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Document and Entity Information	9 Months Ended
Sep. 30, 2012 shares
Document And Entity Information
Entity Registrant Name	Imprimis Pharmaceuticals, Inc.
Entity Central Index Key	0001360214
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	33,859,627
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2012	Dec. 31, 2011
Current assets
Cash and cash equivalents	$ 10,990,871	$ 146,160
Prepaid expenses and other current assets	76,141	14,797
Deferred offering costs	383,746
Total current assets	11,450,758	160,957
Furniture and equipment, net	13,218
TOTAL ASSETS	11,463,976	160,957
Current liabilities
Accounts payable and accrued expenses	594,944	218,612
Accounts payable - related party		56,087
Accrued Phase 3 expenses	55,784	55,784
Accrued payroll	19,115
Deferred revenue		100,000
Notes payable and accrued interest - related party		300,000
Convertible note payable and accrued interest		1,130,479
Total current liabilities	669,843	1,860,962
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
Series A Convertible preferred stock, $0.001 par value, 10 shares authorized, none and 10 shares issued and outstanding at at September 30, 2012 and December 31, 2011, respectively		0
Common stock, $0.001 par value, 395,000,000 shares authorized, 33,859,627 and 1,987,601 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	33,860	1,988
Additional paid-in capital	33,411,513	16,818,740
Deficit accumulated during the development stage	(22,651,240)	(18,520,733)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)	10,794,133	(1,700,005)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 11,463,976	$ 160,957

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended		170 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012
Revenues:
License revenues			$ 100,000		$ 100,000
Operating Expenses:
Selling, general and administrative	946,381	66,496	2,240,004	514,529	11,813,331
Research and development	303,666		580,240	111,554	8,400,498
Loss from operations	(1,250,047)	(66,496)	(2,720,244)	(626,083)	(20,113,829)
Other income (expense):
Interest expense		(18,904)	(24,658)	(56,095)	(1,730,892)
Interest income	4,221		9,805		137,386
Loss from extinguishment of debt			(1,195,410)		(1,195,410)
Gain on settlement					375,000
Gain on forgiveness of liabilities					176,505
Total other expense, net	4,221	(18,904)	(1,210,263)	(56,095)	(2,237,411)
Net loss	(1,245,826)	(85,400)	(3,930,507)	(682,178)	(22,351,240)
Deemed dividend to preferred stockholders			(200,000)		(300,000)
Net loss attributable to common stockholders	$ (1,245,826)	$ (85,400)	$ (4,130,507)	$ (682,178)	$ (22,651,240)
Net loss attributable to common stockholders per common share, basic and diluted	$ (0.04)	$ (0.04)	$ (0.22)	$ (0.34)
Weighted average common shares outstanding, basic and diluted	31,099,103	1,987,601	18,642,566	1,989,490

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended		170 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (3,930,507)	$ (682,178)	$ (22,351,240)
Adjustments to reconcile net loss to net cash used in operating activities:
Estimated fair value of contributed services			2,475,000
Gain on forgiveness of liabilities			(176,505)
Amortization of prepaid consulting fees			807,608
Depreciation	2,090	338	5,244
Loss from extinguishment of debt	1,195,410		1,195,410
Non-cash interest on notes payable	24,658	56,095	1,730,892
Stock-based compensation	1,502,080	149,162	3,630,896
Payments made on behalf of Company by related party			254,142
Changes in assets and liabilities:
Prepaid consulting costs			(140,000)
Prepaid expenses and other current assets	(61,344)	(13,876)	(76,141)
Accounts payable and accrued expenses	61,371	104,779	369,897
Accrued Phase three expenses			111,871
Accrued payroll	19,115	48,835	105,706
Deferred revenue	(100,000)	20,000
NET CASH USED IN OPERATING ACTIVITIES	(1,287,127)	(316,845)	(12,057,220)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets	(15,308)		(18,462)
NET CASH USED IN INVESTING ACTIVITIES	(15,308)		(18,462)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable to related party	450,000		976,300
Proceeds received in connection with debt modification	50,000		50,000
Proceeds from issuance of preferred stock			100,000
Proceeds from notes payable			2,500,000
Preferred stock deemed dividend paid at conversion	(200,000)		(200,000)
Cash advances from related party		27,537	27,537
Repayment of advances from related party			(281,679)
Capital contributions			168,707
Net proceeds from purchase of common stock and exercise of warrants and stock options			99,450
Proceeds from issuance of common stock and warrants for cash, net of offering costs	11,915,931		19,695,023
Deferred offering costs	(68,785)		(68,785)
NET CASH PROVIDED BY FINANCING ACTIVITIES	12,147,146	27,537	23,066,553
NET CHANGE IN CASH AND CASH EQUIVALENTS	10,844,711	(289,308)	10,990,871
CASH AND CASH EQUIVALENTS BALANCES, beginning of period	146,160
CASH AND CASH EQUIVALENTS BALANCES, end of period	10,990,871		10,990,871
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Issuance of and adjustment to common stock and warrants to consulting firms for prepaid consulting fees			432,007
Deferred offering costs in connection with equity offering recorded in accounts payable	314,961		314,961
Conversion of related party accounts payable into common stock	56,087		56,087
Conversion of notes payable and accrued interest into common stock	1,905,137		3,435,314
Forgiveness of notes payable and accrued interest to stockholders			241,701
Conversion of advances to notes payable to stockholders			196,300
Accretion of preferred stock discount			100,000
Related party acquisition of Phase three liabilities			56,087
Conversion of preferred stock into common stock	$ 7,499		$ 7,499

OVERVIEW AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

NOTE 1. OVERVIEW AND BASIS OF PRESENTATION

Company and Background

Imprimis Pharmaceuticals, Inc. (“Imprimis”, the “Company”, “we”, “us”, or “our”) is a specialty pharmaceutical company developing non-invasive, topically delivered products. Our innovative patented Accudel cream formulation technology is designed to enable highly targeted site specific treatment. Impracor, our lead pain product candidate, utilizes the Accudel platform technology to deliver the active drug, ketoprofen, a non-steroidal anti-inflammatory drug, through the skin directly into the underlying tissues where the drug exerts its localized anti-inflammatory and analgesic effects.

