Investment in QN Diagnostics, LLC	6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
Note 4.Investment in QN Diagnostics, LLC	On July 30, 2009, the Company and NuRx jointly formed QND, a Delaware limited liability company. The Company contributed certain intellectual property and other assets related to its lateral flow strip technology and related lateral flow strip reader technology, including the Thyroid Stimulating Hormone Test System, which includes the Company’s Q-Reader™ POC testing product. The fair market value of the contributed assets was approximately $5,450,000, and NuRx contributed $5,000,000 in cash to QND. NuRx and the Company each owned a 50% interest in QND. The purpose of QND was to develop and commercialize products incorporating the lateral flow strip technology and related lateral flow strip readers. QND was managed by a board consisting of two Company designees and two NuRx designees. Subject to certain exceptions, board decisions were made by majority vote, provided that the Company and NuRx had veto rights with respect to certain matters. Since the Company did not have control of QND, the Company accounted for the investment in QND utilizing the equity method of accounting. Under the terms of certain agreements related to QND, QND made a $2.0 million cash distribution to the Company. The Company was committed to further capital contributions to QND, consisting of the transfer of certain fixed assets with a fair value of $100,000 at QND’s discretion, and a $700,000 sustaining capital contribution as required by QND. The Company believed, however, that it had unreimbursed costs and expenses in excess of $800,000 for services provided to or on behalf of QND. As a result, the Company believed it had substantially satisfied its initial sustaining capital contribution requirement. The Company was also required to make certain milestone payments to PRIA Diagnostics, LLC ("PRIA"). During the quarter ended June 30, 2011, however, the Company settled its obligations to PRIA in consideration for the payment to PRIA of $5,000 and the issuance to PRIA of 500,000 shares of the Company's common stock with a deemed value of $15,000. The Company and QND also entered into the Development Agreement, pursuant to which QND was obligated to pay a monthly fee to the Company in exchange for the Company providing all services related to the development, regulatory approval and commercialization of lateral flow products. On July 20, 2010, the Company notified NuRx that NuRx was in material breach of the Development Agreement, and had 60 days from the date of the notification to cure such breach. The notification was related to nonpayment of fees in accordance with the Development Agreement between the Company and QND. Should the breach remain uncured, the Company reserved the right to terminate the Development Agreement.

Investment in QN Diagnostics, LLC

6 Months Ended

Jun. 30, 2011

Note 4.Investment in QN Diagnostics, LLC

On July 30, 2009, the Company and NuRx jointly formed QND, a Delaware limited liability company. The Company contributed certain intellectual property and other assets related to its lateral flow strip technology and related lateral flow strip reader technology, including the Thyroid Stimulating Hormone Test System, which includes the Company’s Q-Reader™ POC testing product. The fair market value of the contributed assets was approximately $5,450,000, and NuRx contributed $5,000,000 in cash to QND. NuRx and the Company each owned a 50% interest in QND. The purpose of QND was to develop and commercialize products incorporating the lateral flow strip technology and related lateral flow strip readers.

QND was managed by a board consisting of two Company designees and two NuRx designees. Subject to certain exceptions, board decisions were made by majority vote, provided that the Company and NuRx had veto rights with respect to certain matters. Since the Company did not have control of QND, the Company accounted for the investment in QND utilizing the equity method of accounting.

Under the terms of certain agreements related to QND, QND made a $2.0 million cash distribution to the Company. The Company was committed to further capital contributions to QND, consisting of the transfer of certain fixed assets with a fair value of $100,000 at QND’s discretion, and a $700,000 sustaining capital contribution as required by QND. The Company believed, however, that it had unreimbursed costs and expenses in excess of $800,000 for services provided to or on behalf of QND. As a result, the Company believed it had substantially satisfied its initial sustaining capital contribution requirement. The Company was also required to make certain milestone payments to PRIA Diagnostics, LLC ("PRIA"). During the quarter ended June 30, 2011, however, the Company settled its obligations to PRIA in consideration for the payment to PRIA of $5,000 and the issuance to PRIA of 500,000 shares of the Company's common stock with a deemed value of $15,000.

The Company and QND also entered into the Development Agreement, pursuant to which QND was obligated to pay a monthly fee to the Company in exchange for the Company providing all services related to the development, regulatory approval and commercialization of lateral flow products. On July 20, 2010, the Company notified NuRx that NuRx was in material breach of the Development Agreement, and had 60 days from the date of the notification to cure such breach. The notification was related to nonpayment of fees in accordance with the Development Agreement between the Company and QND. Should the breach remain uncured, the Company reserved the right to terminate the Development Agreement.