VERMILLION, INC., 10-Q filed on 08 Nov 18
v3.10.0.1
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2018
Oct. 31, 2018
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q3  
Entity Registrant Name VERMILLION, INC.  
Entity Central Index Key 0000926617  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Trading Symbol vrml  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   75,382,684
v3.10.0.1
Condensed Consolidated Balance Sheets - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 11,760,000 $ 5,539,000
Accounts receivable, net 656,000 205,000
Prepaid expenses and other current assets 242,000 459,000
Inventories 115,000 102,000
Total current assets 12,773,000 6,305,000
Property and equipment, net 701,000 1,181,000
Other assets   11,000
Total assets 13,474,000 7,497,000
Current liabilities:    
Accounts payable 495,000 745,000
Accrued liabilities 1,741,000 1,650,000
Short-term debt 188,000 185,000
Other current liabilities   29,000
Total current liabilities 2,424,000 2,609,000
Non-current liabilities:    
Long-term debt 1,340,000 1,481,000
Total liabilities 3,764,000 4,090,000
Commitments and contingencies (Note 3)
Stockholders' equity:    
Common stock, par value $0.001 per share, 150,000,000 shares authorized at September 30, 2018 and December 31, 2017; 75,382,684 and 60,036,017 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively 75,000 60,000
Additional paid-in capital 413,739,000 399,400,000
Accumulated deficit (404,104,000) (396,053,000)
Total stockholders' equity 9,710,000 3,407,000
Total liabilities and stockholders' equity $ 13,474,000 $ 7,497,000
v3.10.0.1
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2018
Dec. 31, 2017
Condensed Consolidated Balance Sheets [Abstract]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 150,000,000 150,000,000
Common stock, shares issued 75,382,684 60,036,017
Common stock, shares outstanding 75,382,684 60,036,017
v3.10.0.1
Condensed Consolidated Statements Of Operations - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Revenue:        
Revenue $ 774 $ 699 $ 2,131 $ 2,323
Cost of revenue:        
Cost of revenue [1] 778 779 2,389 2,200
Gross profit (loss) (4) (80) (258) 123
Operating expenses:        
Research and development [2] 129 192 425 685
Sales and marketing [3] 1,343 1,050 4,046 3,114
General and administrative [4] 1,167 1,177 3,780 3,825
Total operating expenses 2,639 2,419 8,251 7,624
Loss from operations (2,643) (2,499) (8,509) (7,501)
Interest income (expense), net (6) (10) (25) (32)
Other income (expense), net (3)   (17) (9)
Net loss (2,652) (2,509) (8,551) (7,542)
Deemed dividend on warrant repricing   (942)   (942)
Net loss attributable to common stockholders $ (2,652) $ (3,451) $ (8,551) $ (8,484)
Net loss per share attributable to common stockholders - basic and diluted $ (0.04) $ (0.06) $ (0.13) $ (0.15)
Weighted average common shares used to compute basic and diluted net loss per common share 75,306,074 57,455,786 68,288,216 55,909,788
Product [Member]        
Revenue:        
Revenue $ 739 $ 657 $ 1,979 $ 2,195
Cost of revenue:        
Cost of revenue [1] 477 495 1,538 1,345
Service [Member]        
Revenue:        
Revenue 35 42 152 128
Cost of revenue:        
Cost of revenue [1] $ 301 $ 284 $ 851 $ 855
[1] Cost of revenue $35, $29, $93, $108
[2] Research and development $2, 2, $4, $7
[3] Sales and marketing $14, $38, $85, $115
[4] General and administrative $245, $257, $657, $767
v3.10.0.1
Condensed Consolidated Statements Of Operations (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Cost Of Revenue [Member]        
Stock-based compensation expense $ 35 $ 29 $ 93 $ 108
Research And Development [Member]        
Stock-based compensation expense 2 2 4 7
Sales And Marketing [Member]        
Stock-based compensation expense 14 38 85 115
General And Administrative [Member]        
Stock-based compensation expense $ 245 $ 257 $ 657 $ 767
v3.10.0.1
Condensed Consolidated Statements Of Cash Flows - USD ($)
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Cash flows from operating activities:    
Net loss $ (8,551,000) $ (7,542,000)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 527,000 599,000
Stock-based compensation expense 839,000 997,000
Loss on sale and disposal of property and equipment 11,000 4,000
Changes in operating assets and liabilities:    
Accounts receivable 49,000 54,000
Prepaid expenses and other assets 228,000 312,000
Inventories (13,000) (62,000)
Accounts payable, accrued liabilities and other liabilities (159,000) (401,000)
Deferred revenue   62,000
Net cash used in operating activities (7,069,000) (5,977,000)
Cash flows from investing activities:    
Purchase of property and equipment (58,000) (56,000)
Net cash used in investing activities (58,000) (56,000)
Cash flows from financing activities:    
Proceeds from private placement offering of common stock, net of issuance costs   5,127,000
Proceeds from public offering of preferred stock, net of issuance costs 4,496,000  
Proceeds from public offering of common stock, net of issuance costs 8,990,000  
Proceeds from exercise of common stock from exercise of warrants, net of issuance costs   3,577,000
Principal repayment of DECD loan (138,000) (136,000)
Repayment of capital lease obligations (29,000) (25,000)
Proceeds from issuance of common stock from exercise of stock options 29,000  
Net cash provided by financing activities 13,348,000 8,543,000
Net increase in cash and cash equivalents 6,221,000 2,510,000
Cash and cash equivalents, beginning of period 5,539,000 5,242,000
Cash and cash equivalents, end of period 11,760,000 7,752,000
Supplemental disclosure of cash flow information:    
Cash paid during the period for interest 33,000 36,000
Supplemental disclosure of non-cash investing and financing activities:    
50,000 shares of convertible preferred stock converted to 5,000,000 shares of common stock, net of issuance costs $ 4,496,000  
Deemed dividend on warrant repricing   $ 942,000
v3.10.0.1
Condensed Consolidated Statements Of Cash Flows (Parenthetical)
9 Months Ended
Sep. 30, 2018
shares
Condensed Consolidated Statements Of Cash Flows [Abstract]  
Shares converted 50,000
Conversion of new shares 5,000,000
v3.10.0.1
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies
9 Months Ended
Sep. 30, 2018
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies [Abstract]  
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies

