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Description of Business and Basis of Presentation

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Company and Background

Imprimis Pharmaceuticals, Inc. (together with its subsidiaries, unless the context indicates or otherwise requires, the “Company” or “Imprimis”) is a pharmaceutical company focused on developing and commercializing innovative and high quality proprietary compounded drug therapies and making these therapies available to physicians and patients at accessible prices. The Company owns, markets and sells a portfolio of proprietary combination formulations in ophthalmology and urology that it believes may offer competitive advantages and serve unmet needs in the marketplace. The Company’s ophthalmology formulation portfolio, led by its Dropless Therapy™ injectable and LessDrops™ topical formulations, serves the multi-billion dollar eye drop market and is designed to address patient compliance issues and provide other medical and economic benefits to physicians and patients. The Company recently launched its urology business, headed by its Defeat IC™ campaign, which includes a patented compounded formulation for patients suffering from interstitial cystitis, and the ED Free™ campaign, which includes lyophilized compounded formulations for men with erectile dysfunction. The Company is also developing additional complementary proprietary compounded formulations to add to its ophthalmology and urology formulation portfolios. Imprimis makes, dispenses and sells its proprietary compounded formulations, as well as other non-proprietary products, through its wholly-owned compounding pharmacies.

On April 1, 2014, the Company acquired Pharmacy Creations, LLC (“PC”), a New Jersey based compounding pharmacy, on January 1, 2015, the Company acquired South Coast Specialty Compounding, Inc. D/B/A Park Compounding (“Park”), a California based compounding pharmacy and on August 4, 2015, the Company acquired JT Pharmacy, Inc. D/B/A Central Allen Pharmacy (“CAP”), a Texas based compounding pharmacy. Effective with the acquisition of PC, the Company commenced sales and marketing efforts for Imprimis’ portfolio of proprietary and non-proprietary compounded drug formulations.

Basis of Presentation

Imprimis has prepared the accompanying unaudited condensed consolidated financial statements 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 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or for any other period. For further information, refer to the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Liquidity

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses of approximately $6,823 and $4,921 for the six months ended June 30, 2015 and 2014, respectively, and had an accumulated deficit of approximately $48,688 and $41,865 as of June 30, 2015 and December 31, 2014, respectively. In addition, the Company used cash in operating activities of approximately $5,447 and $3,209 for the six months ended June 30, 2015 and 2014, respectively.

While there is no assurance, we believe that cash and cash equivalents and restricted investments of approximately $10,201 at June 30, 2015 will be sufficient to sustain our planned level of operations for at least the next twelve months.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Summary of Significant Accounting Policies

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following represents an update for the six months ended June 30, 2015 to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.

Concentrations of Credit Risk

The Company places its cash with financial institutions deemed by management to be of high credit quality. The Federal Deposit Insurance Corporation (“FDIC”) provides basic deposit coverage with limits up to $250 per owner. At June 30, 2015, the Company had approximately $9,801 in cash deposits in excess of FDIC limits.

Accounts Receivable

Accounts receivable are stated net of allowances for doubtful accounts and contractual adjustments. The accounts receivable balance primarily includes amounts due from customers the Company has invoiced or from third-party providers (e.g., insurance companies and governmental agencies), but for which payment has not been received. Charges to bad debt are based on both historical write-offs and specifically identified receivables. Contractual adjustments are determined by the amount expected to be collected from third-party providers. Accounts receivable are presented net of allowances for doubtful accounts and contractual adjustments in the amount of $183 and $4 as of June 30, 2015 and December 31, 2014, respectively.

Revenue Recognition and Deferred Revenue

The Company recognizes revenues when all of the following criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. The Company began generating revenues upon the acquisition of PC in the second quarter of 2014, which include sales of certain of the Company’s proprietary compounded drug formulations and non-proprietary formulations and products.

Product Revenues

Determination of criteria (3) and (4) is based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Estimated returns and allowances and other adjustments are provided for in the same period during which the related sales are recorded. The Company will defer any revenues received for a product that has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered and no refund will be required.

License Revenues

License arrangements may consist of non-refundable upfront license fees, data transfer fees, research reimbursement payments, exclusive license rights to patented or patent pending compounds, technology access fees, and various performance or sales milestones. These arrangements can be multiple element arrangements.

Non-refundable fees that are not contingent on any future performance by the Company and require no consequential continuing involvement on the part of the Company are recognized as revenue when the license term commences and the licensed data, technology, compounded drug preparation and/or other deliverable is delivered. Such deliverables may include physical quantities of compounded drug preparations, design of the compounded drug preparations and structure-activity relationships, the conceptual framework and mechanism of action, and rights to the patents or patent applications for such compounded drug preparations. The Company defers recognition of non-refundable fees if it has continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee and that are separate and independent of the Company’s performance under the other elements of the arrangement. In addition, if the Company’s continued involvement is required, through research and development services that are related to its proprietary know-how and expertise of the delivered technology or can only be performed by the Company, then such non-refundable fees are deferred and recognized over the period of continuing involvement. Guaranteed minimum annual royalties are recognized on a straight-line basis over the applicable term.

Business Combinations

We account for business combinations by recognizing the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair values on the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions, especially with respect to intangible assets, estimated contingent consideration payments and pre-acquisition contingencies. Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:

	●	future expected cash flows from product sales, support agreements, consulting contracts, other customer contracts, and acquired development technologies and patents; and

	●	discount rates utilized in valuation estimates.

Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, such as changes in our estimate of relevant revenue or other targets, will be recognized in earnings in the period of the estimated fair value change. A change in fair value of the acquisition-related contingent consideration or the occurrence of events that cause results to differ from our estimates or assumptions could have a material effect on the consolidated statements of operations, financial position and cash flows in the period of the change in the estimate.

Goodwill and Intangible Assets

The Company reviews its goodwill and indefinite-lived intangible assets for impairment as of January 1 of each year and when an event or a change in circumstances indicates the fair value of a reporting unit may be below its carrying amount. Events or changes in circumstances considered as impairment indicators include but are not limited to the following:

	●	significant underperformance of the Company’s business relative to expected operating results;

	●	significant adverse economic and industry trends;

	●	significant decline in the Company’s market capitalization for an extended period of time relative to net book value; and

	●	expectations that a reporting unit will be sold or otherwise disposed.

The goodwill impairment test consists of a two-step process as follows:

Step 1. The Company compares the fair value of each reporting unit to its carrying amount, including the existing goodwill. The fair value of each reporting unit is determined using a discounted cash flow valuation analysis. The carrying amount of each reporting unit is determined by specifically identifying and allocating the assets and liabilities to each reporting unit based on headcount, relative revenues or other methods as deemed appropriate by management. If the carrying amount of a reporting unit exceeds its fair value, an indication exists that the reporting unit’s goodwill may be impaired and the Company then performs the second step of the impairment test. If the fair value of a reporting unit exceeds its carrying amount, no further analysis is required.

Step 2. If further analysis is required, the Company compares the implied fair value of the reporting unit’s goodwill, determined by allocating the reporting unit’s fair value to all of its assets and its liabilities in a manner similar to a purchase price allocation, to its carrying amount. If the carrying amount of the reporting unit’s goodwill exceeds its fair value, an impairment loss will be recognized in an amount equal to the excess.

Impairment of Long-Lived Assets

Long-lived assets, such as furniture and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the condensed consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the condensed consolidated balance sheet, if material.

During the three and six months ended June 30, 2015 and 2014, the Company did not recognize any impairment of long-lived assets.

Debt Issuance Costs and Debt Discount

Debt issuance costs and the debt discount are recorded net of note payable in the condensed consolidated balance sheet. Amortization expense of debt issuance costs and the debt discount is calculated using the interest method over the term of the debt and is recorded in interest expense in the accompanying condensed consolidated statement of operations.

Fair Value Measurements

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The established fair value hierarchy prioritizes the use of inputs used in valuation methodologies into the following three levels:

●	Level 1: Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.

●	Level 2: Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

●	Level 3: Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, Level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.

At June 30, 2015 and December 31, 2014, the Company did not have any financial assets or liabilities that are measured on a recurring basis. At June 30, 2015 and December 31, 2014, the Company’s financial instruments included cash and cash equivalents, restricted short-term investments, accounts receivable, accounts payable and accrued expenses, accrued payroll and related liabilities, customer deposits, deferred acquisition obligations, note payable and capital leases. The carrying amount of these financial instruments, except for deferred acquisition obligations, note payable, and the capital leases, approximates fair value due to the short-term maturities of these instruments. The Company’s restricted short-term investments are carried at amortized cost, which approximates fair value. Based on borrowing rates currently available to the Company, the carrying values of the deferred acquisition obligations, note payable, and capital leases approximate their respective fair values.

Third Party Billing and Collection Agreements

In connection with its acquisition of Park, the Company entered into a billing and collection agreement with a third party to assist in the billing and collection of workers’ compensation claims. Under the terms of the agreement, the Company is obligated to pay a fixed fee to the third party equal to 55% of the amounts billed and collected under the workers’ compensation claims. The Company accrues for such fees in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheet. Total billing and collection management expense under this agreement for the three and six months ended June 30, 2015 was $15 and $21, and is included in selling and marketing expenses in the accompanying condensed consolidated statement of operations. The amount due under the agreement as of June 30, 2015 was $54.