Through our strategic relationship with Professional Compounding Centers of America, Inc. (“PCCA”) (see Note 4 and Note 6), one of the largest drug compounding organizations in the world, we expect to facilitate our future selection, formulation and development of potential product candidates. Our relationship with PCCA is exclusive and provides us with the opportunity to develop new products using PCCA’s proprietary drug formulations and drug delivery technologies, as well as access to an extensive database of market-oriented information related to a specific drug development opportunity. We plan to use our proprietary Accudel drug delivery technology, coupled with these licensed technologies, formulations and market data, to identify pharmaceutical development opportunities we perceive a significant unmet need for a new drug product. We are currently considering potential product candidates in the muscle relaxant and neuropathic pain fields, and we expect those areas may be our next avenues for additional product development.

Basis of Presentation

On February 28, 2012, the Company changed its name from Transdel Pharmaceuticals, Inc. to Imprimis Pharmaceuticals, Inc. All prior references to Transdel Pharmaceuticals, Inc. have been changed to Imprimis Pharmaceuticals, Inc. to reflect the change. On February 28, 2012, the Company effected a one-for-eight reverse stock split. All share and per share amounts and calculations in this report reflect the effects of that reverse stock split.

Imprimis has prepared the accompanying interim condensed unaudited 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 complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. 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, 2011.

Principles of Consolidation

On September 17, 2007, Imprimis entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) by and among Imprimis, Transdel Pharmaceuticals Holdings, Inc., a privately held Nevada corporation (“Transdel Holdings”), and Trans-Pharma Acquisition Corp., a newly formed, wholly-owned Delaware subsidiary of Imprimis (“Acquisition Sub”). Upon closing of the merger transaction contemplated under the Merger Agreement (the “Merger”), Acquisition Sub merged with and into Transdel Holdings, and Transdel Holdings, as the surviving corporation, became a wholly-owned subsidiary of Imprimis. As a result of the Merger, the former owners of Transdel Holdings became the controlling stockholders of Imprimis. Accordingly, the merger of Transdel Holdings and Imprimis is a reverse merger that has been accounted for as a recapitalization of Transdel Holdings.

Effective on September 17, 2007, and for all reporting periods thereafter, Imprimis’ operating activities, including any prior comparative period, include only those of Transdel Holdings. All references to share and per share amounts in the accompanying consolidated financial statements and footnotes have been restated to reflect the aforementioned share exchange. All significant intercompany accounts and transactions have been eliminated in consolidation.

On June 20, 2011, Transdel Holdings was merged with Imprimis Pharmaceuticals, Inc., at which time Transdel Holdings ceased as a corporation, and Imprimis Pharmaceuticals, Inc. remains as the sole surviving corporation.

Development Stage Enterprise

The Company is a development stage company as defined under Financial Accounting Standards Board (“FASB”) guidance. The Company is devoting substantially all of its present efforts to establish a new business, and its planned principal operations have not yet commenced. All losses accumulated since inception have been considered as part of the Company’s development stage activities.

These condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development state enterprise and has incurred recurring operating losses, has had negative operating cash flows and has not recognized any significant revenues since July 24, 1998 (inception). In addition, the Company has a deficit accumulated during the development stage of approximately $22.7 million at September 30, 2012, and anticipates incurring further losses through the year 2012 and beyond. The Company has not yet generated commercial sales revenue and has funded its operating losses to date through debt and equity offerings and borrowings under its line of credit. The Company believes that its existing cash and cash equivalents will be sufficient to cover its cash flow requirements through the next twelve months.

Research and Development

The Company expenses all costs related to research and development as they are incurred.

Revenue Recognition and Deferred Revenue

The Company will recognize revenues in accordance with FASB guidance, which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) will be based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments will be provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or for which services have not been rendered or are subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or services have been rendered or no refund will be required.

For the nine months ended September 30, 2012, the Company recorded $100,000 in revenues for non-refundable royalty advances, which were previously deferred. The Company does not anticipate that it will generate any significant revenues until one or more of its drug candidates are approved by the U.S. Food and Drug Administration (“FDA”) and the Company is able to commercialize one or more of its product candidates. Also, effective sales and marketing support must be in place for either the drug candidates or any other products the Company may develop in order to generate any revenues. The FDA approval process is highly uncertain and the Company cannot estimate when it will generate revenues at this time from sales of its products.

Income Taxes

Income tax expense is provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due, plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to the effects of net operating loss carry forwards and differing basis, depreciation methods, and lives of depreciable assets. The deferred tax assets represent the future tax return consequences of those differences, which will be deductible when the assets are recovered.

No income tax benefit (expense) was recognized for the nine months ended September 30, 2012 as a result of tax losses in this period and because deferred tax benefits, derived from the Company’s prior net operating losses, were previously fully reserved. At September 30, 2012, the Company had federal and California net operating loss carryforwards of approximately $14.1 million and $13.6 million, respectively. The use of our net operating losses may be restricted in future years due to the limitations pursuant to IRC Section 382 on changes in ownership.

The Company is subject to taxation in the United States and California. The Company’s tax years for 2000 and forward are subject to examination by the United States and state tax authorities due to the carry forward of unutilized net operating losses.

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 to $250,000 per owner. In addition to the basic insurance deposit coverage, the FDIC is providing temporary unlimited coverage for noninterest-bearing transaction accounts from December 31, 2010 to December 31, 2012. At September 30, 2012, the Company had approximately $10.1 million in cash deposits in excess of FDIC limits.

Furniture and Equipment

Furniture and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of three to five years.

Furniture and equipment, net, as of September 30, 2012 and December 31, 2011 consisted of the following:

		September 30,		December 31,
		2012		2011
Furniture and Equipment, net:
Computer Software and Hardware	$	6,341	$	-
Furniture and Equipment		8,967		-
		15,308		-
Accumulated Depreciation		(2,090)		-
	$	13,218	$	-

During the three and nine months ended September 30, 2012, the Company recorded depreciation expenses of $843 and $2,090, respectively, and during the three and nine months ended September 30, 2011, the Company recorded depreciation expenses of $0 and $338, respectively.

Deferred Offering Costs

On July 25, 2012, the Company filed with the Securities and Exchange Commission a registration statement in connection with a proposed offering of its common stock. At September 30, 2012, the Company had deferred offering costs of $383,746 for legal, accounting and other expenses directly related to the proposed offering. Any cash proceeds the Company may receive from the proposed offering will be netted against these deferred offering costs and any future costs directly associated with the offering. There is no obligation to consummate an offering and an offering may not occur.