1.   ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Organization

Vermillion, Inc. (“Vermillion”; Vermillion and its wholly-owned subsidiaries are collectively referred to as the “Company,” “we” or “our”) is incorporated in the state of Delaware, and is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. The Company sells OVA1™ and Overa™ risk of malignancy tests for ovarian cancer (“OVA1” and “Overa,” respectively) through Vermillion’s wholly-owned Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified clinical laboratory, ASPiRA LABS, Inc. (“ASPiRA LABS”).



The Company also offers in-vitro diagnostic (“IVD”) trial services to third-party customers through its wholly-owned subsidiary, ASPiRA IVD, Inc. (“ASPiRA IVD”), which commenced operations in June 2016. ASPiRA IVD is a specialized, CLIA certified, laboratory provider dedicated to meeting the unique testing needs of IVD manufacturers seeking to commercialize high-complexity assays.

Liquidity

The Company has incurred significant net losses and negative cash flows from operations since inception, and as a result has an accumulated deficit of approximately $404,104,000 at September 30, 2018. The Company also expects to incur a net loss and negative cash flows from operations for the remainder of 2018. There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations.  However, management believes that the current working capital position will be sufficient to meet the Company’s working capital needs for at least the next 12 months.



As discussed in Note 4, on April 17, 2018, the Company completed two public offerings, pursuant to which certain investors purchased Vermillion common stock and Vermillion Series B convertible preferred stock for net proceeds of approximately $13,500,000 after deducting offering expenses.

 

As discussed in Note 4, on August 31, 2017, certain investors exercised outstanding warrants to purchase shares of Vermillion common stock for net proceeds of approximately $3,577,000 after deducting offering expenses.



As discussed in Note 4, on February 17, 2017, the Company completed a private placement pursuant to which certain investors purchased Vermillion common stock and warrants to purchase shares of Vermillion common stock for net proceeds of approximately $5,127,000 after deducting offering expenses.



As discussed in Note 3, in March 2016, the Company entered into an agreement (the “Loan Agreement”) pursuant to which it may borrow up to $4,000,000 from the State of Connecticut Department of Economic and Community Development (the “DECD”). An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the Loan Agreement. The remaining $2,000,000 will be advanced if and when the Company achieves certain future milestones. The loan may be prepaid at any time without premium or penalty.



Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period.



The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal year. The condensed consolidated balance sheet at December 31, 2017 included in this report has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2017 included in Vermillion’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 13, 2018 (the “2017 Annual Report”).



The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated results.



Significant Accounting and Reporting Policies



Revenue Recognition



The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), which it adopted on January 1, 2018 using the modified retrospective method.



In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services.



Product Revenue



Prior to January 1, 2018, the Company recognized product revenue in accordance with the provisions of ASC 954-605, Health Care Entities - Revenue Recognition. The Company's product revenue is generated by performing diagnostic services using its OVA1 and Overa tests, and the service is completed upon the delivery of the test result to the prescribing physician. The entire transaction price is allocated to the single performance obligation contained in a contract with a patient. Under the previous revenue recognition accounting methodology, certain product revenue was recognized upon the ultimate receipt of cash. Under ASC 606, all revenue is recognized upon completion of the OVA1 or Overa test based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management as the collection cycle on some accounts can be as long as one year.    

 

The Company also reviewed its patient account population and determined an appropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similar collection experience. The Company has elected this practical expedient that, when evaluated for collectability, results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis. There were no impairment losses on accounts receivable recorded during the three and nine months ended September 30, 2018.



Under the modified retrospective implementation method, the Company recorded a one-time cumulative effect adjustment at January 1, 2018 to reflect the aggregate effect of all open OVA1 and Overa tests performed prior to January 1, 2018 as if revenue had been recognized under ASC 606.  The cumulative effect adjustment was recorded increasing the opening balance of Accounts Receivable by $500,000 in the condensed consolidated balance sheets with an offsetting reduction to Accumulated Deficit. The Company’s right to receive payment on this balance is contingent only on the passage of time.



The following tables show the impact of adoption to our consolidated statement of operations and balance sheet:





 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2018



 

Impact of changes in accounting policies

(in thousands, except per share amounts)

 

As Reported

 

Balances without adoption of ASC 606

 

Effect of Change Higher/(Lower)

Product revenue

 

$

1,979 

 

$

1,994 

 

$

(15)

Operating loss

 

$

(8,509)

 

$

(8,494)

 

$

(15)

Net loss

 

$

(8,551)

 

$

(8,536)

 

$

(15)

Net loss per share, basic and diluted

 

$

(0.13)

 

$

(0.12)

 

$

 -







 

 

 

 

 

 

 

 

 

September 30, 2018



 

Impact of changes in accounting policies

(in thousands)

 

As Reported

 

Balances without adoption of ASC 606

 

Effect of Change Higher/(Lower)

Assets:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

656 

 

$

171 

 

$

485 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

Accumulated deficit

 

$

(404,104)

 

$

(404,589)

 

$

485 



ASC 606 did not have an aggregate impact on the Company’s net cash provided by operating activities, but resulted in offsetting changes in certain assets and liabilities presented within net cash provided by operating activities in the Company’s condensed consolidated statement of cash flows, as reflected in the above tables.