Stock-Based Compensation

All stock-based payments to employees, directors and consultants, including grants of stock options, warrants, restricted stock units (“RSUs”) and restricted stock, are recognized in the condensed consolidated financial statements based upon their estimated fair values. The Company uses the Black-Scholes-Merton option pricing model and Monte Carlo Simulation to estimate the fair value of stock-based awards. The estimated fair value is determined at the date of grant. The financial statement effect of forfeitures is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates.

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows Financial Accounting Standards Board (“FASB”) guidance. As such, the value of the applicable stock-based compensation is periodically remeasured and income or expense is recognized during the vesting terms of the equity instruments. The measurement date for the estimated fair value of the equity instruments issued is the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the estimated fair value of the equity instrument is primarily recognized over the term of the consulting agreement. According to FASB guidance, an asset acquired in exchange for the issuance of fully vested, nonforfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company records the estimated fair value of nonforfeitable equity instruments issued for future consulting services as prepaid stock-based consulting expenses in its condensed consolidated balance sheets.

Income Taxes

The Company accounts for income taxes under the provisions of FASB Accounting Standards Codification (“ASC”) 740, Income Taxes, or ASC 740. As of June 30, 2015, there were no unrecognized tax benefits included in the condensed consolidated balance sheet that would, if recognized, affect the effective tax rate. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties in its condensed consolidated balance sheets at June 30, 2015 or December 31, 2014, and has not recognized interest and/or penalties in the condensed consolidated statements of operations for the periods ended June 30, 2015 and 2014. The Company is subject to taxation in the United States, New Jersey, and California. The Company’s tax years since 2000 are subject to examination by the federal and state tax authorities due to the carryforward of unutilized net operating losses.

Basic and Diluted Net Loss per Common Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants, outstanding during the period.

Basic and diluted net loss per share is computed using the weighted average number of shares of common stock outstanding during the period. Common stock equivalents (using the treasury stock or “if converted” method) from deferred acquisition obligations, stock options, RSUs and warrants were 3,014,919 and 3,419,149 at June 30, 2015 and 2014, respectively, and are excluded from the calculation of diluted net loss per share for all periods presented because the effect is anti-dilutive. Common stock equivalents at June 30, 2015 included 28,633 shares of common stock underlying RSUs awarded to directors that had vested, but the issuance and delivery of these shares are deferred until the director resigns.

The following table shows the computation of basic and diluted net loss per share of common stock for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014

Numerator – net loss	$	(3,730	)	$	(2,596	)	$	(6,823	)	$	(4,921	)
Denominator – weighted average number of shares outstanding, basic and diluted		9,501,730			9,109,842			9,419,956			9,060,496
Net loss per share, basic and diluted	$	(0.39	)	$	(0.28	)	$	(0.72	)	$	(0.54	)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management are, among others, allowance for doubtful accounts and contractual adjustments, realizability of inventories, valuation of deferred taxes, goodwill and intangible assets, recoverability of long-lived assets and goodwill, valuation of contingent acquisition obligations and deferred acquisition obligations, valuation of note payable, and valuation of stock-based compensation issued to employees and non-employees. Actual results could differ from those estimates.

Recently Adopted Accounting Pronouncements

In April 2015, the FASB issued Accounting Standard Update (“ASU”) 2015-03 Simplifying the Presentation of Debt Issuance Costs. This update requires capitalized debt issuance costs to be classified as a reduction to the carrying value of debt rather than a deferred charge, as is currently required. This update will be effective for the Company for all annual and interim periods beginning after December 15, 2015 and is required to be adopted retroactively for all periods presented, and early adoption is permitted. The Company has elected early adoption of this policy for the periods presented, and the Company is currently presenting debt issuance costs as a reduction in the carrying value of the note payable in accordance with this ASU.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers. This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating the expected impact of the updated guidance, but does not believe the adoption of the updated guidance will have a significant impact on its consolidated financial statements.

Acquisitions

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Acquisitions

NOTE 3. ACQUISITIONS

Acquisition of Park

On January 1, 2015, the Company acquired all of the outstanding membership interests of Park (the “Park Acquisition”) from its previous owners (the “Sellers”), such that Park became a wholly owned subsidiary of the Company. The acquisition of Park permits the Company to further make and distribute its patent-pending proprietary drug formulations and other novel pharmaceutical solutions and introduces the Company to new geographic and compounded formulation markets.

The transaction has been accounted for as a business combination and the financial results of Park have been included in the Company’s condensed consolidated financial statements for the period subsequent to the acquisition.

The estimated acquisition date fair value of consideration transferred, assets acquired and liabilities assumed for Park are presented below and represent the Company’s best estimates.

Fair Value of Consideration Transferred

At the closing of the Park Acquisition, the Company paid to the Sellers an aggregate cash purchase price of $3,000, net of fees and expenses, and a $100 payment for cash remaining in a Park bank account, and we issued to the Sellers 63,525 shares of the Company’s restricted common stock, valued at $500 based on the average closing price of the Company’s common stock for the 10 trading days preceding the closing. In addition, the Company is obligated to make 12 quarterly cash payments to the Sellers collectively of $53 each over the three years following the closing of the Park Acquisition, totaling $638; provided that the Sellers will have the option to receive the last six of such payments, totaling up to an aggregate of $319, in the form of 6,749 shares of the Company’s common stock for each such payment. The convertible features of the deferred consideration provide for a rate of conversion that is at market value, and as a result no value was attributed to the conversion feature.

Management applied a discount rate of 15% to the restricted common stock issued at the closing of the Park Acquisition due to a lack of marketability of such shares as a result of certain restrictions on their transfer. The total acquisition date fair value of the consideration transferred and to be transferred is estimated at approximately $4,116.

A $591 liability was recognized for the estimated acquisition date fair value of the deferred consideration and is included in the deferred acquisition obligations in the accompanying condensed consolidated balance sheet at June 30, 2015.

The total acquisition date fair value of consideration transferred and to be transferred is estimated as follows:

Cash payment to Sellers at closing	$	3,100
Restricted common stock issuance to Sellers at closing		425
Deferred consideration to Sellers		591
Total acquisition date fair value	$	4,116

Allocation of Consideration Transferred

The identifiable assets acquired and liabilities assumed were recognized and measured as of the acquisition date based on their estimated fair values as of January 1, 2015, the acquisition date. The excess of the acquisition date fair value of consideration transferred over the estimated fair value of the net tangible assets and intangible assets acquired was recorded as goodwill.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

Cash and cash equivalents	$	95
Accounts receivable		399
Inventories		232
Furniture and equipment		252
Intangible assets		2,629
Total identifiable assets acquired		3,607
Accounts payable and accrued expenses		304
Other liabilities		35
Total liabilities assumed		339
Total identifiable assets less liabilities assumed		3,268
Goodwill		848
Net assets acquired	$	4,116

The fair value adjustments made herein and the allocation of purchase price is preliminary. During the three months ended June 30, 2015 the discount rate of the common stock issued at the time of the Park Acquisition was adjusted from 25% to 15% which resulted in an increase of $46 and $4 in goodwill and intangible assets, respectively, compared to the initial allocation of the purchase price. The final allocation will be based on estimates and appraisals that will be finalized within one year of the closing of the Park Acquisition and based on the Company’s final evaluation of Park’s assets and liabilities, including both tangible and intangible assets. The final allocation of purchase price and the resulting effect on net income (loss) may differ from the amounts included herein. If the Company’s final purchase price allocation differs from the allocation used in preparing these condensed consolidated financial statements, the Company’s tangible and intangible assets and net loss could be higher or lower than the amounts presented in these condensed consolidated financial statements.

Results of Operations

The amount of revenues and net income of Park included in the Company’s condensed consolidated statement of operations from the acquisition date through the period ended June 30, 2015 are as follows:

Total revenues		$	2,201
Net income		$	88

Intangible Assets

Management engaged a third-party valuation firm to assist in the determination of the fair value of the acquired intangible assets of Park. In determining the fair value of the intangible assets, the Company considered, among other factors, the best use of the acquired assets, analyses of historical financial performance of Park and estimates of future performance of Park. The fair values of the identified intangible assets related to Park’s customer relationships, trade name, non-competition clause, and state pharmacy licenses. Customer relationships and the non-competition clause were calculated using the income approach. Trade name and state pharmacy licenses were calculated using the cost approach. The following table sets forth the components of identified intangible assets associated with the Park Acquisition and their estimated useful lives.

	Fair Value		Useful Life
Customer relationships		2,387	3 - 15 years
Trade name		10	5 years
Non-competition clause		224	3 years
State pharmacy licenses		8	25 years
	$	2,629

The Company determined the useful lives of intangible assets based on the expected future cash flows and contractual life associated with the respective assets. Trade names represent the fair value of the brand and name recognition associated with the marketing of Park’s formulations and services. Customer relationships represent the expected future benefit from contracts and relationships which, at the date of acquisition, were reasonably anticipated to continue given the history and operating practices of Park. The non-competition clause represents the contractual period and expected degree of adverse economic impact that would exist in its absence. Licenses represent twelve state pharmacy licenses Park held at the date of acquisition.