Deferred Rent

The Company accounts for rent expense related to its operating leases by determining total minimum rent payments on the leases over their respective periods and recognizing the rent expense on a straight-line basis. The difference between the actual amount paid and the amount recorded as rent expense in each fiscal year is recorded as an adjustment to deferred rent. The deferred rent balance at September 30, 2012 was $1,734 and is included in accounts payable and accrued expenses in the accompanying unaudited condensed consolidated balance sheet.

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: 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: 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: 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.

The fair values of the Company’s cash and cash equivalents, accounts payable, and accrued expenses approximate carrying values due to their short term maturities.

Beneficial Conversion Features and Debt Discounts

The convertible features of debt provide for a rate of conversion that is below market value. Such feature is normally characterized as a “beneficial conversion feature” (“BCF”). The relative fair values of the BCF were recorded as discounts from the face amount of the respective debt instrument. The Company amortized the discount using the effective interest method through maturity of such instruments.

Stock-Based Compensation

All share-based payments to employees, including grants of stock options to employees, directors and consultants and restricted stock grants, are recognized in the financial statements based upon their fair values.

The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows FASB guidance. As such, the value of the applicable stock-based compensation is periodically remeasured and income or expense is recognized during their vesting terms. The measurement date for the fair value of the equity instruments issued is determined at 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 fair value of the equity instrument is primarily recognized over the term of the consulting agreement. In accordance with 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 fair value of nonforfeitable equity instruments issued for future consulting services as prepaid consulting fees in its consolidated balance sheets.

The Company recorded stock-based compensation related to equity instruments granted to employees, directors and consultants as follows:

		For The Three		For The Three		For The Nine		For The Nine
		Months Ended		Months Ended		Months Ended		Months Ended
		September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Employees - selling, general and administrative	$	180,630	$	32,757	$	298,854	$	104,675
Employees - research and development		61,299		-		143,711		37,754
Directors - selling, general and administrative		331,264		4,041		898,679		6,733
Consultants - selling, general and administrative		80,849		-		160,836		-
Total	$	654,042	$	36,798	$	1,502,080	$	149,162

Basic and Diluted 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 applicable to common stock per share is computed using the weighted average number of common shares outstanding during the period. Common stock equivalents (prior to application of the treasury stock or, “if converted” method) from convertible notes, preferred stock, stock options, unvested restricted stock units (“RSUs”) and warrants were 8,345,388 and 395,846 at September 30, 2012 and 2011, respectively, and are excluded from the calculation of diluted net loss per share for all periods presented because the effect is anti-dilutive.

The following table shows the computation of basic and diluted earnings per common share for the three- and nine-month periods ended September 30, 2012 and September 30, 2011:

	For the three months ended			For the three months ended			For the nine months ended			For the nine months ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011

Net loss	$	(1,245,826	)	$	(85,400	)	$	(3,930,507	)	$	(682,178	)
Deemed dividend to preferred stockholders		—			—			(200,000	)		—
Numerator – loss attributable to common stockholders	$	(1,245,826	)	$	(85,400	)	$	(4,130,507	)	$	(682,178	)
Denominator – weighted average
number of shares outstanding, basic and diluted		31,099,103			1,987,601			18,642,566			1,989,490
Loss per share, basic and diluted	$	(0.04	)	$	(0.04	)	$	(0.22	)	$	(0.34	)

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, 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, the valuation of contributed services, deferred taxes and stock-based compensation issued to employees and non-employees. Actual results could differ from those estimates.

NOTES PAYABLE - RELATED PARTY

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

NOTE 3. NOTES PAYABLE - RELATED PARTY

DermaStar is a former control person of the Company and had the ability to direct or cause direction of management and policies of the Company through its ownership of the Company’s capital stock. Also, Dr. Robert Kammer, a director and the Chairman of the Board of the Company, and Mark L. Baum, Chief Executive Officer and a director of the Company, were managing members and partial owners of DermaStar. In July 2012, the Company was informed by DermaStar that it had dissolved and distributed all of its shares of the Company’s capital stock held by it to its members. As a result of that dissolution and distribution, DermaStar is no longer a control person of the Company.

Convertible Note – April 2010

On April 5, 2010, the Company issued a Senior Convertible Promissory Note (the “Note”) to Alexej Ladonnikov in a private placement. The Note included an annual interest rate of 7.5% and (unless converted or prepaid, as noted below) all principal and interest was due and payable on its maturity date of April 5, 2012 (“Maturity Date”). At any time prior to the Maturity Date, the investor had the right to convert all or a portion of the outstanding principal and accrued interest at a conversion ratio of one share of the Company’s common stock for each $8 (the fair market value of the Company’s common stock on April 5, 2010) owed. Also, at any time prior to the Maturity Date, the Company had the option to prepay the outstanding principal and accrued interest. The Company received gross proceeds from the issuance of the Note in the aggregate amount of $1,000,000. There were no discounts or commissions paid in connection with this private placement. Accrued interest on the Note was $0 and $130,479 at September 30, 2012 and December 31, 2011, respectively, and interest expense on the Note for the three and nine months ended September 30, 2012 was $0 and $12,123, respectively, and for the three and nine months ended September 30, 2011 was $18,904 and $56,095, respectively. Following the Company’s bankruptcy petition filed June 26, 2011, as well as the change in ownership control following the issuance of Series A Convertible Preferred Stock to DermaStar, the entire unpaid principal sum of this Note, together with its accrued and unpaid interest became immediately due and payable.

In January 2012, DermaStar acquired 80% of the Note in a private transaction with Mr. Ladonnikov. On January 25, 2012, the Board of Directors of the Company approved, and the Company entered into, separate waiver and settlement agreements with DermaStar and Mr. Ladonnikov, the two parties holding the Note.

In connection with each of the waiver and settlement agreements, the holders of the Note each agreed to forever waive their rights to (i) accelerate the entire unpaid principal sum of the Note and all accrued interest pursuant to Section 1 of the Note related to the Company’s bankruptcy petition filed June 26, 2011, (ii) Section 7 of the Senior Convertible Note Purchase Agreement dated April 5, 2010, regarding the designation and creation of the Series A Convertible Preferred Stock (“Series A Preferred Stock”) and (iii) certain conversion rights pursuant to Section 3 of the Note related to the change of control that resulted from the sale of the Series A Preferred Stock.