Other Practical Expedients 

   

The Company does not adjust the transaction price for the effects of a significant financing component, as at contract inception, the Company expects the collection cycle to be one year or less.

   

The Company expenses sales commissions when incurred because the amortization period would have been one year or less.  These costs are recorded within sales and marketing expenses.



Service Revenue

The Company’s service revenue is generated by performing IVD trial services for third-party customers. Application of the modified retrospective method did not impact amounts previously reported by the Company, nor did it require a cumulative effect adjustment upon adoption, as the Company’s method of recognizing revenue under ASC 606 was analogous to the method utilized immediately prior to adoption.  Accordingly, there is no need for the Company to disclose the amount by which each financial statement line item was affected as a result of applying the new standard and an explanation of significant changes.



Measurement of progress on contracts with customers will generally be based on the input measurement of cost incurred relative to the total expected costs to satisfy the performance obligation. The Company has not disclosed the value of unsatisfied performance obligations for all service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adoption rules. The remainder are not material to the consolidated financial statements.



Recent Accounting Pronouncements



In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), Compensation - Stock Compensation (“ASU 2016-09”). The new guidance simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016 and interim periods within that reporting period. The Company adopted this standard on January 1, 2018, and the adoption did not have a material impact on the consolidated financial statements.  In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Base Payment Accounting.  This new guidance expands the scope of Topic 718 to include share-based payment transactions from acquiring goods and services from nonemployees, which was previously codified under Topic 505, where this change will modify the measurement requirements of nonemployee awards.    This amendment is effective for annual periods after December 15, 2018.  The Company is currently evaluating the impact of adoption of this standard.



In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) (“ASU 2016-2”). This guidance is intended to make leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-2 will be effective for interim and annual periods beginning after December 15, 2018. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited and early adoption is permitted. The Company expects to adopt this standard beginning in 2019. Currently, our only significant leases are our two office leases.The Company is still evaluating the effect adoption will have on our financial statements. We expect to complete our evaluation during the fourth quarter.



In May 2014, the FASB issued ASC 606, which superseded existing revenue recognition guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company adopted ASC 606 effective on January 1, 2018 using the modified retrospective method. Please see the above “Revenue Recognition” section for a discussion of the Company’s revenue recognition under ASC 606.

 

v3.10.0.1
Agreements With Quest Diagnostics Incorporated
9 Months Ended
Sep. 30, 2018
Agreements With Quest Diagnostics Incorporated [Abstract]  
Agreements With Quest Diagnostics Incorporated

2.   AGREEMENTS WITH QUEST DIAGNOSTICS INCORPORATED



In March 2015, the Company entered into a commercial agreement with Quest Diagnostics, Incorporated (“Quest Diagnostics”). Pursuant to this agreement, all OVA1 U.S. testing services for Quest Diagnostics customers were transferred to Vermillion’s wholly-owned subsidiary, ASPiRA LABS, as of August 2015. Pursuant to this agreement, as amended as of March 1, 2018, Quest Diagnostics is continuing to provide blood draw and logistics support by transporting specimens from its clients to ASPiRA LABS for testing through at least March 11, 2019 in exchange for a market value fee. Per the terms of the new commercial agreement, the Company will not offer to existing or future Quest Diagnostics customers tests that Quest Diagnostics offers.

v3.10.0.1
Commitments And Contingencies
9 Months Ended
Sep. 30, 2018
Commitments And Contingencies [Abstract]  
Commitments And Contingencies

3.   COMMITMENTS AND CONTINGENCIES



Development Loan



On March 22, 2016, the Company entered into the Loan Agreement with the DECD, pursuant to which the Company may borrow up to $4,000,000 from the DECD.  Proceeds from the loan were utilized primarily to fund the build-out, information technology infrastructure and other costs related to the Company’s Trumbull, Connecticut facility and operations.  The loan bears interest at a fixed rate of 2.0% per annum and requires equal monthly payments of principal and interest until maturity, which occurs on April 15, 2026.  As security for the loan, the Company has granted the DECD a blanket security interest in the Company’s personal and intellectual property.  The DECD’s security interest in the Company’s intellectual property may be subordinated to a qualified institutional lender.  Under the terms of the Loan Agreement, as amended, the Company may be eligible for forgiveness of up to $2,000,000 of the principal amount of the loan if the Company achieves certain job creation and retention milestones by March 1, 2021 (the “Measurement Date”).  Conversely, if the Company is either unable to meet these job creation and retention milestones, namely, hiring and retaining for a consecutive two-year period 40 full-time employees with a specified average annual salary by the Measurement Date,  or does not maintain the Company’s Connecticut operations for a period of 10 years, the DECD may require early repayment of a portion or all of the loan depending on job attainment as compared to the required amount plus a penalty of 5% of the total funded loan.  



An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the Loan Agreement.  The remaining $2,000,000 will be advanced if and when the Company achieves certain other future milestones. The loan may be prepaid at any time without premium or penalty.



Operating Leases



The Company leases facilities to support its business of discovering, developing and commercializing diagnostic tests in the fields of gynecologic disease. The Company’s principal facility, including the CLIA laboratory used by ASPiRA LABS, is located in Austin, Texas, and the CLIA laboratory used by ASPiRA IVD is located in Trumbull, Connecticut. The Austin, Texas lease includes an aggregate annual base rent of $86,000 and annual estimated common area charges, taxes and insurance of $46,000 and expires on January 31, 2019.    