Goodwill

Of the total estimated purchase price for the Park Acquisition, $848 was allocated to goodwill and is attributable to expected synergies between the combined companies, including access for the Company to fulfill prescriptions with its patent-pending proprietary drug formulations through Park’s market channels and assembled workforce. Goodwill represents the excess of the purchase price of the acquired business over the fair value of the underlying net tangible and intangible assets acquired. Goodwill resulting from the business will be tested for impairment at least annually and more frequently if certain indicators are present. In the event the Company determines that the value of goodwill has become impaired, it will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. None of the goodwill is expected to be deductible for income tax purposes.

2014 Acquisition of PC

On April 1, 2014, the Company completed the acquisition of PC. The Company has included the financial results of PC in its condensed consolidated financial statements from the date of acquisition. The total purchase price for PC was approximately $1,115, which consisted of approximately $600 in cash payments and $515 in contingent consideration. The Company has recorded $124 of net tangible assets less liabilities, $659 of identifiable intangible assets, and $332 of goodwill in connection with such acquisition.

Pro Forma Financial Information

The following table presents the Company’s unaudited pro forma results (including Park and PC) for the three and six months ended June 30, 2014, as though the companies had been combined as of the beginning of each of the periods presented. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of each period presented, nor is it indicative of results of operations which may occur in the future. The unaudited pro forma results presented include amortization charges for intangible assets, interest charges, acquisition costs, and eliminations of intercompany transactions.

	For the			For the
	Three Months Ended			Six Months Ended
	June 30, 2014			June 30, 2014
Total revenues	$	1,721		$	3,248
Net loss	$	(2,669	)	$	(4,846	)

The Company incurred approximately $201 in acquisition expenses related to the Park Acquisition, and did not incur material acquisition expenses related to the PC acquisition.

Restricted Short-Term Investment

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

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-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4926-128472

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1383-128463

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479

+ Details

Restricted Short-Term Investment

6 Months Ended

Jun. 30, 2015

Restricted Short-term Investment

NOTE 4. RESTRICTED SHORT-TERM INVESTMENTS

The restricted short-term investments at June 30, 2015 and December 31, 2014 consist of certificates of deposit, which are classified as held-to-maturity. At June 30, 2015 and December 31, 2014, the restricted short-term investments were recorded at amortized cost, which approximates fair value.

At June 30, 2015 and December 31, 2014, the certificates of deposit of $150 were classified as a current asset. These certificates of deposit are required as collateral under the Company’s corporate credit card agreement and additional security for the Company’s office space lease, and they automatically renew every twelve months.

Inventories

6 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

Inventories

NOTE 5. INVENTORIES

Inventories are comprised of finished compounded formulations, over-the-counter and prescription retail pharmacy products, commercial pharmaceutical products, related laboratory supplies and active pharmaceutical ingredients. The composition of inventories as of June 30, 2015 and December 31, 2014 was as follows:

	June 30, 2015		December 31, 2014
Raw materials	$	386	$	146
Work in progress		-		98
Finished goods		407		129
Total inventories	$	793	$	373

Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2015

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

NOTE 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:

	June 30, 2015		December 31, 2014
Prepaid insurance	$	35	$	124
Other prepaid expenses		295		82
Deposits and other current assets		106		35
Total prepaid expenses and other current assets	$	436	$	241

Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

NOTE 7. INTANGIBLE ASSETS AND GOODWILL

The Company’s intangible assets at June 30, 2015 consisted of the following:

	Amortization
	periods			Accumulated			Net
	(in years)	Cost		amortization			Carrying value
Customer relationships	3-15 years	$	2,983	$	(166	)	$	2,817
Trade name	5 years		15		(3	)		12
Non-competition clause	3-4 years		274		(53	)		221
State pharmacy licenses	25 years		16		(2	)		14
		$	3,288	$	(224	)	$	3,064

Amortization expense for intangible assets for the three and six months ended June 30, 2015 was as follows:

	For the Three Months Ended		For the Six Months Ended
	June 30, 2015		June 30, 2015
Customer relationships	$	66	$	129
Trade name		1		2
Non-competition clause		26		44
State pharmacy licenses		1		1
	$	94	$	176

Estimated future amortization expense for the Company’s intangible assets at June 30, 2015 is as follows:

Years ending December 31,
Remainder of 2015	$	174
2016		349
2017		349
2018		208
2019		205
Thereafter		1,779
	$	3,064

The changes in the carrying value of the Company’s goodwill during the six months ended June 30, 2015 were as follows:

Balance at January 1, 2015	$	332
Acquisition of Park (see Note 3)		848
Balance at June 30, 2015	$	1,180

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

6 Months Ended

Jun. 30, 2015

Payables and Accruals [Abstract]

NOTE 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:

	June 30, 2015			December 31, 2014
Accounts payable	$	1,016		$	699
Deferred rent		44			5
Accrued interest (see Note 9)		86			-
Accrued exit fee for note payable (see Note 9)		500			-
Building lease liability(1)		58			74
Other accrued expenses		-			39	(2)
Total accounts payable and accrued expenses		1,704			817
Less: Current portion		(1,181	)		(787	)
Non-current total accrued expenses	$	523		$	30

	(1)	In September 2014, the Company relocated its primary operations to a 7,565 square foot office facility in San Diego, California. In February 2015, the Company entered into a sublease agreement to sublet 3,874 square feet of its previously occupied offices through the remaining term of the lease at a monthly rent amount of $8. The Company recognized a loss of approximately $117 during the year ended December 31, 2014 related to the estimated remaining lease liability, net of expected sublease income, of the previously occupied offices. The obligations were discounted based on current prevailing market rates.

	(2)	The amount consists of a $39 stock-based compensation accrual at December 31, 2014 related to stock options granted for consulting services provided. The stock options were granted during the six months ended June 30, 2015 and the $39 was recorded to additional paid-in-capital.

Debt

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Debt

NOTE 9. DEBT

On May 11, 2015, the Company entered into a loan and security agreement (the “Loan Agreement”) with IMMY Funding LLC, an affiliate of Life Sciences Alternative Funding LLC (the “Lender”), as lender and collateral agent. Pursuant to the terms of the Loan Agreement, the Lender made available to the Company term loans in the aggregate principal amount of up to $15,000, $10,000 of which was drawn on May 11, 2015 and the remaining $5,000 of which will be available to be drawn, at the Company’s option, upon the Company’s achievement of at least $15,000 in trailing 12-month revenue during any consecutive 12-month period through May 11, 2016. The term loans bear interest at a fixed per-annum rate of 12.5% and allows for 2% of the interest to be paid-in-kind until either February 2017 or May 2017, such date dependent upon the Company’s ability to meet certain revenue or cash balance measures. The Company is permitted to pay interest only for the first three years and after the end of the interest-only period, we will be required to pay interest, plus repayments of the principal amount of the term loans, in 36 equal monthly installments. The interest-only period may be reduced to 20 months if the Company does not meet certain minimum revenue or cash balance requirements and the Company would be required to pay interest, plus repayments of the principal amount of the term loans, in 24 equal monthly installments. All amounts owed under the loan agreement, including a final fee of 5% of the aggregate principal amount of the term loans, will be due on the earlier of May 11, 2021, or 24 months after the end of the interest-only period. The Company incurred expenses of approximately $697 in connection with the Loan Agreement. The final fee and expenses are being amortized as interest expense over the term of the debt using the interest method and the related liability of $500 for the final fee is included in accrued expenses (see Note 8) in the accompanying condensed consolidated balance sheet.

Pursuant to the terms of the Loan Agreement, the Company is bound by certain affirmative covenants setting forth actions that the Company must take during the term of the Loan Agreement, including, among others, certain information delivery requirements, obligations to maintain certain insurance and certain notice requirements. Additionally, the Company is bound by certain negative covenants setting forth actions that the Company may not take during the term of the Loan Agreement without the Lender’s consent, including, among others, disposing of certain of the Company’s or its subsidiaries’ business or property, incurring certain additional indebtedness, entering into certain merger, acquisition or change of control transactions, paying certain dividends or distributions on or repurchasing any of the Company’s capital stock, or incurring any lien or other encumbrance on the Company’s or its subsidiaries’ assets, subject to certain permitted exceptions. Upon the occurrence of an event of default under the Loan Agreement (subject to cure periods for certain events of default), all amounts owed by the Company thereunder may be declared immediately due and payable by the Lender. Events of default include, among others, the following: the occurrence of certain bankruptcy events; the failure to make payments under the Loan Agreement when due; the occurrence of a material adverse change in the business, operations or condition of the Company or any of its subsidiaries; the breach by the Company or its subsidiaries of certain of their material agreements with third parties; the initiation of certain regulatory enforcement actions against the Company or its subsidiaries; the rendering of certain types of fines or judgments against the Company or its subsidiaries; any breach by the Company or its subsidiaries of any covenant (subject to cure periods for certain covenants) made in the Loan Agreement; and the failure of any representation or warranty made by the Company or its subsidiaries in connection with the Loan Agreement to be correct in any material respect when made.