Pursuant to the terms of the waiver and settlement agreement by and between the Company and DermaStar, DermaStar and the Company agreed to the mandatory conversion of the eighty percent (80%) of the principal and accrued and unpaid interest of the Note held by DermaStar, at such time as (and not until) the Company has a sufficient number of authorized common shares to effect such a conversion, into common stock of the Company at a conversion price of approximately $0.13336 (“DermaStar Conversion Price”). Additionally, DermaStar agreed to a mandatory conversion of an additional $56,087 current accounts payable of the Company (“AP Conversion”) held by DermaStar, at such time as (and not until) the Company had a sufficient number of authorized common shares for such conversion. The AP Conversion was made at the DermaStar Conversion Price.

On February 28, 2012, the Company issued 7,274,812 common shares to DermaStar as payment in full for its 80% ownership of the Note ($800,000), its related accrued interest ($114,082) and $56,087 in the Company’s accounts payable. The Company has determined this to be a substantial modification to the debt instruments and has applied debt extinguishment accounting to record a loss on extinguishment of debt of $856,087 for the nine months ended September 30, 2012.

Pursuant to the terms of the waiver and settlement agreement by and between the Company and Mr. Ladonnikov, Mr. Ladonnikov and the Company agreed to the mandatory conversion of the twenty percent (20%) of the principal and accrued and unpaid interest of the Note held by Mr. Ladonnikov, at such time as (and not until) the Company had a sufficient number of authorized common shares to effect such a conversion, into common stock of the Company at a conversion price of $0.12. Additionally, Mr. Ladonnikov agreed to make a one-time payment to the Company, at such time as the Note is converted into Company common stock, of $50,000.

On February 28, 2012, the Company received payment from Mr. Ladonnikov of $50,000 and issued 1,904,338 common shares to Mr. Ladonnikov as payment in full for his 20% ownership of the Note ($200,000) and its related accrued interest ($28,521). The Company has determined this to be a substantial modification to the debt instrument and has applied debt extinguishment accounting to record a loss on extinguishment of debt of $150,000 ($200,000 Note principal balance less $50,000 cash payment received) for the nine months ended September 30, 2012.

Secured Line of Credit

On November 21, 2011, the Company entered into a Secured Line of Credit Letter Agreement (the “Line of Credit Agreement”) with DermaStar. The Line of Credit Agreement became effective on December 10, 2011, in connection with the dismissal of the Chapter 11 Case by the Bankruptcy Court. The line of credit was secured by a blanket security interest in all of the Company’s assets, including its intellectual property. The Line of Credit Agreement provided for advances to the Company of up to an aggregate of $750,000 (each an “Advance” and collectively the “Loan”), subject to the satisfaction by the Company of certain conditions in connection with the initial Advance and each subsequent Advance. Each Advance was made pursuant to a promissory note in favor of DermaStar. The Company had received advances totaling $750,000 and $300,000 up to April 25, 2012 (the date of the conversion thereof) and December 31, 2011, respectively. The promissory notes accrued interest at 10% annually and had a maturity of one year after the effective dates of the applicable Advance. There was no accrued interest on the promissory notes at September 30, 2012 and interest expense for the three and nine months ended September 30, 2012 was $0 and $12,534, respectively.

As of April 20, 2012, the aggregate principal balance owing under the Line of Credit was $750,000. Effective April 20, 2012, the Company and DermaStar entered into a Promissory Note Conversion Agreement (the “Conversion Agreement”) wherein the parties agreed that the entire outstanding principal balance of the promissory notes issued in favor of DermaStar pursuant to the Line of Credit Agreement and all related accrued interest, totaling $762,534, would be converted into shares of the Company’s common stock and warrants to purchase the Company’s common stock on the same terms as the issuance of such securities in the April Private Placement (as described in Note 4). Pursuant to the Conversion Agreement, on April 25, 2012 and upon conversion of the outstanding principal balance and unpaid interest under the Line of Credit Agreement, DermaStar was issued a total of 965,233 shares of the Company’s common stock and a related warrant to purchase up to an additional 241,308 shares of the Company’s common stock. The warrant has an exercise price of $1.185 per share and a three year term. The Line of Credit Agreement has been terminated.

The addition of a conversion feature to the Line of Credit Agreement resulted in terms that were substantially different from the terms of the original agreement, and therefore, the conversion resulted in an extinguishment of debt. The relative fair value of the warrant issued to DermaStar was determined to be $137,383 using the Black-Scholes-Merton valuation model. The variables used in this pricing model included: (1) discount rate of 0.4% (2) expected warrant life of 3 years, (3) expected volatility of 350% and (4) zero expected dividends. In addition, the value of the effective BCF resulting from the Conversion Agreement was determined to be $51,940. The value of the debt discount was recorded as additional paid-in capital and as the Line of Credit is immediately convertible, the debt discount of $189,323 was immediately expensed as a loss on extinguishment of debt.

Notes payable consist of the following:

		September 30,		December 31,
		2012		2011
10% convertible notes	$	-	$	300,000
7.5% convertible note		-		1,000,000
Total convertible notes payable	$	-	$	1,300,000
Less: Current portion		-		(1,300,000)
Long-term portion	$	-	$	-

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

STOCKHOLDERS EQUITY AND STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2012

Equity [Abstract]

NOTE 4. STOCKHOLDERS EQUITY

Common Stock

On February 28, 2012, the Company increased the number of authorized shares of capital stock to 400,000,000, and the number of authorized shares of common stock to 395,000,000 and effected a one-for-eight reverse stock split. All share and per share amounts and calculations in this report reflect the one-for-eight reverse stock split.

On February 28, 2012, the Company issued 1,904,338 common shares to Alexej Ladonnikov as payment in full for his 20% ownership of the Note ($200,000) and its related accrued interest ($28,521).

On April 20, 2012, the Company entered into a Securities Purchase Agreement with certain accredited investors relating to the sale and issuance of an aggregate of 10,058,455 shares of its common stock and warrants to purchase up to 2,514,642 shares of its common stock at an exercise price of $1.185 per share, for an aggregate purchase price of approximately $7,950,000 (the “April Private Placement”). The April Private Placement closed on April 25, 2012, and the Company received proceeds, net of offering costs, of approximately $7,930,000.

On April 25, 2012, the Company converted debt totaling $762,534 (including accrued interest of $12,534) owed to DermaStar, a related party, into 965,233 shares of the Company’s common stock and a related warrant to purchase 241,308 shares of the Company’s common stock at an exercise price of $1.185 per share on the same terms as the issuance of such securities in the April Private Placement (see Note 3).

