common stock, shares authorized Common Stock, Shares, Issued Common stock, shares issued Common Stock, Shares Outstanding Common stock, shares outstanding Income Statement [Abstract] Income Statement [Abstract] Revenues [Abstract] Revenue Diagnostic Testing Service Diagnostic Testing Service Aggregate revenue during the period for services rendered in the normal course of business which are not otherwise defined in the taxonomy. Product Sales Product Sales Aggregate revenue during the period for product sales rendered in the normal course of business which are not otherwise defined in the taxonomy. Revenue, Net Total Revenue Total Revenue Cost Of Revenue [Abstract] Cost of Revenue Cost Of Services Diagnostic Testing Service Diagnostic Testing Service Cost Of Goods Sold Product Sales Product Sales Cost Of Revenue Total Cost of Revenue Total Cost of Revenue Total Cost of Revenue Total Cost of Revenue Loss on Reduction of Inventory Loss on reduction of inventory to LCM Loss incurred on reduction of inventory to lower of cost or market. Loss on Reduction of Inventory to LCM Gross Profit Gross Profit Gross Profit Selling Expense Selling expenses General and Administrative Expense General and Administrative expenses Operating Expenses Total operating expenses Total operating expenses Operating Income (Loss) Operating Loss Investment Income, Interest Interest Income Interest Expense Interest Expense Interest Expense Income (Loss) From Continuing Operations Before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest Net Loss before Income Taxes Net Loss before Income Taxes Income Tax Expense (Benefit) Income Taxes Net Income (Loss) Attributable To Parent Net loss Net Loss Net loss Earnings Per Share, Basic and Diluted Loss per common share - basic and diluted (in dollars per share) Weighted Average Number Of Shares Outstanding, Basic and Diluted Weighted average shares outstanding, basic & diluted (in shares) Statement Of Cash Flows [Abstract] Statement of Cash Flows [Abstract] Net Cash Provided By (Used In) Operating Activities [Abstract] CASH FLOWS FROM OPERATING ACTIVITIES Common Shares Issued For Services Common shares issued for services The value of common shares issued for services. Share-Based Compensation Share-based Compensation Compensation cost for stock options granted Loan Initiation Fee Accrued For Notes Payable Loan initiation fee accrued for notes payable The amount of loan initiation fee accrued for notes payable. Depreciation, Depletion and Amortization Depreciation and amortization Adjustments To Reconcile Net Income (Loss) To Cash Provided By (Used In) Operating Activities [Abstract] Adjustments to reconcile net loss to net cash provided by operating activities: Increase (Decrease) In Accounts Receivable Increase in accounts receivable Increase in accounts receivable Increase (Decrease) In Inventories Increase in inventory Increase in inventory Increase (Decrease) In Prepaid Expense Increase in prepaid expenses Increase in prepaid expenses Increase (Decrease) In Security Deposits Increase in security deposits Increase (Decrease) In Accounts Payable Increase (decrease) in accounts payable Increase Decrease In Accrued Payroll Decrease in accrued payroll The increase (decrease) during the period in accrued payroll. Increase (Decrease) In Accrued Liabilities Increase (decrease) in accrued expenses Net Cash Provided By (Used In) Operating Activities Net cash used in operating activities Net cash used in operating activities Net Cash Provided By (Used In) Investing Activities [Abstract] CASH FLOWS FROM INVESTING ACTIVITIES Payments To Acquire Furniture and Fixtures Purchase of furniture & fixtures Purchase of furniture & fixtures Payments To Acquire Software Purchase of software Purchase of software Net Cash Provided By (Used In) Investing Activities Net cash used in investing activities Net cash used in investing activities Net Cash Provided By (Used In) Financing Activities [Abstract] CASH FLOWS FROM FINANCING ACTIVITIES Proceeds From Issuance Of Common Stock and Warrants Net proceeds from issuance of common stocks and warrants The cash inflow from the issuance of common stock and warrants. Proceeds From (Repayments Of) Lines Of Credit (Repayments of) Proceeds from bank line of credit Proceeds From (Repayments Of) Related Party Debt Proceeds from (repayments of) loans from related parties Proceeds From Repayments Of Commercial Line Of Credit Cash released from (restricted for) commercial line of credit The net cash inflow or outflow from commercial line of credit. Net Cash Provided By (Used In) Financing Activities Net cash provided by financing activities Net cash provided by financing activities Cash and Cash Equivalents, Period Increase (Decrease) NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS Supplemental Cash Flow Elements [Abstract] SUPPLEMENTAL DISCLOSURES: Interest Paid Interest paid Income Taxes Paid, Net Income taxes paid Income taxes paid Noncash Investing and Financing Items [Abstract] NONCASH INVESTING AND FINANCING ACTIVITIES: Common Stock and Warrants Issued For Assets Purchase Common stock and warrants issued for assets purchase The value of common stock and warrants issued for assets purchase in noncash investing or financing activities. Options Issued For Previously Accrued Director Compensation Options issued for previously accrued director compensation Options issued for previously accrued director compensation The value of options issued for previously accrued director compensation in noncash investing or financing activities. Organization, Consolidation and Presentation of Financial Statements [Abstract] Organization, Consolidation and Presentation of Financial Statements [Abstract] Nature Of Operations [Text Block] Nature of Operations [Text Block] Going Concern Disclosure [Abstract] Going Concern Disclosure [Abstract] Going Concern Disclosure [Text Block] The entire disclosure for going concern. Going Concern Disclosure [Text Block] Accounting Policies [Abstract] Accounting Policies [Abstract] Significant Accounting Policies [Text Block] Significant Accounting Policies [Text Block] Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block]