The Company’s obligations under the Loan Agreement are guaranteed on a secured basis by its wholly owned subsidiaries. Each of the Company and its subsidiaries has granted the Lender a security interest in substantially all of its personal property, rights and assets, including intellectual property rights and equity ownership, to secure the payment of all amounts owed under the Loan Agreement.

In connection with the Loan Agreement, the Company has issued to the Lender a warrant to purchase up to 125,000 shares of the Company’s common stock, which is exercisable immediately, has an exercise price of $7.85 per share and has a term of 10 years. The relative fair value of the warrants was approximately $840 and was estimated using the Black-Scholes-Merton model with the following assumptions: fair value of the Company’s common stock at issuance of $7.97 per share; ten-year contractual term; 109% volatility; 0% dividend rate; and a risk-free interest rate of 1.25%. The relative fair value of the warrants was recorded as a debt discount, decreasing notes payable and increasing additional paid-in capital on the accompanying condensed consolidated balance sheet. The debt discount is being amortized to interest expense over the term of the debt using the interest method. For the three and six months ended June 30, 2015, debt discount and issuance costs amortization was approximately $70.

Notes payable at June 30, 2015 was as follows:

	June 30, 2015
12.5% note payable	$	10,000
Add: Interest paid-in-kind		28
Less: Discount on note for issuance costs and relative fair value of warrants		(1,967	)
Less: Current portion		-
Long-term portion	$	8,061

Future minimum payments as of June 30, 2015 are as follows:

Year Ending December 31,	Amount
Remainder of 2015	$	529
2016		1,075
2017		1,195
2018		2,741
2019		4,183
Thereafter		6,275
Total minimum payments		15,998
Less: amount representing interest and interest paid-in-kind		(5,998	)
Note payable, gross		10,000
Add: interest paid-in-kind		28
Less: unamortized discount and issuance costs		(1,967	)
Note payable and interest paid-in-kind, net of unamortized debt discount and issuance costs	$	8,061

Stockholders' Equity and Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Stockholders' Equity and Stock-Based Compensation

NOTE 10. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Common Stock

During January 2015, the Company issued 63,525 shares of restricted common stock, valued at $425, in connection with the Park Acquisition (see Note 3).

In January 2015, the Company issued 8,521 shares of its common stock in connection with RSUs that had been awarded to a non-employee director and had vested, but were not issued and settled until the resignation of the director on January 1, 2015.

During the six months ended June 30, 2015, 9,936 shares of the Company’s common stock underlying RSUs issued to directors vested, but the issuance and delivery of these shares are deferred until the director resigns.

During the six months ended June 30, 2015, the Company issued a total of 220,912 shares of common stock as a result of warrant exercises. Of these, the Company received cash proceeds of $1,248 for the issuance of 209,980 shares of common stock upon the exercise on a cash basis of warrants to purchase the same number of shares of common stock with an exercise price of $5.925, and the Company received no cash proceeds for the issuance of 10,932 shares of common stock upon the exercise pursuant to cashless exercise provisions of warrants to purchase 30,457 shares of common stock with an exercise price of $5.25 per share.

Preferred Stock

At June 30, 2015, the Company had 5,000,000 shares of preferred stock, $0.001 par value, authorized and no shares of preferred stock issued and outstanding.

Stock Option Plan

On September 17, 2007, the Company’s Board of Directors and stockholders adopted the Company’s 2007 Incentive Stock and Awards Plan, which was subsequently amended on November 5, 2008, February 26, 2012, July 18, 2012, May 2, 2013 and September 27, 2013 (as amended, the “Plan”). As of June 30, 2015, the Plan provides for the issuance of a maximum of 5,000,000 shares of the Company’s common stock. The purpose of the Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in the Company’s development and financial success. Under the Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Internal Revenue Code, non-qualified stock options, restricted stock units and restricted stock. The Plan is administered by the Compensation Committee of the Company’s Board of Directors.

Stock Options

A summary of stock option activity under the Plan for the six months ended June 30, 2015 is as follows:

	Number of shares			Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life		Aggregate Intrinsic Value
Options outstanding - January 1, 2015		1,029,240		$	5.74
Options granted		187,673		$	7.68
Options exercised		-		$	-
Options cancelled/forfeit		(15,103	)	$	9.06
Options outstanding - June 30, 2015		1,201,810		$	5.99		6.19	$	2,356
Options exercisable		822,593		$	5.44		4.96	$	2,564
Options vested and expected to vest		1,163,888		$	5.96		6.11	$	2,331

The aggregate intrinsic value in the table above represents the total pre-tax amount of the proceeds, net of exercise price, which would have been received by option holders if all option holders had exercised and immediately sold all options with an exercise price lower than the market price on June 30, 2015, based on the closing price of the Company’s common stock of $8.13 on that date.

During the six months ended June 30, 2015, the Company granted stock options to certain employees and consultants. The stock options were granted with an exercise price equal to the current market price of the Company’s common stock, as reported by the securities exchange on which the common stock was then listed, at the grant date and have contractual terms of 10 years. Vesting terms for options granted to employees and consultants during the six months ended June 30, 2015 typically included one of the following vesting schedules: 25% of the shares subject to the option vest and become exercisable on the first anniversary of the grant date and the remaining 75% of the shares subject to the option vest and become exercisable quarterly in equal installments thereafter over three years; quarterly vesting over three years; or 100% vesting associated with the provision or completion of services provided under contracts with consultants. Certain option awards provide for accelerated vesting if there is a change in control (as defined in the Plan) and in the event of certain modifications to the option award agreement.

The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model. The expected volatility is based on the historical volatilities of the common stock of the Company and comparable publicly traded companies based on the Company’s belief that it currently has limited relevant historical data regarding the volatility of its stock price on which to base a meaningful estimate of expected volatility. The expected term of options granted was determined in accordance with the “simplified approach,” as the Company has limited, relevant, historical data on employee exercises and post-vesting employment termination behavior. The expected risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The financial statement effect of forfeitures is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates. For option grants to employees and directors, the Company assigns a forfeiture factor of 10%. These factors could change in the future, which would affect the determination of stock-based compensation expense in future periods. Utilizing these assumptions, the fair value is determined at the date of grant.

The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing options granted to employees:

	2015
Weighted-average fair value of options granted	$	6.60
Expected terms (in years)		5.81 - 6.11
Expected volatility		106 - 121	%
Risk-free interest rate		1.47 - 1.64	%
Dividend yield		-

The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing options granted to consultants:

	2015
Weighted-average fair value of options granted	$	6.18
Expected terms (in years)		10.00
Expected volatility		109	%
Risk-free interest rate		1.06	%
Dividend yield		-

The following table summarizes information about stock options outstanding and exercisable at June 30, 2015:

	Options Outstanding						Options Exercisable
			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
	Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Life in Years		Price		Exercisable		Price
$ 2.40 - $3.20		250,000		4.07	$	2.80		250,000	$	2.80
$ 3.60 - $4.51		337,723		4.46	$	4.36		283,350	$	4.41
$ 5.49 - $7.99		353,730		8.87	$	7.07		115,262	$	6.60
$ 8.06 - $8.75		253,557		6.88	$	8.89		167,181	$	8.92
$ 28.00 - $80.00		6,800		4.60	$	40.86		6,800	$	40.86
		1,201,810		6.19	$	5.99		822,593	$	5.44

As of June 30, 2015, there was approximately $1,975 of total unrecognized compensation expense related to unvested stock options granted under the Plan. That expense is expected to be recognized over the weighted-average remaining vesting period of 2.5 years. The stock-based compensation for all stock options was $240 and $569 during the three and six months ended June 30, 2015, respectively.

Restricted Stock Units

Restricted stock unit, or RSU, awards are granted subject to certain vesting requirements and other restrictions, including performance and market-based vesting criteria. The grant date fair value of the RSUs, which has been determined based upon the market value of the Company’s common stock on the grant date, is expensed over the vesting period of the RSUs. Unvested portions of RSUs issued to consultants are remeasured on an interim basis until vesting criteria is met.

During February 2015, the Company granted 30,000 RSUs to its Chief Financial Officer, Andrew R. Boll and 30,000 RSUs to its Chief Commercial Officer, John P. Saharek, valued at $442 in the aggregate. The RSUs were granted pursuant to the Plan and will vest on the third anniversary of the RSU grant date, subject to the applicable employee’s continued employment with the Company on such date and accelerated vesting of all unvested shares thereunder upon the occurrence of a change in control (as defined in the Plan).

During February 2015, the Company granted 157,500 RSUs to Mr. Boll, which are subject to the satisfaction of certain market-based and continued service conditions (the “Boll Performance Equity Award”). The market-based vesting criteria are separated into five tranches and require that the Company achieve and maintain certain stock price targets ranging from $10 per share to $30 per share during the three-year period following the grant date. With certain limited exceptions, Mr. Boll must be employed with the Company on the third anniversary of the grant date in order for the Boll Performance Equity Award to vest. The initial fair value of the Boll Performance Equity Award was $228 using a Monte Carlo Simulation with a three-year life, 60% volatility and a risk free interest rate of 0.77%.