On August 30, 2012, the Company entered into a License Agreement (the “PCCA License Agreement") and a Stock Purchase Agreement (the “PCCA Purchase Agreement”) in a strategic transaction with PCCA (the “PCCA Transaction”). Pursuant to the terms of the PCCA Purchase Agreement, on August 31, 2012, the Company issued and sold to PCCA 4,163,414 shares of its common stock at a per share purchase price of $0.96075, for aggregate proceeds, net of offering costs, of approximately $3,980,000.

Preferred Stock

At September 30, 2012, the Company had 5,000,000 shares of preferred stock, $0.001 par value, authorized and no shares of preferred stock issued and outstanding.

Series A Preferred Stock - Converted

On December 12, 2011, the Company issued 10 shares of Series A Preferred Stock to DermaStar, a related party, in a private placement. The Series A Preferred Stock has the rights and preferences identified in the Certificate of Designation to our Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on December 9, 2011. Among other things, the Certificate of Designation (i) authorizes 10 shares of the Company’s preferred stock to be designated as “Series A Convertible Preferred Stock”; (ii) grants the holders of the Series A Preferred Stock the right to convert into our common stock at a conversion price of approximately $0.013336, as adjusted; (iii) grants a liquidation preference of $10,000 per share of Series A Preferred Stock; (iv) provides that the holders of Series A Preferred Stock shall vote with the holders of our common stock on an “as converted basis”; and (v) provides that the affirmative vote of a majority of the outstanding shares of the Series A Preferred Stock is required to approve certain corporate matters including, among other things, changes to the rights of the holders of the Series A Preferred Stock, amendments to our Amended and Restated Certificate of Incorporation or Bylaws, issuance of priority or parity securities, issuance of debt securities, entry into certain fundamental transactions and increase or decrease in the size of our Board of Directors.

On June 29, 2012, DermaStar converted the 10 shares of Series A Preferred Stock held by it into 7,498,500 shares of the Company’s common stock. In connection with the conversion, the Company paid to DermaStar $200,000 as partial consideration for the conversion pursuant to a conversion agreement. Immediately following the conversion of the Series A Preferred Stock, all 10 shares were retired to our treasury and cancelled. The Company recognized the $200,000 payment as additional consideration transferred in the transaction in excess of the fair value of the consideration issuable in accordance with the original conversion terms. As a result, the cash payment to DermaStar was recorded as a deemed preferred stock dividend. Accordingly, the Company recorded a deemed preferred stock dividend at the date of conversion, June 29, 2012, totaling $200,000, which represents an increase to reported net loss in arriving at net loss attributable to common stockholders.

Restricted Stock Units (“RSUs”)

RSU awards are granted subject to certain restrictions, including performance based conditions. The grant-date fair value of the RSUs, which has been determined based upon the market value of the Company’s shares on the grant date, is expensed over the vesting period.

On July 18, 2012, the Company granted to Mr. Baum, in connection with his services as the Chief Executive Officer, 800,000 RSUs pursuant to a Stand-alone Restricted Stock Unit Agreement (the “Baum RSUs”) outside of the Company’s 2007 Incentive Stock and Awards Plan (as amended on November 5, 2008, January 25, 2012 and July 18, 2012) (the “Plan”). The Baum RSUs are subject to certain performance-based vesting criteria, such that 200,000 RSUs will vest upon the satisfaction of each of the following events: (i) successful completion of a financing that results in aggregate cash proceeds to the Company of at least $5,000,000 at any time following the effective date of the grant; (ii) the Company meets the primary endpoints of its Phase 3 clinical studies for its drug candidate, Impracor; (iii) the Company submits a New Drug Application for Impracor to the U.S. Food and Drug Administration; and (iv) the Company enters into a definitive license, collaboration or similar agreement for Impracor that would reasonably be expected to generate cash flow for the Company. The Baum RSUs vest in full upon a change in control of the Company. The Company has accounted for the Baum RSUs based on an assumption of the full satisfaction of its performance-based vesting criteria..

On July 18, 2012, the Company granted to Dr. Kammer, in connection with his services as a consultant and advisor to the Company, 200,000 RSUs, pursuant to a Stand-alone Restricted Stock Unit Agreement (“Kammer RSUs”) outside of the Plan. The Kammer RSUs are subject to certain performance-based vesting criteria, such that all 200,000 RSUs will vest when the Company meets the primary endpoints of its Phase 3 clinical studies for its drug candidate, Impracor. The Kammer RSUs vest in full upon a change in control of the Company. The Company has accounted for the Kammer RSU based on an assumption of the full satisfaction of its performance-based vesting criteria. In accordance with accounting guidance for share-based compensation to consultants, the unvested portion of the Kammer RSUs will be revalued on an interim basis until the performance-based vesting criteria is met. Once the performance-based vesting criteria is met, the fair value and total expense amount of the Kammer RSUs will be calculated based on the market value of the Company’s common stock that day. On the date of issuance, July 18, 2012, the Kammer RSUs were valued at $130,000, and as of September 30, 2012, the revalued estimated fair value of the Kammer RSUs was $380,000.

A summary of the Company’s RSU activity and related information for the nine months ended September 30, 2012 is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Unvested – January 1, 2012		—	$	—
RSUs granted		1,000,000		0.65
RSUs vested		—		—
RSUs cancelled		—		—
Unvested - September 30, 2012		1,000,000	$	0.65

The grant-date fair value of RSUs granted during the nine month period ended September 30, 2012 was approximately $650,000. As of September 30, 2012, the total unrecognized compensation expense related to unvested RSUs was approximately $685,000 (including recognized and unrecognized expenses of the revalued fair value of the Kammer RSUs) which is expected to be recognized over a weighted-average period of 1 year, based on estimated vesting schedules.

Stock Option Plan

On September 17, 2007, the Company’s Board of Directors and stockholders adopted the Plan, which, as of September 30, 2012, provided for the issuance of a maximum of an aggregate of 12,000,000 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 and restricted stock. The Plan will be administered by the Company’s Board of Directors until such time as such authority has been delegated to a committee of the Board of Directors. On January 25, 2012, our stockholders approved an amendment to the Plan to increase the number of shares available for issuance under the Plan from 375,000 to 3,750,000 and to modify the definition of “fair market value” under the Plan, among other things. The approval became effective on February 26, 2012. Effective as of July 18, 2012, our board of directors and stockholders holding a majority of the Company’s outstanding voting power approved a further amendment to the Plan to increase the number of shares available for issuance under the Plan from 3,750,000 to 12,000,000 and to increase the per person limit on the maximum number of shares of the Company’s common stock that may be granted to an individual under the Plan in a calendar year.