In October 2015, the Company entered into a lease agreement for a facility in Trumbull, Connecticut. The lease required initial payments for the buildout of leasehold improvements to the office space, which were approximately $596,000. The term of the lease is five years beginning after the initial date of occupancy in January 2016 and a rent abatement period of five months. The lease includes an aggregate annual base rent of $32,000 and annual estimated common area charges, taxes and insurance of $95,000.  



Building rent for the three months ended September 30, 2018 and 2017 totaled $66,000 for each period. Building rent for the nine months ended September 30, 2018 and 2017 totaled $199,000 and $189,000, respectively.





Non-cancelable Royalty Obligations



The Company is a party to an amended research collaboration agreement with The Johns Hopkins University School of Medicine under which the Company licenses certain of its intellectual property. Under the terms of the amended research collaboration agreement, Vermillion is required to pay the greater of 4% royalties on net sales of diagnostic tests using the assigned patents or annual minimum royalties of $57,500. Royalty expense for the three months ended September 30, 2018 and 2017 totalled $30,000 for each period. Royalty expense for the nine months ended September 30, 2018 and 2017 totalled $78,000 and $94,000, respectively.

  

v3.10.0.1
Stockholders' Equity
9 Months Ended
Sep. 30, 2018
Stockholders' equity:  
Stockholders' Equity

4.   STOCKHOLDERS’ EQUITY



2018 Offerings    



On April 13, 2018, the Company entered into two underwriting agreements (each, an “Underwriting Agreement”) with Piper Jaffray & Co., as the sole underwriter (the “Underwriter”), in connection with separate but concurrent public offerings of the Company’s securities.



Pursuant to the first Underwriting Agreement, the Company agreed to issue and sell an aggregate of 10,000,000 shares of Vermillion common stock, par value $0.001 per share, offered by the Underwriter in a public offering at a price to the public of $1.00 per share (the “Common Stock Offering”). Under this Underwriting Agreement, the Company granted the Underwriter an option to purchase up to an additional 1,500,000 shares of Vermillion common stock at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any. The Underwriter did not exercise this option. The Common Stock Offering closed on April 17, 2018 and resulted in proceeds, net of 7% underwriting costs and other offering costs, to the Company of $8,992,000.



Pursuant to the second Underwriting Agreement, the Company agreed to issue and sell an aggregate of 50,000 shares of Vermillion Series B Convertible Preferred Stock, par value $0.001 per share, offered by the Underwriter in a public offering at a price to the public of $100.00 per share (the “Series B Offering”).  The Series B Offering closed on April 17, 2018 and resulted in proceeds, net of 7% underwriting costs and other offering costs, to the Company of $4,496,000.



Upon obtaining Company stockholder approval at the annual meeting of Company stockholders on June 21, 2018, each of the 50,000 shares of Vermillion Series B Convertible Preferred Stock was automatically converted into shares of Vermillion common stock, at a conversion rate of 100 shares of Vermillion common stock per one share of Vermillion Series B Convertible Preferred Stock, including shares issuable pursuant to customary anti-dilution provisions.

2017 Warrant Repricing and Exercise      



In December 2014, the Company issued warrants to purchase up to an aggregate of 4,166,659 shares of Vermillion common stock at an exercise price of $2.00 per share in conjunction with a December 2014 private placement of Vermillion common stock.  



On August 31, 2017, certain holders of these warrants exercised warrants to purchase 3,796,818 shares of Vermillion common stock in consideration for the Company agreeing to reduce the exercise price to $1.00 per share of Vermillion common stock. The remaining 369,841 unexercised warrants expired by their original terms on December 23, 2017.



 The Company issued 3,796,818 shares of Vermillion common stock and received $3,796,818 in aggregate gross proceeds (approximately $3,577,000 net of transaction costs). The incremental non-cash fair value of approximately $942,000 from the modification of the warrants was calculated using the Black-Scholes model and recorded as a deemed dividend to the warrant holders within stockholders’ equity.



2017 Private Placement       

On February 17, 2017, the Company completed a private placement pursuant to which certain investors purchased 3,747,125 shares of Vermillion common stock at a price of $1.40 per share. Vermillion also issued warrants to purchase shares of Vermillion common stock at a price of $0.125 per warrant share in the private placement. Net proceeds of the private placement were approximately $5,127,000 after deducting offering expenses. The warrants are exercisable for 2,810,338 shares of Vermillion common stock at $1.80 per share. The warrants expire on the fifth anniversary of the date of issuance or, if earlier, five business days after Vermillion delivers notice that the closing price per share of its common stock exceeded the exercise price for 20 consecutive trading days during the exercise period.



The sale of common stock and issuance of warrants qualified for equity treatment under GAAP. The respective values of the warrants and common stock were calculated using their relative fair values and classified under common stock and additional paid-in capital. The value ascribed to the warrants is $804,000 and to the common stock is approximately $4,296,000.



2010 Stock Incentive Plan

The Company’s employees, directors, and consultants are eligible to receive awards under the Vermillion, Inc. Second Amended and Restated 2010 Stock Incentive Plan (the “2010 Plan”). The 2010 Plan permits the granting of a variety of awards, including stock options, share appreciation rights, restricted shares, restricted share units, unrestricted shares, deferred share units, performance and cash-settled awards, and dividend equivalent rights. The 2010 Plan provides for issuance of up to 12,122,983 shares of Vermillion common stock, subject to adjustment as provided in the 2010 Plan.