The market-based vesting conditions applicable to the Boll Performance Equity Award are as follows:

Tranche	Number of Shares	Target Share Price
Tranche 1	30,000 shares	$10.00 or greater
Tranche 2	30,000 shares	$15.00 or greater
Tranche 3	30,000 shares	$20.00 or greater
Tranche 4	30,000 shares	$25.00 or greater
Tranche 5	37,500 shares	$30.00 or greater

For each respective tranche to vest the following conditions must be met: (i) the Company’s common stock must have an official closing price at or above the Target Share Price for the respective tranche (each such date, a “Trigger Date”); (ii) during the period that includes the Trigger Date and the immediately following 19 trading days (the “Measurement Period”), the arithmetic mean of the 20 closing prices of the Company’s common stock during the Measurement Period must be at or above the Target Share Price for such tranche; and (iii) with certain limited exceptions, Mr. Boll must be in continuous service with the Company through the third anniversary of the grant date. Any unvested RSUs under the Boll Performance Equity Award will be forfeited on the third anniversary of the grant date.

A summary of the Company’s RSU activity and related information for the six months ended June 30, 2015 is as follows:

	Number of RSUs			Weighted Average Grant Date Fair Value
RSUs unvested - January 1, 2015		1,276,815		$	3.20
RSUs granted		242,624		$	3.59
RSUs vested		(9,936	)	$	7.55
RSUs cancelled/forfeited		(6,209	)	$	6.85
RSUs unvested at June 30, 2015		1,503,294		$	3.22

As of June 30, 2015, the total unrecognized compensation expense related to unvested RSUs was approximately $2,002, which is expected to be recognized over a weighted-average period of 1.1 years, based on the vesting schedules of the applicable RSUs. The stock-based compensation for RSU’s during the three and six months ended June 30, 2015 was $413 and $792, respectively.

Warrants

From time to time, the Company issues warrants to purchase shares of the Company’s common stock to investors, lenders (see Note 9), underwriters and other non-employees for services rendered or to be rendered in the future.

In April 2015, warrants to purchase 334,819 shares of the Company’s common stock with an exercise price of $5.925 were cancelled following the expiration of their contractual term.

A summary of warrant activity for the six months ended June 30, 2015 is as follows:

	Number of Shares Subject to Warrants Outstanding			Weighted Avg. Exercise Price

Warrants outstanding - January 1, 2014		690,944		$	6.05
Granted		125,000		$	7.85
Exercised		(240,437	)	$	5.84
Expired		(334,819	)	$	5.93
Warrants outstanding and exercisable - June 30, 2015		240,688		$	7.41
Weighted average remaining contractual life of the outstanding warrants in years - June 30, 2015		6.49

The fair value of each warrant is estimated on the date of grant using the Black-Scholes-Merton option pricing model. The intrinsic value of warrants exercised during the six months ended June 30, 2015 was approximately $528.

A list of the warrants outstanding as of June 30, 2015 is included in the following table:

	Warrants Outstanding						Warrants Exercisable
			Warrants		Exercise		Warrants		Expiration
Warrant Series	Issue Date		Outstanding		Price		Exercisable		Date
Lender warrants (see Note 9)		5/11/2015		125,000	$	7.85		125,000		5/11/2025
Underwriter Warrants		2/7/2013		55,688	$	5.25		55,688		2/7/2018
Warrants issued to investor relations consultant		7/19/2013		60,000	$	8.50		60,000		7/19/2018
				240,688	$	7.41		240,688

The Company recorded stock-based compensation (including the amortization of stock-based prepaid consulting fees) related to equity instruments granted to employees, directors and consultants as follows:

	For the		For the		For the		For the
	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Employees - selling and marketing	$	107	$	17	$	175	$	31
Employees - general and administrative		516		562		1,037		1,105
Directors - general and administrative		63		42		108		84
Consultants - selling and marketing		17		15		41		31
Consultants - general and administrative		-		18		-		87
Consultants - research and development		-		5		-		9
Total	$	703	$	659	$	1,361	$	1,347

Commitments and Contingencies Disclosure [Abstract]

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(d),(e))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB TOPIC 4.E)
-URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.29-31)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies

NOTE 11. COMMITMENTS AND CONTINGENCIES

Capital Leases

The Company leases equipment under capital leases with an interest rate of 4.25% per annum. At June 30, 2015, future payments under the Company’s capital leases were as follows:

Year ending December 31,
Remainder of 2015	$	15
2016		22
2017		1
Total minimum lease payments		38
Less amount representing interest		(3	)
Present value of future minimum lease payments		35
Less current portion		(27	)
Capital lease obligation, net of current portion	$	8

The value of the equipment under capital leases as of June 30, 2015 was $60, with related accumulated depreciation of $18.

Operating Leases

In February 2015, the Company entered into a lease agreement for approximately 8,602 square feet of lab, warehouse and office space in Roxbury, New Jersey. The current lease term expires on July 31, 2022. The monthly rent amount is $10 and includes annual increases of approximately 3.75%, and the lease allows for the first five months of rent amounts to be abated. This facility is currently undergoing construction to serve as an outsourcing facility and pharmacy.

In January 2015, the Company entered into a commercial lease agreement, for the lease of certain premises to Park of approximately 4,500 square feet of lab and office space. The monthly rent amount is $10 and includes annual increases of approximately 3%.

In June 2014, the Company entered into a lease agreement for 7,565 square feet of office space that commenced on September 1, 2014 and continues until October 31, 2018. Monthly rent began on September 1, 2014 in the amount of $20, with a 3% increase in the base rent amount on an annual basis. The lease agreement allows for the monthly rent amount to be abated for two months at various times during the lease agreement. This space serves as our corporate headquarters.

In April 2013, the Company entered into a lease agreement for 3,874 square feet of office space that commenced on May 1, 2013 and continues until September 30, 2016. Monthly rent began on May 1, 2013 in the amount of $10 with a 3% increase in the base rent amount on an annual basis. The lease agreement allows for the monthly rent amount to be abated for five months at various times during the lease agreement. In February 2015, the Company entered into a sublease agreement to sublet this space through the remaining term of the lease at a monthly rent amount of $8.

In January 2010, PC entered into a lease agreement for 3,137 square feet of office and laboratory space that commenced on January 1, 2010 and continues until December 31, 2015. Monthly rent began on January 1, 2010 in the amount of $4.

Legal

In the ordinary course of business, the Company may face various claims brought by third parties and the Company may, from time to time, make claims or take legal actions to assert the Company’s rights, including intellectual property disputes, contractual disputes and other commercial disputes. Any of these claims could subject the Company to litigation. Management believes the outcomes of currently pending claims are not likely to have a material effect on the Company’s consolidated financial position and results of operations.

Indemnities

In addition to the indemnification provisions contained in the Company’s charter documents, the Company generally enters into separate indemnification agreements with each of the Company’s directors and officers. These agreements require the Company, among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status or service as the Company’s director or officer, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. The Company also indemnifies its lessors in connection with its facility leases for certain claims arising from the use of the facilities. These indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities in the accompanying condensed consolidated balance sheets.

Urigen License

On October 24, 2014 (the “Urigen Effective Date”), the Company entered into a license agreement (the “Urigen License”) with Urigen Pharmaceuticals, Inc. (“Urigen”), pursuant to which Urigen granted to the Company a license under certain U.S. patents and patent applications to develop and sell in the U.S. Urigen’s URG101 product (“HLA”), a heparin and alkalinized lidocaine compounded formulation, for the prevention or treatment of disorders of the lower urinary tract.

As consideration for the license granted under the Urigen License, the Company agreed to pay Urigen annual tiered royalties based on sales of HLA, subject to certain minimum annual royalty payments. The annual tiered royalties consist of the greater of (i) $0.50 per dose (dollar amount not presented in thousands), and (ii) 15%-20% of the Company’s net sales of HLA, with the royalty amount within such range depending on the Company’s aggregate sales of HLA during the period to which the royalty payment applies. The minimum annual royalty payment consists of (a) for the 2015 calendar year, the greater of (i) 110% of the aggregate royalties paid to Urigen under the Existing Sublicenses during the preceding 12 months, on a prorated basis, and (ii) $800, less the aggregate royalties paid to Urigen under the Existing Sublicenses during the 2015 calendar year, and (b) for each calendar year thereafter, 110% of the aggregate amount owed by the Company to Urigen under the Urigen License during the prior calendar year. The Company is obligated to pay such royalties beginning with its first commercial sale of HLA and continuing until the expiration of the patents subject to the license granted under the Urigen License. The Company has also agreed to use commercially reasonable efforts to develop and commercialize HLA according to the terms of a diligence plan agreed to by the parties, which efforts will include, without limitation, the Company’s investment of $2,000 in commercialization efforts of HLA, which investment and timeline can be adjusted dependent on market circumstances, and is expected to be incurred over 18-24 months following the Urigen Effective Date.