A summary of the Plan activity for the nine months ended September 30, 2012 is as follows:

	Number of shares			Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life		Aggregate Intrinsic Value
Options outstanding - December 31, 2011		150,152		$	9.68
Options granted		5,060,616			0.73
Options exercised		—
Options cancelled		(718,750	)		0.67
Options outstanding - September 30, 2012		4,492,018		$	1.04		5.01	$	5,072,416
Options exercisable - September 30, 2012		1,847,652		$	1.45		5.59	$	2,038,108
Options vested and expected to vest - September 30, 2012		4,227,582		$	1.06		5.04	$	4,768,985

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 September 28, 2012, based on the closing price of the Company’s common stock of $1.90 on that date.

On January 25, 2012, the Board approved the grant to Dr. Balbir Brar, the Company’s President, of an option to purchase 1,125,000 shares of common stock under the Plan. The exercise price of the option is $0.736 and the option vests as follows: 1/36^thof the unvested shares will vest on each of the 36 monthly periods following the date of the grant provided Dr. Brar continues to be employed by the Company as of the applicable vesting date.

On January 25, 2012, in connection with a senior advisory agreement, the Board approved the grant to Dr. Paul Finnegan, a director, an option to purchase up to 625,000 shares of common stock under the Plan. The exercise price of the option is $0.64. The option was originally scheduled to vest as follows: 250,000 shares on January 6, 2013, 250,000 shares on January 6, 2014 and 125,000 on January 6, 2015. On May 9, 2012, the Company entered into a termination agreement to terminate its senior advisory agreement with Dr. Finnegan, and, in connection therewith, entered into an amendment to Dr. Finnegan’s option agreement. The amendment to the option agreement modifies the vesting schedule of the option to provide that 40% of the shares covered by the grant will vest on September 30, 2012, 40% will vest on March 31, 2013 and 20% will vest on September 30, 2013, provided that Dr. Finnegan is serving as a director, employee or consultant at the time of such vesting. In connection with the termination of the senior advisory agreement, the option agreement was also modified to provide for the issuance of the option as compensation for Dr. Finnegan’s services as a director rather than a consultant. This option is accounted for as an employee stock option agreement, the final valuation of the option was determined at the date of modification and the remaining expense of the option agreement will be recognized ratably over the remaining vesting periods in accordance with the modified terms.

On January 25, 2012, the Board approved a one-time stock option grant to Mr. Baum, the Company’s current Chief Executive Officer and a director, to purchase up to 625,000 shares of the Company’s common stock under the Plan. The option was issued to Mr. Baum for his uncompensated services as Chairman of the Board and significant ongoing services related, but not limited to, the Company’s emergence from Chapter 11 bankruptcy protection, negotiation with creditors, pursuit of additional financing opportunities and hiring of executive officers. The option vests in twelve equal monthly periods, commencing on January 25, 2012 and ending on January 25, 2013 and has an exercise price of $0.48.

On January 25, 2012 the Board approved the grant to Andrew R. Boll, the Company’s Vice-President of Accounting and Public Reporting, of an option to purchase up to 75,000 shares of common stock under the Plan, which option was granted on February 1, 2012, the commencement date of Mr. Boll’s employment with the Company. The exercise price of the option is $0.736 and the option vests as follows: 1/36^th of the unvested shares will vest on each of the 36 monthly periods following the date of the grant provided Mr. Boll continues to be employed by the Company as of the applicable vesting date.

On January 25, 2012 the Board approved the grant to Dr. Joachim Schupp, the Company’s Chief Medical Officer, of an option to purchase up to 375,000 shares of common stock under the Plan, which option was granted on February 15, 2012, the commencement date of Dr. Schupp’s employment with the Company. The exercise price of the option is $0.72 and the option vests as follows: 1/36^th of the unvested shares will vest on each of the 36 monthly periods following the date of the grant provided Dr. Schupp continues to be employed by the Company as of the applicable vesting date.

On April 1, 2012, the Board of Directors approved the issuance of options to purchase 125,000 shares of the Company’s common stock to each of the Company’s directors, including the Company’s employee and non-employee directors, under the Plan. Each of the options has an exercise price of $0.90 per share. The options have a term of five years and vest quarterly over a one year period, such that the option to purchase 31,250 shares vests on each of June 30, 2012, September 30, 2012, December 31, 2012 and March 31, 2013.

On April 1, 2012, in recognition and consideration for his services as a director to the Company during 2010 and 2011, the Board approved the issuance to Dr. Jeff Abrams of an additional option to purchase 300,000 shares of the Company’s common stock with an exercise price of $0.90 per share under the Plan. The option has a ten year term and vests monthly over a one year period.

On April 1, 2012, the Company granted to Mr. Baum an option to purchase up to 300,000 shares of the Company’s common stock at an exercise price of $0.90 per share under the Plan . The option terminates on March 31, 2017 and vests over a two year period, with 75,000 options vesting immediately upon issuance and an additional 9,375 options vesting monthly for the next twenty four months thereafter.

Effective as of the close of business on July 25, 2012, Dr. Brar submitted his resignation as a director on the Board of Directors of the Company. Dr. Brar continues in his capacity as the President of the Company. At the time of his resignation as a director, options to purchase 31,250 shares had vested under Dr. Brar’s April 1, 2012 option grant related to his Board service, and all unvested shares subject to the option were forfeited. Dr. Brar was granted an extension of 240 days from his resignation date to exercise the 31,250 vested shares.

On July 26, 2012, the Board of Directors of the Company appointed Stephen G. Austin, CPA, as a new director on the Board of Directors of the Company. In connection with his appointment as a director, the Board approved the issuance to Mr. Austin of an option to purchase up to 85,616 shares of the Company’s common stock under the Plan. Such option has an exercise price of $0.90 per share, has a term of five years, and vests monthly over a period of one year commencing on January 1, 2013.