Stock-Based Compensation



During the three months ended September 30, 2018, the Company awarded Vermillion’s non-employee directors an aggregate of 27,871 shares of restricted stock under the 2010 Plan having a fair value of approximately $35,000. The vesting of these shares of restricted stock is as follows: 32% on September 1, 2018, and 68% on December 1, 2018. The Company also awarded a certain consultant 16,816 shares of restricted stock under the 2010 Plan having a fair value of approximately $13,000.  



During the nine months ended September 30, 2018, the Company awarded Vermillion’s non-employee directors an aggregate of 398,400 shares of restricted stock under the 2010 Plan having a fair value of approximately $442,000. The vesting of these shares of restricted stock is as follows: 50% on June 1, 2018, 25% on September 1, 2018 and 25% on December 1, 2018. 35,000 of those shares of restricted stock were forfeited upon the departure of a board member in June. The Company also awarded certain consultants 23,350 shares of restricted stock under the 2010 Plan having a fair value of approximately $23,000.  



During the nine months ended September 30, 2018, the Company granted certain officers and employees options to purchase an aggregate of 934,000 shares of Vermillion common stock with an exercise price of $1.11 per share and 125,000 shares of Vermillion common stock with an exercise price of $0.90 per share. These stock options vest 25% on each of the four anniversaries of the vesting commencement date for each such stock option. 



The allocation of employee stock-based compensation expense by functional area for the three and nine months ended September 30, 2018 and 2017 was as follows:

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands)

 

2018

 

2017

 

2018

 

2017

Cost of revenue

 

$

22 

 

$

21 

 

$

69 

 

$

61 

Research and development

 

 

 

 

 -

 

 

 

 

Sales and marketing

 

 

14 

 

 

38 

 

 

95 

 

 

108 

General and administrative

 

 

233 

 

 

216 

 

 

727 

 

 

630 

Total

 

$

271 

 

$

275 

 

$

895 

 

$

804 



 

 

 

 

 

 

 

 

 

 

 

 





v3.10.0.1
Loss Per Share
9 Months Ended
Sep. 30, 2018
Loss Per Share [Abstract]  
Loss Per Share

5.   LOSS PER SHARE

The Company calculates basic loss per share using the weighted average number of shares of Vermillion common stock outstanding during the period. Because the Company is in a net loss position, diluted loss per share is calculated using the weighted average number of shares of Vermillion common stock outstanding and excludes the effects of 7,414,053 and 7,971,860 potential shares of Vermillion common stock as of September 30, 2018 and 2017, respectively, that are anti-dilutive. Potential shares of Vermillion common stock include incremental shares of Vermillion common stock issuable upon the exercise of outstanding warrants, stock options and unvested restricted stock units.

v3.10.0.1
Related Party Transactions
9 Months Ended
Sep. 30, 2018
Related Party Transactions [Abstract]  
Related Party Transactions

6.   RELATED PARTY TRANSACTIONS

On December 18, 2017, the Company entered into a consulting agreement for a term of up to five months with the Company’s former Senior Vice President, Finance and Chief Accounting Officer.  Pursuant to the terms of the consulting agreement through May 15, 2018, the consultant provided accounting and finance services related to the transition of financial leadership. The Company agreed to pay $150 per hour for such consulting services.  The consultant also remained eligible for payout under the Company’s 2017 Corporate Incentive Plan after he satisfactorily met certain performance obligations as outlined in the consulting agreement. During the nine months ended September 30, 2018, the consultant was paid an aggregate of $53,925 for services provided pursuant to the consulting agreement. 



v3.10.0.1
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies (Policy)
9 Months Ended
Sep. 30, 2018
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies [Abstract]  
Organization

Organization

Vermillion, Inc. (“Vermillion”; Vermillion and its wholly-owned subsidiaries are collectively referred to as the “Company,” “we” or “our”) is incorporated in the state of Delaware, and is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. The Company sells OVA1™ and Overa™ risk of malignancy tests for ovarian cancer (“OVA1” and “Overa,” respectively) through Vermillion’s wholly-owned Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified clinical laboratory, ASPiRA LABS, Inc. (“ASPiRA LABS”).



The Company also offers in-vitro diagnostic (“IVD”) trial services to third-party customers through its wholly-owned subsidiary, ASPiRA IVD, Inc. (“ASPiRA IVD”), which commenced operations in June 2016. ASPiRA IVD is a specialized, CLIA certified, laboratory provider dedicated to meeting the unique testing needs of IVD manufacturers seeking to commercialize high-complexity assays.

Liquidity

Liquidity

The Company has incurred significant net losses and negative cash flows from operations since inception, and as a result has an accumulated deficit of approximately $404,104,000 at September 30, 2018. The Company also expects to incur a net loss and negative cash flows from operations for the remainder of 2018. There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations.  However, management believes that the current working capital position will be sufficient to meet the Company’s working capital needs for at least the next 12 months.



As discussed in Note 4, on April 17, 2018, the Company completed two public offerings, pursuant to which certain investors purchased Vermillion common stock and Vermillion Series B convertible preferred stock for net proceeds of approximately $13,500,000 after deducting offering expenses.

 

As discussed in Note 4, on August 31, 2017, certain investors exercised outstanding warrants to purchase shares of Vermillion common stock for net proceeds of approximately $3,577,000 after deducting offering expenses.



As discussed in Note 4, on February 17, 2017, the Company completed a private placement pursuant to which certain investors purchased Vermillion common stock and warrants to purchase shares of Vermillion common stock for net proceeds of approximately $5,127,000 after deducting offering expenses.



