Correction of an error

12 Months Ended

Dec. 31, 2011

Correction of an error

14.   Correction of an error

During the fourth quarter of 2011, management reevaluated the Company’s method for estimating the accounts receivable allowance for doubtful accounts associated with Medicare and Private Payor sales. Historically, the Company’s policy was to record a write-off of accounts receivable aged greater than one-year from the date of being billed. Management evaluated the historical collection patterns of receivables for Medicare and Private Payors and built a model to relate the collection of accounts receivables to the period of sale in order to establish an estimation of the amount of every accounts receivable dollar that was collected. Based upon this model, management concluded that an allowance for doubtful accounts was required for the 2011 and 2010 annual periods, and in each of the quarterly periods included therein.. Since an allowance for doubtful accounts was not originally recorded in each of these periods, management concluded there was an error and evaluated the effect of not recording an allowance for doubtful accounts in each of the annual periods, and the quarterly periods included therein in accordance with the SEC’s Staff Accounting Bulletin (SAB) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statement. Management evaluated the materiality of the errors from qualitative and quantitative perspectives and concluded that the error was not material to any prior periods.   The correction of the error in the current period was material to the 2011 fourth quarter financial statements but was not material to the results of operations for the year ended December 31, 2010 or 2011or the trend of financial results.  Accordingly, management corrected the error in the fourth quarter of 2011.  The impact of the adjustment to correct the error to the specific line items of the financial statements for the year ended December 31, 2011 was as follows:

	Increase
	(Decrease)
Statement of operations:
Operating loss	$	679,183
Net loss		679,183
Net loss per share – basic and diluted		0.04
Balance Sheet:
Accounts receivable, net of allowance for doubtful accounts		(679,183	)
Total current assets		(679,183	)
Accumulated deficit		679,183

In the course of performing our year-end financial close procedures for the year ended December 31, 2010, management identified a prior period error relating to the recognition of revenue relating to the GSK agreement (see Note 6).  The error related to an understatement of net revenue in the amount $322,469 in the year ended December 31, 2008.  In accordance with the SEC’s Staff Accounting Bulletin (SAB) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, management evaluated the materiality of the errors from qualitative and quantitative perspectives and concluded that the error was not material to any prior periods.   The correction of the error in the current period was material to the 2010 fourth quarter financial statements but was not material to the results of operations for the year ended December 31, 2010 or the trend of financial results.  Accordingly, management corrected the error in the fourth quarter of 2010.  The impact of the adjustment to correct the error to the specific line items of the financial statements for the year ended December 31, 2010 was as follows:

	Increase
	(Decrease)
Statement of operations:
Net revenue	$	322,469
Operating loss		(322,469	)
Net loss		(322,469	)
Net loss per share – basic and diluted		(0.02	)
Balance Sheet:
Deferred revenue	$	(322,469	)
Total liabilities		(322,469	)
Accumulated deficit		(322,469	)