The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for the grants issued to employees and directors during the nine months ended September 30, 2012:

	Nine Months Ended September 30, 2012
Weighted-average fair value of options granted	$	0.65
Expected terms (in years)		2.5-5.5
Expected volatility		219-360%
Risk-free interest rate		0.31-1.03%
Dividend yield		—

Effective April 1, 2012, the Company entered into an advisory agreement with director Dr. Robert Kammer (the “Advisory Agreement”) pursuant to which Dr. Kammer will provide certain services to the Company in addition to his services as a director, including, but not limited to, providing management and advice regarding the operations of the registration clinical trials including start-up and on-going clinical operational and development activities, manufacturing and quality control of the clinical and commercial supplies, project and operational management, assistance in the identification of new drug delivery technologies that may be available for acquisition or license and assistance in the development of the Company’s intellectual property. As part of Dr. Kammer’s compensation under the Advisory Agreement, the Company granted to Dr. Kammer on April 1, 2012 an option to purchase up to 300,000 shares of the Company’s common stock at an exercise price of $0.90 per share under the Plan. The option terminates on March 31, 2017 and vests over a two year period, with 75,000 options vesting immediately upon issuance and an additional 9,375 options vesting monthly for the next twenty four months thereafter. In accordance with accounting guidance for share-based compensation to consultants, the unvested portion of the option will be revalued on an interim basis until the termination of the Advisory Agreement. The Advisory Agreement is to terminate on the earlier of the completion of the services or the second anniversary of the date of the agreement. As of September 30, 2012, the revalued aggregate estimated fair value of the stock option, based on the Black-Scholes-Merton pricing model, was $338,420.

The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for the grants issued to consultants during the nine months ended September 30, 2012:

	Nine Months Ended September 30, 2012
Weighted-average fair value of options granted	$	1.46
Expected terms (in years)		4.50-5.00
Expected volatility		306% - 361%
Risk-free interest rate		0.62%-1.03%
Dividend yield		—

The Company’s outstanding options have been granted to the employees, directors and consultants at exercise prices that range from $0.48 to $16.00, the estimated fair market value of the common stock on the dates of issuance. These options have expiration dates that range from 4 – 10 years from their grant date and vest immediately, monthly, quarterly, or on an annual basis for a period of up to five years. The Company uses the Black-Scholes-Merton option pricing model to estimate the grant-date fair value of share-based awards. The Black-Scholes-Merton model requires subjective assumptions regarding future stock price volatility and expected time to exercise, along with assumptions about the risk-free interest rate and expected dividends, which affect the estimated fair values of the Company’s stock-based awards. The expected term of options granted was determined in accordance with the “simplified approach” as the Company has limited historical data on employee exercises and post-vesting employment termination behavior. The expected volatility is based on the historical volatilities of the common stock of the Company. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The Company used 0% as an expected dividend yield assumption. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. Utilizing these assumptions, the fair value is determined at the date of grant.

The Company issued options to purchase up to 5,060,616 shares of the Company’s common stock during the nine months ended September 30, 2012. The weighted average fair value per share of grants issued during the nine months ended September 30, 2012 was $0.65.

As of September 30, 2012, there was approximately $1,800,000 of total unrecognized compensation expense related to unvested stock options under the Plan. That expense is expected to be recognized over the weighted-average remaining vesting period of 1.42 years.

Other Stock Based Compensation

As additional compensation to Dr. Kammer under his Advisory Agreement, Dr. Kammer is to be compensated $10,000 per month in the form of common stock issued outside of the Plan based on a $0.90 price per share being allocated to each dollar of payment due to Dr. Kammer. Upon the completion of a financing transaction yielding not less than $15 million to the Company, Dr. Kammer may unilaterally choose to be paid in either cash or common stock, based on the same $0.90 price per share. Dr. Kammer and the Company have agreed that the common stock issuable to Dr. Kammer as compensation under his advisory agreement is to be accrued and issued on a quarterly or annual basis; accordingly, as of the date hereof no such shares have been issued to Dr. Kammer. The balance due to Dr. Kammer at September 30, 2012 under the Advisory Agreement was $71,667 (share equivalent of 66,667 common shares) and is included in accounts payable and accrued expenses in the accompanying unaudited condensed consolidated balance sheet.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ 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=6881521&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=6228006&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=6959260&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
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Section B
-Paragraph 7, 11A
-Chapter 1
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph d
-Article 4

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 20: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 21: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

Reference 22: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 3, 4, 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 23: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

+ Details

OVERVIEW AND BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Imprimis has prepared the accompanying interim condensed unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United Stated 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 complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. 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, 2011.

Principles of Consolidation

Principles of Consolidation

Development Stage Enterprise

Development Stage Enterprise

These condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development state enterprise and has incurred recurring operating losses, has had negative operating cash flows and has not recognized any significant revenues since July 24, 1998 (inception). In addition, the Company has a deficit accumulated during the development stage of approximately $22.7 million at September 30, 2012, and anticipates incurring further losses through the year 2012 and beyond. The Company has not yet generated commercial sales revenue and has funded its operating losses to date through debt and equity offerings and borrowings under its line of credit. The Company believes that its existing cash and cash equivalents, will be sufficient to cover its cash flow requirements through the next twelve months.

Research and Development

Research and Development

The Company expenses all costs related to research and development as they are incurred.

Revenue Recognition and Deferred Revenue

Revenue Recognition and Deferred Revenue

Income Taxes

Income Taxes

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

Furniture and Equipment

Furniture and Equipment

Furniture and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of three to five years.

Furniture and equipment, net, as of September 30, 2012 and December 31, 2011 consisted of the following:

		September 30,		December 31,
		2012		2011
Furniture and Equipment, net:
Computer Software and Hardware	$	6,341	$	-
Furniture and Equipment		8,967		-
		15,308		-
Accumulated Depreciation		(2,090)		-
	$	13,218	$	-

Deferred Offering Costs

Deferred Offering Costs

Deferred Rent

Deferred Rent

Fair Value Measurements

Fair Value Measurements

·	Level 1: 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: 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: 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.

The fair values of the Company’s cash and cash equivalents, accounts payable, and accrued expenses approximate carrying values due to their short term maturities.