As discussed in Note 3, in March 2016, the Company entered into an agreement (the “Loan Agreement”) pursuant to which it may borrow up to $4,000,000 from the State of Connecticut Department of Economic and Community Development (the “DECD”). An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the Loan Agreement. The remaining $2,000,000 will be advanced if and when the Company achieves certain future milestones. The loan may be prepaid at any time without premium or penalty.



Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period.



The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal year. The condensed consolidated balance sheet at December 31, 2017 included in this report has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2017 included in Vermillion’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 13, 2018 (the “2017 Annual Report”).



The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated results.

Significant Accounting and Reporting Policies

Significant Accounting and Reporting Policies



Revenue Recognition



The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), which it adopted on January 1, 2018 using the modified retrospective method.



In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services.



Product Revenue



Prior to January 1, 2018, the Company recognized product revenue in accordance with the provisions of ASC 954-605, Health Care Entities - Revenue Recognition. The Company's product revenue is generated by performing diagnostic services using its OVA1 and Overa tests, and the service is completed upon the delivery of the test result to the prescribing physician. The entire transaction price is allocated to the single performance obligation contained in a contract with a patient. Under the previous revenue recognition accounting methodology, certain product revenue was recognized upon the ultimate receipt of cash. Under ASC 606, all revenue is recognized upon completion of the OVA1 or Overa test based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management as the collection cycle on some accounts can be as long as one year.    

 

The Company also reviewed its patient account population and determined an appropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similar collection experience. The Company has elected this practical expedient that, when evaluated for collectability, results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis. There were no impairment losses on accounts receivable recorded during the three and nine months ended September 30, 2018.



Under the modified retrospective implementation method, the Company recorded a one-time cumulative effect adjustment at January 1, 2018 to reflect the aggregate effect of all open OVA1 and Overa tests performed prior to January 1, 2018 as if revenue had been recognized under ASC 606.  The cumulative effect adjustment was recorded increasing the opening balance of Accounts Receivable by $500,000 in the condensed consolidated balance sheets with an offsetting reduction to Accumulated Deficit. The Company’s right to receive payment on this balance is contingent only on the passage of time.



The following tables show the impact of adoption to our consolidated statement of operations and balance sheet:





 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2018



 

Impact of changes in accounting policies

(in thousands, except per share amounts)

 

As Reported

 

Balances without adoption of ASC 606

 

Effect of Change Higher/(Lower)

Product revenue

 

$

1,979 

 

$

1,994 

 

$

(15)

Operating loss

 

$

(8,509)

 

$

(8,494)

 

$

(15)

Net loss

 

$

(8,551)

 

$

(8,536)

 

$

(15)

Net loss per share, basic and diluted

 

$

(0.13)

 

$

(0.12)

 

$

 -







 

 

 

 

 

 

 

 

 

September 30, 2018



 

Impact of changes in accounting policies

(in thousands)

 

As Reported

 

Balances without adoption of ASC 606

 

Effect of Change Higher/(Lower)

Assets:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

656 

 

$

171 

 

$

485 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

Accumulated deficit

 

$

(404,104)

 

$

(404,589)

 

$

485 



ASC 606 did not have an aggregate impact on the Company’s net cash provided by operating activities, but resulted in offsetting changes in certain assets and liabilities presented within net cash provided by operating activities in the Company’s condensed consolidated statement of cash flows, as reflected in the above tables.





Other Practical Expedients 

   

The Company does not adjust the transaction price for the effects of a significant financing component, as at contract inception, the Company expects the collection cycle to be one year or less.

   

The Company expenses sales commissions when incurred because the amortization period would have been one year or less.  These costs are recorded within sales and marketing expenses.



Service Revenue

The Company’s service revenue is generated by performing IVD trial services for third-party customers. Application of the modified retrospective method did not impact amounts previously reported by the Company, nor did it require a cumulative effect adjustment upon adoption, as the Company’s method of recognizing revenue under ASC 606 was analogous to the method utilized immediately prior to adoption.  Accordingly, there is no need for the Company to disclose the amount by which each financial statement line item was affected as a result of applying the new standard and an explanation of significant changes.



Measurement of progress on contracts with customers will generally be based on the input measurement of cost incurred relative to the total expected costs to satisfy the performance obligation. The Company has not disclosed the value of unsatisfied performance obligations for all service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adoption rules. The remainder are not material to the consolidated financial statements.

Recent Accounting Pronouncements

Recent Accounting Pronouncements



In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), Compensation - Stock Compensation (“ASU 2016-09”). The new guidance simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016 and interim periods within that reporting period. The Company adopted this standard on January 1, 2018, and the adoption did not have a material impact on the consolidated financial statements.  In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Base Payment Accounting.  This new guidance expands the scope of Topic 718 to include share-based payment transactions from acquiring goods and services from nonemployees, which was previously codified under Topic 505, where this change will modify the measurement requirements of nonemployee awards.    This amendment is effective for annual periods after December 15, 2018.  The Company is currently evaluating the impact of adoption of this standard.



In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) (“ASU 2016-2”). This guidance is intended to make leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-2 will be effective for interim and annual periods beginning after December 15, 2018. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited and early adoption is permitted. The Company expects to adopt this standard beginning in 2019. Currently, our only significant leases are our two office leases.The Company is still evaluating the effect adoption will have on our financial statements. We expect to complete our evaluation during the fourth quarter.



In May 2014, the FASB issued ASC 606, which superseded existing revenue recognition guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company adopted ASC 606 effective on January 1, 2018 using the modified retrospective method. Please see the above “Revenue Recognition” section for a discussion of the Company’s revenue recognition under ASC 606.