The Urigen License was non-exclusive until April 24, 2015, when the Company exercised its option to convert the non-exclusive license to an exclusive license for the remaining term of the Urigen License. Legacy sublicensees, who previously had non-exclusive licensed rights to compound and sell HLA (the “Existing Sub-licensees”) were provided written notice of the Company’s intent to terminate those non-exclusive license agreements, on or around April 24, 2015. Over the following 60 to 90 days (the “Transition Period”) the Company entered into agreements with the Existing Sub-licensees to transfer existing refill prescriptions to the Company’s wholly owned pharmacies. These agreements required various one-time payments and limited future payments related to transferred prescriptions. Urigen agreed that any revenue received from the Existing Sub-licensees from HLA sales that are consistent with their respective agreements with Urigen, will be kept by the Company (without a related royalty payment to Urigen). Beginning on April 24, 2015, the Company was due royalty payments on any HLA prescriptions filled by Existing Sub-licensees during the Transition Period and any additional period the sublicenses filled prescriptions for HLA. During the three and six months ended June 30, 2015, the Company recognized $50 in royalty revenues related to HLA prescriptions filled by the Existing Sub-licensees.

Subject to certain conditions and each party’s right to terminate the Urigen License earlier under certain circumstances, the Urigen License will continue in effect until the expiration of the Company’s royalty obligations under the Urigen License. The Urigen License terminates upon the first commercial sale of HLA by Urigen, its affiliates, or a third party after the U.S. Food and Drug Administration (the “FDA”) grants Urigen approval to market HLA in the U.S., if market approval is granted. The Company shall have the option, at its discretion, to become a non-exclusive distributor of HLA following the FDA granting Urigen such market approval. During the three and six months ended June 30, 2015 the Company recognized $3 and $5 in royalty amounts under the Urigen License, and such amounts are included in cost of sales in the accompanying condensed consolidated statement of operations.

PCCA License Agreement

On August 30, 2012, the Company entered into a license agreement with Professional Compounding Centers of America (“PCCA”), pursuant to which PCCA has granted to the Company and its affiliates certain exclusive rights under PCCA’s proprietary formulations, other technologies and data, and the Company has agreed to pay to PCCA certain royalties on net sales relating to the sale of certain future products that the Company may produce, which royalties will range from 4.5% to 9% for each product, subject to certain minimum royalty payments. PCCA may terminate the license agreement if the Company fails to commence efforts to research and develop any such products within certain time periods, as set forth in the license agreement. No royalty amounts have been paid or accrued under this agreement during the six months ended June 30, 2015 and 2014.

PCCA Strategic Alliance Agreement

On February 18, 2013, the Company entered into a strategic alliance agreement with PCCA. Under this agreement, PCCA has agreed that, during the term of the agreement, it will not introduce any of PCCA’s members or customers meeting certain criteria (the “Member/Customers”) to any third party whereby such third party licenses or otherwise acquires the intellectual property rights of such Member/Customer, without first presenting such an opportunity to the Company. PCCA may, but is not required to, present such opportunities to the Company, use reasonable efforts to facilitate an introductory meeting between the Member/Customer and the Company, and further provide certain key technical assistance with respect to any potential development project the Company may pursue associated with the Member/Customer’s intellectual property rights. In the event the Company and a Member/Customer introduced to the Company by PCCA enter into a commercial agreement for the license or acquisition of the intellectual property rights owned by the Member/Customer, PCCA will be entitled to receive certain cash fees up to an aggregate of $100, as well as a commission based on net sales, if any, generated by the Company as a result of the acquired intellectual property rights. The agreement has a term of one year and is automatically extended for successive one year periods unless either party gives the other written notice of non-renewal. This agreement automatically renewed for a one-year term on February 18, 2015. No royalty amounts have been paid or accrued under this agreement during the six months ended June 30, 2015 and 2014.

Asset Purchase Agreements

The Company has acquired intellectual property rights related to certain proprietary innovations from certain inventors (the “Inventors”) through multiple asset purchase agreements. The asset purchase agreements provide that the Inventors will cooperate with the Company in obtaining patent protection for the acquired intellectual property and that the Company will use commercially reasonable efforts to research, develop and commercialize a product based on the acquired intellectual property. In addition, the Company has acquired a right of first refusal on additional intellectual property and drug development opportunities presented by these Inventors.

In consideration for the acquisition of the intellectual property rights, the Company is obligated to make payments to the Inventors based on the completion of certain milestones, generally consisting of: (1) a payment payable within 30 days after the issuance of the first patent in the United States arising from the acquired intellectual property (if any); (2) a payment payable within 30 days after the Company files the first investigational new drug application (“IND”) with the FDA for the first product arising from the acquired intellectual property (if any); (3) for certain of the Inventors, a payment payable within 30 days after the Company files the first new drug application with the FDA for the first product arising from the acquired intellectual property (if any); and (4) certain royalty payments based on the net receipts received by the Company in connection with the sale or licensing of any product based on the acquired intellectual property (if any), after deducting (among other things) the Company’s development costs associated with such product. If, following five years after the date of the applicable asset purchase agreement, the Company either (a) for certain of the Inventors, has not filed an IND or, for the remaining Inventors, has not initiated a study where data is derived, or (b) has failed to generate royalty payments to the Inventors for any product based on the acquired intellectual property, the Inventors may terminate the applicable asset purchase agreement and request that the Company re-assign the acquired technology to the Inventors. No royalty amounts have been paid or accrued under these agreements during the six months ended June 30, 2015 and 2014.

Segment Information and Concentrations

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segment Information and Concentrations

NOTE 12. SEGMENT INFORMATION AND CONCENTRATIONS

The Company operates its business on the basis of a single reportable segment, which is the business of developing proprietary drug therapies and providing such therapies through sterile and non-sterile pharmaceutical compounding services. The Company’s chief operating decision-maker is the Chief Executive Officer, who evaluates the Company as a single operating segment.

The Company categorizes revenues by geographic area based on selling location. All operations are currently located in the U.S.; therefore, total revenues for 2015 and 2014 are attributed to the U.S. All long-lived assets at June 30, 2015 are located in the U.S.

The Company sells its compounded formulations to a large number of customers. Less than 10% of the Company’s total pharmacy sales were derived from a single customer for the three and six months ended June 30, 2015.

The Company receives its active pharmaceutical ingredients from three main suppliers. These suppliers collectively accounted for 51% and 57%, respectively, of active pharmaceutical ingredient purchases during the three and six months ended June 30, 2015.

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Subsequent Events

6 Months Ended

Jun. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

NOTE 13. SUBSEQUENT EVENTS

The Company has performed an evaluation of events occurring subsequent to June 30, 2015 through the filing date of this Quarterly Report. Based on its evaluation, nothing other than the events described below needs to be disclosed.

From July 1, 2015 through the filing date of this Quarterly Report, the Company issued a total of 43,318 shares of common stock as a result of option exercises. The Company received no cash proceeds for the issuance of the shares of common stock upon the exercise pursuant to cashless exercise provisions of stock options to purchase 95,300 shares of common stock with exercise prices of $4.50 per share.

Baum Agreement

On July 31, 2015 the Company entered into a First Amendment to Amended and Restated Employment Agreement (the “Amendment”), with its Chief Executive Officer, Mark L. Baum (“Mr. Baum”), which amended that certain Amended and Restated Employment Agreement (the “Employment Agreement”), dated May 2, 2013, by and between Mr. Baum and the Company. Pursuant to the Amendment, Mr. Baum’s eligibility for certain discretionary performance related stock option grants set forth in Section 3(f) of the Employment Agreement was terminated.

On July 31, 2015 (the “Grant Date”), pursuant to Section 3(f) of the Employment Agreement, the Company granted Mr. Baum an option (“Option”) to purchase 600,000 shares of common stock (“Shares”) of the Company at an exercise price of $7.87 per share under the Company’s Amended and Restated 2007 Incentive Stock and Awards Plan, as amended, pursuant to the Company’s form of Nonqualified Stock Option Agreement. 200,000 of the Shares subject to the Option shall vest if, at any time during the five (5) years following the Grant Date, the average of the official closing price per share of the Company’s common stock during the preceding five (5) days is equal to or greater than $9.00 (the “First Price Condition”). 100,000 of the Shares subject to the Option shall vest if, at any time during the five (5) years following the Grant Date, the average of the official closing price per share of the Company’s common stock during the preceding five (5) days is equal to or greater than $10.00 (the “Second Price Condition”). 100,000 of the Shares subject to the Option shall vest if, at any time during the five (5) years following the Grant Date, the average of the official closing price per share of the Company’s common stock during the preceding five (5) days is equal to or greater than $12.00 (the “Third Price Condition”). 100,000 of the Shares subject to the Option shall vest if, at any time during the five (5) years following the Grant Date, the average of the official closing price per share of the Company’s common stock during the preceding five (5) days is equal to or greater than $14.00 (the “Fourth Price Condition”). 100,000 of the Shares subject to the Option shall vest if, at any time during the five (5) years following the Grant Date, the average of the official closing price per share of the Company’s common stock during the preceding five (5) days is equal to or greater than $15.00 (the “Fifth Price Condition” and each of the First Price Condition, the Second Price Condition, the Third Price Condition and the Fourth Price Condition, a “Price Condition”). Upon satisfaction of a Price Condition within one year of the date Mr. Baum is terminated by the Company without Cause (as defined in the Employment Agreement) or Mr. Baum resigns for Good Reason (as defined in the Employment Agreement), Mr. Baum shall be entitled to receive the applicable portion of the Option. If termination of Mr. Baum’s employment occurs by reason of death, Disability (as defined in the Employment Agreement) or any reason other than by the Company without Cause or by Mr. Baum for Good Reason prior to the vesting in full of the Option, any unexercised portion of the Option which has not vested on such date of termination of employment will be automatically terminated. Mr. Baum will have 90 days from the date of termination of employment or until the Grant Expiration Date (as defined below), whichever is shorter, to exercise any portion of the Option that is vested and exercisable on the date of termination; provide that if the termination was for Cause, the Option shall be immediately cancelled. The Option terminates on the fifth anniversary of the Grant Date (“Grant Expiration Date”).