 

v3.10.0.1
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies (Tables)
9 Months Ended
Sep. 30, 2018
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies [Abstract]  
Summary Of The Impact Of Adoption ASC 606 On Financials



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2018



 

Impact of changes in accounting policies

(in thousands, except per share amounts)

 

As Reported

 

Balances without adoption of ASC 606

 

Effect of Change Higher/(Lower)

Product revenue

 

$

1,979 

 

$

1,994 

 

$

(15)

Operating loss

 

$

(8,509)

 

$

(8,494)

 

$

(15)

Net loss

 

$

(8,551)

 

$

(8,536)

 

$

(15)

Net loss per share, basic and diluted

 

$

(0.13)

 

$

(0.12)

 

$

 -







 

 

 

 

 

 

 

 

 

September 30, 2018



 

Impact of changes in accounting policies

(in thousands)

 

As Reported

 

Balances without adoption of ASC 606

 

Effect of Change Higher/(Lower)

Assets:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

656 

 

$

171 

 

$

485 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

Accumulated deficit

 

$

(404,104)

 

$

(404,589)

 

$

485 



v3.10.0.1
Stockholders' Equity (Tables)
9 Months Ended
Sep. 30, 2018
Stockholders' equity:  
Allocation of Stock-Based Compensation Expense by Functional Area



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands)

 

2018

 

2017

 

2018

 

2017

Cost of revenue

 

$

22 

 

$

21 

 

$

69 

 

$

61 

Research and development

 

 

 

 

 -

 

 

 

 

Sales and marketing

 

 

14 

 

 

38 

 

 

95 

 

 

108 

General and administrative

 

 

233 

 

 

216 

 

 

727 

 

 

630 

Total

 

$

271 

 

$

275 

 

$

895 

 

$

804 



 

 

 

 

 

 

 

 

 

 

 

 



v3.10.0.1
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies (Narrative) (Details) - USD ($)
3 Months Ended 9 Months Ended
Apr. 17, 2018
Aug. 31, 2017
Feb. 17, 2017
Apr. 15, 2016
Sep. 30, 2018
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Mar. 22, 2016
Organization Consolidation And Summary Of Significant Accounting Policies [Line Items]                  
Accumulated deficit         $ (404,104,000) $ (404,104,000)   $ (396,053,000)  
Proceeds from exercise of common stock from exercise of warrants, net of issuance costs   $ 3,577,000         $ 3,577,000    
Proceeds from public offering $ 13,500,000                
Proceeds from issuance of private placement     $ 5,127,000       $ 5,127,000    
Impairment losses         0 0      
DECD [Member]                  
Organization Consolidation And Summary Of Significant Accounting Policies [Line Items]                  
DECD maximum borrowing capacity                 $ 4,000,000
DECD initial disbursement       $ 2,000,000          
DECD remaining borrowing capacity                 $ 2,000,000
Accounting Standards Update 2014-09 [Member]                  
Organization Consolidation And Summary Of Significant Accounting Policies [Line Items]                  
One time adjustment         $ 500,000 $ 500,000      
v3.10.0.1
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies (Summary Of The Impact Of Adoption ASC 606 On Financials) (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]          
Revenue $ 774,000 $ 699,000 $ 2,131,000 $ 2,323,000  
Operating loss (2,643,000) (2,499,000) (8,509,000) (7,501,000)  
Net loss $ (2,652,000) $ (2,509,000) $ (8,551,000) $ (7,542,000)  
Net loss per share, basic and diluted $ (0.04) $ (0.06) $ (0.13) $ (0.15)  
Assets          
Accounts receivable $ 656,000   $ 656,000   $ 205,000
Stockholders' equity:          
Accumulated deficit (404,104,000)   (404,104,000)   $ (396,053,000)
Balances Without Adoption of ASC 606 [Member]          
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]          
Operating loss     (8,494,000)    
Net loss     $ (8,536,000)    
Net loss per share, basic and diluted     $ (0.12)    
Assets          
Accounts receivable 171,000   $ 171,000    
Stockholders' equity:          
Accumulated deficit (404,589,000)   (404,589,000)    
Effect of Change Higher/(Lower) [Member]          
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]          
Operating loss     (15,000)    
Net loss     (15,000)    
Assets          
Accounts receivable 485,000   485,000    
Stockholders' equity:          
Accumulated deficit 485,000   485,000    
Product [Member]          
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]          
Revenue $ 739,000 $ 657,000 1,979,000 $ 2,195,000  
Product [Member] | Balances Without Adoption of ASC 606 [Member]          
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]          
Revenue     1,994,000    
Product [Member] | Effect of Change Higher/(Lower) [Member]          
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]          
Revenue     $ (15,000)    
v3.10.0.1
Commitments And Contingencies (Details)
1 Months Ended 3 Months Ended 9 Months Ended
Apr. 15, 2016
USD ($)
Mar. 22, 2016
USD ($)
Oct. 31, 2015
USD ($)
Sep. 30, 2018
USD ($)
Sep. 30, 2017
USD ($)
Sep. 30, 2018
USD ($)
employee
Sep. 30, 2017
USD ($)
Commitments And Contingencies [Line Items]              
Operating leases rental expense       $ 66,000 $ 66,000 $ 199,000 $ 189,000
Percent of royalty paid           4.00%  
Minimum royalty payment           $ 57,500  
Royalty expense       $ 30,000 $ 30,000 78,000 $ 94,000
Austin, Texas facility [Member]              
Commitments And Contingencies [Line Items]              
Annual base rent           86,000  
Annual estimated common area charges, taxes and insurance           $ 46,000  
Lease expiration date           Jan. 31, 2019  
Trumbull, Connecticut Facility [Member]              
Commitments And Contingencies [Line Items]              
Annual base rent     $ 32,000        
Annual estimated common area charges, taxes and insurance     95,000        
Leasehold improvements     $ 596,000        
Lease term       5 years   5 years  
Rent abatement period           5 months  
DECD [Member]              
Commitments And Contingencies [Line Items]              
DECD maximum borrowing capacity   $ 4,000,000          
Fixed rate per annum   2.00%          
Maturity date   Apr. 15, 2026          
Amount eligible for forgiveness   $ 2,000,000          
Job creation, number of employees | employee           40  
Debt, maturity term           10 years  
Debt penalty percentage           5.00%  
DECD initial disbursement $ 2,000,000            
DECD remaining borrowing capacity   $ 2,000,000          
v3.10.0.1
Stockholders' Equity (Narrative) (Details) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended
Jun. 21, 2018
Apr. 17, 2018
Dec. 23, 2017
Aug. 31, 2017
Feb. 17, 2017
Dec. 31, 2014
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Apr. 13, 2018
Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Common stock, shares issued             75,382,684   75,382,684     60,036,017
Warrants exercised       3,796,818                
Warrants unexercised     369,841                  
Par value             $ 0.001   $ 0.001     $ 0.001
Proceeds from issuance of private placement         $ 5,127,000         $ 5,127,000    
Proceeds from public offering   $ 13,500,000                    
Incremental non-cash fair value of warrants               $ 942,000   $ 942,000    
Exercise price of warrants       $ 1.00                
Fair value of warrants issued         $ 804,000              
Common stock value             $ 75,000   $ 75,000     $ 60,000
Preferred stock, shares issued             0   0     0
Preferred stock, par value             $ 0.001   $ 0.001     $ 0.001
Common stock issuable per preferred share 100                      
Shares converted                 50,000      
2010 Stock Incentive Plan [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Shares available for grant             12,122,983   12,122,983      
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | Restricted Stock [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Restricted shares granted             27,871   398,400      
Fair value of restricted share units             $ 35,000   $ 442,000      
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | Restricted Stock [Member] | June 1, 2018 [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Vesting percentage                 50.00%      
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | Restricted Stock [Member] | September 1, 2018 [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Vesting percentage             32.00%   25.00%      
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | Restricted Stock [Member] | December 1, 2018 [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Vesting percentage             68.00%   25.00%      
2010 Stock Incentive Plan [Member] | Certain Consultants [Member] | Restricted Stock [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Restricted shares granted             16,816   23,350      
Fair value of restricted share units             $ 13,000   $ 23,000      
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | Stock Option [Member] | Share-based Compensation Award, Tranche One [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Vesting percentage                 25.00%      
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $1.11 [Member] | Stock Option [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Granted                 934,000      
Stock options granted, average exercise price             $ 1.11   $ 1.11      
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $0.90 [Member] | Stock Option [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Granted                 125,000      
Stock options granted, average exercise price             $ 0.90   $ 0.90      
2010 Stock Incentive Plan [Member] | Board Of Directors [Member] | Restricted Stock [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Restricted shares forfeited                 35,000      
Common Stock [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Common stock, shares issued       3,796,818 3,747,125           10,000,000  
Warrants issued in connection with private placement           4,166,659            
Par value                     $ 0.001  
Price per share         $ 1.40              
Issued a warrant to purchase common stock with a cost         $ 0.125              
Underwriting agreement, per share                     $ 1.00  
Underwriting agreement                     1,500,000  
Proceeds from issuance of private placement       $ 3,577,000 $ 5,127,000              
Proceeds from public offering   8,992,000                    
Incremental non-cash fair value of warrants       942,000                
Warrants outstanding to purchase shares         2,810,338              
Exercise price of warrants         $ 1.80 $ 2.00            
Common stock value         $ 4,296,000              
Gross proceeds from issuance of private placement       $ 3,796,818                
Percent of net proceeds of underwriting costs and other offering costs                 7.00%      
Series B Convertible Preferred Stock [Member]                        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                        
Underwriting agreement, per share                     $ 100.00  
Proceeds from public offering   $ 4,496,000                    
Preferred stock, shares issued                     50,000  
Preferred stock, par value                     $ 0.001  
Percent of net proceeds of underwriting costs and other offering costs                 7.00%      
Shares converted 50,000                      
v3.10.0.1
Stockholders' Equity (Allocation of Stock-Based Compensation Expense by Functional Area) (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Cost Of Revenue [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense $ 35 $ 29 $ 93 $ 108
Research And Development [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 2 2 4 7
Sales And Marketing [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 14 38 85 115
General And Administrative [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 245 257 657 767
Employee Stock-Based Compensation [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 271 275 895 804
Employee Stock-Based Compensation [Member] | Cost Of Revenue [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 22 21 69 61
Employee Stock-Based Compensation [Member] | Research And Development [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 2   4 5
Employee Stock-Based Compensation [Member] | Sales And Marketing [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 14 38 95 108
Employee Stock-Based Compensation [Member] | General And Administrative [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense $ 233 $ 216 $ 727 $ 630
v3.10.0.1
Loss Per Share (Details) - shares
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Loss Per Share [Abstract]    
Antidilutive securities excluded from computation of earnings per share 7,414,053 7,971,860
v3.10.0.1
Related Party Transactions (Details) - Former Senior Vice President, Finance And Chief Accounting Officer [Member]
9 Months Ended
Sep. 30, 2018
USD ($)
Related Party Transaction [Line Items]  
Term of consulting agreement 5 years
Payment per hour $ 150
Payments to related party $ 53,925