On July 31, 2015, the Company entered into a Retention Bonus Letter Agreement with Mr. Baum, pursuant to which the Company agrees to pay Mr. Baum 1.5% of the Fair Market Value (as defined in the Retention Bonus Letter Agreement) of the Change in Control Consideration (as defined in the Retention Bonus Letter Agreement) paid by a buyer to acquire the Company (“Retention Bonus”) in a transaction constituting a Change in Control (as defined in the Retention Bonus Letter Agreement), subject to Mr. Baum’s continued employment with the Company. The Company’s obligation to pay such Retention Bonus is subject and subordinated to the Company’s senior debt and terminates on May 2, 2016.

CAP Acquisition

On August 4, 2015, the Company acquired all of the outstanding capital stock of CAP pursuant to a stock purchase agreement entered into in July 2015. CAP is a compounding and retail pharmacy located in Allen, Texas. At closing, the Company paid the former owners of CAP a gross amount of four-hundred-twenty thousand dollars ($420).

Canadian License Agreement

On August 11, 2015, (the “CAN Effective Date”), the Company entered into a license agreement (the “CAN Agreement”) with Advanced Dosage Forms, Inc. and John DiGenova (collectively “ADF”), pursuant to which the Company granted to ADF a license under certain U.S. patent applications (the “Licensed Patent Rights”) to develop and sell in Canada certain of the Company’s proprietary Dropless and LessDrops compounded formulations (the “OPH Products”) and use of certain of the Company’s trademarks, designs, trade names and markings. Such license is non-exclusive; such that prior to December 31, 2015, the parties shall negotiate in good faith and attempt to reach mutual agreement on the terms and conditions upon which ADF would have the option to convert the licenses hereunder to exclusive. Such terms and conditions would include, without limitation, (a) diligence and market penetration conditions to convert, (b) annual diligence and market growth conditions to maintain exclusivity, and (c) an annual license fee of $50 payable to Imprimis ($25 of which would be creditable against the royalties owing during such year).

As consideration for the license granted under the CAN Agreement, ADF has agreed to pay the Company royalties based on its sales of the OPH Products. The royalties consist of the greater of (i) $50 per unit of OPH Products sold (dollar amount not presented in thousands) and (ii) 20% of the ADF’s sales of the OPH Products. ADF has also agreed to pay to Imprimis a noncreditable license fee of $10 at the CAN Effective Date. ADF is obligated to pay such royalties beginning with its first commercial sale of the OPH Products and continuing until claims under the Licensed Patent Rights are considered expired, abandoned, or unenforceable and are no longer subject to the license granted under the Agreement. ADF is obligated to maintain quality standards established by the Company, use commercially reasonable efforts to develop and commercialize the OPH Products and market shares according to the terms of the Agreement as agreed to by the parties.

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.

Concentrations of Credit Risk

Concentrations of Credit Risk

Accounts Receivable

Accounts Receivable

Revenue Recognition and Deferred Revenue

Revenue Recognition and Deferred Revenue

Product Revenues

License Revenues

Business Combinations

Business Combinations

	●	future expected cash flows from product sales, support agreements, consulting contracts, other customer contracts, and acquired development technologies and patents; and

	●	discount rates utilized in valuation estimates.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

	●	significant underperformance of the Company’s business relative to expected operating results;

	●	significant adverse economic and industry trends;

	●	significant decline in the Company’s market capitalization for an extended period of time relative to net book value; and

	●	expectations that a reporting unit will be sold or otherwise disposed.

The goodwill impairment test consists of a two-step process as follows:

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

During the three and six months ended June 30, 2015 and 2014, the Company did not recognize any impairment of long-lived assets.

Debt Issuance Costs and Debt Discount

Debt Issuance Costs and Debt Discount

Fair Value Measurements

Fair Value Measurements

●	Level 1: Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.

●	Level 2: Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

●	Level 3: Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, Level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.

Third Party Billing and Collection Agreements

Third Party Billing and Collection Agreements

Stock-Based Compensation

Stock-Based Compensation

Income Taxes

Income Taxes

Basic and Diluted Net Loss per Common Share

Basic and Diluted Net Loss per Common Share

The following table shows the computation of basic and diluted net loss per share of common stock for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014

Numerator – net loss	$	(3,730	)	$	(2,596	)	$	(6,823	)	$	(4,921	)
Denominator – weighted average number of shares outstanding, basic and diluted		9,501,730			9,109,842			9,419,956			9,060,496
Net loss per share, basic and diluted	$	(0.39	)	$	(0.28	)	$	(0.72	)	$	(0.54	)

Use of Estimates

Use of Estimates

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2015

Schedule of Basic and Diluted Earnings Per Common Share

The following table shows the computation of basic and diluted net loss per share of common stock for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014

Numerator – net loss	$	(3,730	)	$	(2,596	)	$	(6,823	)	$	(4,921	)
Denominator – weighted average number of shares outstanding, basic and diluted		9,501,730			9,109,842			9,419,956			9,060,496
Net loss per share, basic and diluted	$	(0.39	)	$	(0.28	)	$	(0.72	)	$	(0.54	)

Acquisitions (Tables)

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Schedule of Acquisition Date Fair Value of Consideration

The total acquisition date fair value of consideration transferred and to be transferred is estimated as follows:

Cash payment to Sellers at closing	$	3,100
Restricted common stock issuance to Sellers at closing		425
Deferred consideration to Sellers		591
Total acquisition date fair value	$	4,116

Schedule of Estimated Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

Cash and cash equivalents	$	95
Accounts receivable		399
Inventories		232
Furniture and equipment		252
Intangible assets		2,629
Total identifiable assets acquired		3,607
Accounts payable and accrued expenses		304
Other liabilities		35
Total liabilities assumed		339
Total identifiable assets less liabilities assumed		3,268
Goodwill		848
Net assets acquired	$	4,116

Schedule of Result of Operation from Acquisition

Total revenues		$	2,201
Net income		$	88

Schedule of Intangible Assets Acquisition

The following table sets forth the components of identified intangible assets associated with the Park Acquisition and their estimated useful lives.

	Fair Value		Useful Life
Customer relationships		2,387	3 - 15 years
Trade name		10	5 years
Non-competition clause		224	3 years
State pharmacy licenses		8	25 years
	$	2,629

Schedule of Pro Forma Financial Information

The unaudited pro forma results presented include amortization charges for intangible assets, interest charges, acquisition costs, and eliminations of intercompany transactions.

	For the			For the
	Three Months Ended			Six Months Ended
	June 30, 2014			June 30, 2014
Total revenues	$	1,721		$	3,248
Net loss	$	(2,669	)	$	(4,846	)

Inventories (Tables)

6 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

Schedule of Inventories

The composition of inventories as of June 30, 2015 and December 31, 2014 was as follows:

	June 30, 2015		December 31, 2014
Raw materials	$	386	$	146
Work in progress		-		98
Finished goods		407		129
Total inventories	$	793	$	373

Prepaid Expenses and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2015

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	June 30, 2015		December 31, 2014
Prepaid insurance	$	35	$	124
Other prepaid expenses		295		82
Deposits and other current assets		106		35
Total prepaid expenses and other current assets	$	436	$	241

Intangible Assets and Goodwill (Tables)

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

The Company’s intangible assets at June 30, 2015 consisted of the following:

	Amortization
	periods			Accumulated			Net
	(in years)	Cost		amortization			Carrying value
Customer relationships	3-15 years	$	2,983	$	(166	)	$	2,817
Trade name	5 years		15		(3	)		12
Non-competition clause	3-4 years		274		(53	)		221
State pharmacy licenses	25 years		16		(2	)		14
		$	3,288	$	(224	)	$	3,064

Schedule of Amortization Expenses for Intangible Assets

Amortization expense for intangible assets for the three and six months ended June 30, 2015 was as follows:

	For the Three Months Ended		For the Six Months Ended
	June 30, 2015		June 30, 2015
Customer relationships	$	66	$	129
Trade name		1		2
Non-competition clause		26		44
State pharmacy licenses		1		1
	$	94	$	176

Schedule of Estimated Future Amortization Expense

Estimated future amortization expense for the Company’s intangible assets at June 30, 2015 is as follows:

Years ending December 31,
Remainder of 2015	$	174
2016		349
2017		349
2018		208
2019		205
Thereafter		1,779
	$	3,064

Schedule of Changes in Carrying Value of Goodwill

The changes in the carrying value of the Company’s goodwill during the six months ended June 30, 2015 were as follows:

Balance at January 1, 2015	$	332
Acquisition of Park (see Note 3)		848
Balance at June 30, 2015	$	1,180

Accounts Payable and Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2015

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

	June 30, 2015			December 31, 2014
Accounts payable	$	1,016		$	699
Deferred rent		44			5
Accrued interest (see Note 9)		86			-
Accrued exit fee for note payable (see Note 9)		500			-
Building lease liability(1)		58			74
Other accrued expenses		-			39	(2)
Total accounts payable and accrued expenses		1,704			817
Less: Current portion		(1,181	)		(787	)
Non-current total accrued expenses	$	523		$	30

	(1)	In September 2014, the Company relocated its primary operations to a 7,565 square foot office facility in San Diego, California. In February 2015, the Company entered into a sublease agreement to sublet 3,874 square feet of its previously occupied offices through the remaining term of the lease at a monthly rent amount of $8. The Company recognized a loss of approximately $117 during the year ended December 31, 2014 related to the estimated remaining lease liability, net of expected sublease income, of the previously occupied offices. The obligations were discounted based on current prevailing market rates.

	(2)	The amount consists of a $39 stock-based compensation accrual at December 31, 2014 related to stock options granted for consulting services provided. The stock options were granted during the six months ended June 30, 2015 and the $39 was recorded to additional paid-in-capital.

Debt (Tables)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Summary of Notes Payable

Notes payable at June 30, 2015 was as follows:

	June 30, 2015
12.5% note payable	$	10,000
Add: Interest paid-in-kind		28
Less: Discount on note for issuance costs and relative fair value of warrants		(1,967	)
Less: Current portion		-
Long-term portion	$	8,061

Summary of Future Minimum Payments

Future minimum payments as of June 30, 2015 are as follows:

Year Ending December 31,	Amount
Remainder of 2015	$	529
2016		1,075
2017		1,195
2018		2,741
2019		4,183
Thereafter		6,275
Total minimum payments		15,998
Less: amount representing interest and interest paid-in-kind		(5,998	)
Note payable, gross		10,000
Add: interest paid-in-kind		28
Less: unamortized discount and issuance costs		(1,967	)
Note payable and interest paid-in-kind, net of unamortized debt discount and issuance costs	$	8,061

Stockholders' Equity and Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Schedule of Stock Option Plan Activity

A summary of stock option activity under the Plan for the six months ended June 30, 2015 is as follows:

	Number of shares			Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life		Aggregate Intrinsic Value
Options outstanding - January 1, 2015		1,029,240		$	5.74
Options granted		187,673		$	7.68
Options exercised		-		$	-
Options cancelled/forfeit		(15,103	)	$	9.06
Options outstanding - June 30, 2015		1,201,810		$	5.99		6.19	$	2,356
Options exercisable		822,593		$	5.44		4.96	$	2,564
Options vested and expected to vest		1,163,888		$	5.96		6.11	$	2,331

Schedule of Fair Value Assumption

The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing options granted to employees:

	2015
Weighted-average fair value of options granted	$	6.60
Expected terms (in years)		5.81 - 6.11
Expected volatility		106 - 121	%
Risk-free interest rate		1.47 - 1.64	%
Dividend yield		-

The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing options granted to consultants:

	2015
Weighted-average fair value of options granted	$	6.18
Expected terms (in years)		10.00
Expected volatility		109	%
Risk-free interest rate		1.06	%
Dividend yield		-

Schedule of Shares Outstanding and Exercisable

The following table summarizes information about stock options outstanding and exercisable at June 30, 2015:

	Options Outstanding						Options Exercisable
			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
	Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Life in Years		Price		Exercisable		Price
$ 2.40 - $3.20		250,000		4.07	$	2.80		250,000	$	2.80
$ 3.60 - $4.51		337,723		4.46	$	4.36		283,350	$	4.41
$ 5.49 - $7.99		353,730		8.87	$	7.07		115,262	$	6.60
$ 8.06 - $8.75		253,557		6.88	$	8.89		167,181	$	8.92
$ 28.00 - $80.00		6,800		4.60	$	40.86		6,800	$	40.86
		1,201,810		6.19	$	5.99		822,593	$	5.44

Market-based Vesting Conditions for Restricted Stock Units Granted

The market-based vesting conditions applicable to the Boll Performance Equity Award are as follows:

Tranche	Number of Shares	Target Share Price
Tranche 1	30,000 shares	$10.00 or greater
Tranche 2	30,000 shares	$15.00 or greater
Tranche 3	30,000 shares	$20.00 or greater
Tranche 4	30,000 shares	$25.00 or greater
Tranche 5	37,500 shares	$30.00 or greater

Schedule of Restricted Stock Units Activity

A summary of the Company’s RSU activity and related information for the six months ended June 30, 2015 is as follows:

	Number of RSUs			Weighted Average Grant Date Fair Value
RSUs unvested - January 1, 2015		1,276,815		$	3.20
RSUs granted		242,624		$	3.59
RSUs vested		(9,936	)	$	7.55
RSUs cancelled/forfeited		(6,209	)	$	6.85
RSUs unvested at June 30, 2015		1,503,294		$	3.22

Schedule of Warrants Activity

A summary of warrant activity for the six months ended June 30, 2015 is as follows:

	Number of Shares Subject to Warrants Outstanding			Weighted Avg. Exercise Price

Warrants outstanding - January 1, 2014		690,944		$	6.05
Granted		125,000		$	7.85
Exercised		(240,437	)	$	5.84
Expired		(334,819	)	$	5.93
Warrants outstanding and exercisable - June 30, 2015		240,688		$	7.41
Weighted average remaining contractual life of the outstanding warrants in years - June 30, 2015		6.49

Schedule of Warrants Outstanding and Warrants Exercisable

A list of the warrants outstanding as of June 30, 2015 is included in the following table:

	Warrants Outstanding						Warrants Exercisable
			Warrants		Exercise		Warrants		Expiration
Warrant Series	Issue Date		Outstanding		Price		Exercisable		Date
Lender warrants (see Note 9)		5/11/2015		125,000	$	7.85		125,000		5/11/2025
Underwriter Warrants		2/7/2013		55,688	$	5.25		55,688		2/7/2018
Warrants issued to investor relations consultant		7/19/2013		60,000	$	8.50		60,000		7/19/2018
				240,688	$	7.41		240,688

Schedule of Stock Based Compensation Granted to Employees Directors Consultants

	For the		For the		For the		For the
	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Employees - selling and marketing	$	107	$	17	$	175	$	31
Employees - general and administrative		516		562		1,037		1,105
Directors - general and administrative		63		42		108		84
Consultants - selling and marketing		17		15		41		31
Consultants - general and administrative		-		18		-		87
Consultants - research and development		-		5		-		9
Total	$	703	$	659	$	1,361	$	1,347

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

Compensation and Retirement Disclosure [Abstract]

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2015

Schedule of Lease Equipment Under Capital Lease

The Company leases equipment under capital leases with an interest rate of 4.25% per annum. At June 30, 2015, future payments under the Company’s capital leases were as follows:

Year ending December 31,
Remainder of 2015	$	15
2016		22
2017		1
Total minimum lease payments		38
Less amount representing interest		(3	)
Present value of future minimum lease payments		35
Less current portion		(27	)
Capital lease obligation, net of current portion	$	8

Description of Business and Basis of Presentation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Accounting Policies [Abstract]
Net losses	$ 3,730	$ 2,596	$ 6,823	$ 4,921
Accumulated deficit	48,688		48,688		$ 41,865
Net cash used in operating activities			5,447	$ 3,209
Cash and cash equivalents and restricted investments	$ 10,201		$ 10,201

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Deposit coverage limits by FDIC, per owner		$ 250
Cash deposits in excess of FDIC limits		9,801
Accounts receivable, net of allowance for doubtful accounts	$ 183	183		$ 4
Impairment of long-lived assets		0	$ 0
Unrecognized tax benefits
Recognize interest and/or penalties related to income tax matters in income tax expense
Anti-dilutive		3,014,919	3,419,149
Number of restricted stock included in common stock equivalents		28,633
Billing And Collection Agreement [Member] \| Third Party [Member]
Percentage of billing and collection amount		55.00%
Billing and collection management expense	15	$ 21
Due to related party	$ 54	$ 54

Summary of Significant Accounting Policies - Schedule of Basic and Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Accounting Policies [Abstract]
Numerator - net loss	$ (3,730)	$ (2,596)	$ (6,823)	$ (4,921)
Denominator - weighted average number of shares outstanding, basic and diluted	9,501,730	9,109,842	9,419,956	9,060,496
Net loss per share, basic and diluted	$ (0.39)	$ (0.28)	$ (0.72)	$ (0.54)

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.