Beneficial Conversion Features and Debt Discounts

Beneficial Conversion Features and Debt Discounts

Stock-Based Compensation

Stock-Based Compensation

The Company recorded stock-based compensation related to equity instruments granted to employees, directors and consultants as follows:

		For The Three		For The Three		For The Nine		For The Nine
		Months Ended		Months Ended		Months Ended		Months Ended
		September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Employees - selling, general and administrative	$	180,630	$	32,757	$	298,854	$	104,675
Employees - research and development		61,299		-		143,711		37,754
Directors - selling, general and administrative		331,264		4,041		898,679		6,733
Consultants - selling, general and administrative		80,849		-		160,836		-
Total	$	654,042	$	36,798	$	1,502,080	$	149,162

Basic and Diluted Loss per Common Share

Basic and Diluted Loss per Common Share

The following table shows the computation of basic and diluted earnings per common share for the three- and nine-month periods ended September 30, 2012 and September 30, 2011:

	For the three months ended			For the three months ended			For the nine months ended			For the nine months ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011

Net loss	$	(1,245,826	)	$	(85,400	)	$	(3,930,507	)	$	(682,178	)
Deemed dividend to preferred stockholders		—			—			(200,000	)		—
Numerator – loss attributable to common stockholders		(1,245,826	)		(85,400	)		(4,130,507	)		(682,178	)
Denominator – weighted average
number of shares outstanding, basic and diluted		31,099,103			1,987,601			18,642,566			1,989,490
Loss per share, basic and diluted	$	(0.04	)	$	(0.04	)	$	(0.22	)	$	(0.34	)

Use of Estimates

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, 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, the valuation of contributed services, stock options, deferred taxes and stock-based compensation issued to employees and non-employees. Actual results could differ from those estimates.

STOCKHOLDERS EQUITY AND STOCK BASED COMPENSATION (Details 1)	9 Months Ended
	Sep. 30, 2012 USD ($) $ / shares shares
Number of shares
Beginning Balance \| shares	150,152
Granted \| shares	5,060,616
Cancelled/Forfeited \| shares	(718,750)
Ending Balance \| shares	4,492,018
Exercisable Ending Balance \| shares	1,847,652
Vested and expected to vest - September 30, 2012 \| shares	4,227,582
Weighted Avg. Exercise Price
Beginning Balance \| $ / shares	$ 9.68
Granted \| $ / shares	0.73
Cancelled/Forfeited \| $ / shares	0.67
Ending Balance \| $ / shares	1.04
Exercisable Ending Balance \| $ / shares	1.45
Vested and expected to vest - September 30, 2012 \| $ / shares	$ 1.06
Weighted Avg. Remaining Contractual Life
Ending Balance	5 years 1 day
Exercisable Ending Balance	5 years 5 months 9 days
Vested and expected to vest - September 30, 2012	5 years 4 days
Aggregate Intrinsic Value
Ending Balance \| $	$ 5,072,416
Exercisable Ending Balance \| $	2,038,108
Vested and expected to vest - September 30, 2012 \| $	$ 4,768,985

OVERVIEW AND BASIS OF PRESENTATION (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		170 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Dec. 31, 2011
Component of Operating Other Cost and Expense [Line Items]
Revenue			$ 100,000		$ 100,000
Deposit limits per Owner			250,000
Company Deposit Limits			10,100,000
Depreciation expenses	843	$ 0	2,090	$ 338	5,244
Deferred offering costs	383,746		383,746		383,746
Deferred rent	1,734		$ 1,734		1,734
Antidilutive Securities Excluded from Computation of Earnings Per Share			8,345,388	395,846
FederalMember
Component of Operating Other Cost and Expense [Line Items]
Net operating loss carryforwards	14,100,000		$ 14,100,000		14,100,000
CaliforniaMember
Component of Operating Other Cost and Expense [Line Items]
Net operating loss carryforwards	$ 13,600,000		$ 13,600,000		$ 13,600,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2012	Dec. 31, 2011
Stockholders' Equity (Deficit)
Preferred stock, par value	$ 0.001	$ .001
Preferred stock, Authorized	10	10
Preferred stock, Issued	0	10
Preferred stock, outstanding	0	10
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	395,000,000	395,000,000
Common stock, issued shares	33,859,627	1,987,601
Common stock, outstanding shares	33,859,627	1,987,601

STOCKHOLDERS EQUITY AND STOCK BASED COMPENSATION (Details 2)	9 Months Ended
	Sep. 30, 2012 $ / shares
Employee and Directors
Weighted-average fair value of options granted	$ 0.65
Expected terms Minimum	2 years 6 months
Expected terms Maximum	5 years 6 months
Expected volatility minimum	219.00%
Expected volatility maximum	360.00%
Risk-free interest rate Minimum	0.31%
Risk-free interest rate Maximum	1.03%
ConsultantsMember
Weighted-average fair value of options granted	$ 1.46
Expected terms Minimum	4 years 6 months
Expected terms Maximum	5 years
Expected volatility minimum	306.00%
Expected volatility maximum	361.00%
Risk-free interest rate Minimum	0.62%
Risk-free interest rate Maximum	1.03%

WARRANTS (Details) - WarrantMember	9 Months Ended
WARRANTS (Details) - WarrantMember	Sep. 30, 2012 $ / shares shares
Number of shares
Warrants Beginning Balance \| shares	95,498
Granted \| shares	2,755,950
Exercised \| shares
Cancelled/Forfeited \| shares	(64,745)
Warrants Ending Balance \| shares	2,786,703
Weighted average remaining contractual life of the outstanding warrants in years - September 30, 2012	2 years 6 months 19 days
Weighted Avg. Exercise Price
Exercise Price Beginning Balance \| $ / shares	$ 33.16
Exercise Price Granted \| $ / shares	1.19
Exercise Price Exercised \| $ / shares
Exercise Price Cancelled/Forfeited \| $ / shares	32.00
Exercise Price Ending Balance \| $ / shares	$ 1.56

OVERVIEW AND BASIS OF PRESENTATION (Details) - USD ($)	Sep. 30, 2012	Dec. 31, 2011
Furniture and Equipment, net
Computer Software and Hardware	$ 6,341
Furniture and Equipment	8,967
Total	15,308
Accumulated Depreciation	(2,090)
Furniture and Equipment, net	$ 13,218

NOTES PAYABLE - RELATED PARTY (Details) - USD ($)	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Convertible notes Payable
Total convertible notes payable		1,300,000
Less: Current portion		(1,300,000)
Long-term portion
TenPercentConvertibleNotesPayableMember
Debt Instrument [Line Items]
Convertible notes Payable		300,000
Total convertible notes payable
Less: Current portion
Long-term portion
SevenPointFiveConvertibleNotesPayableMember
Debt Instrument [Line Items]
Convertible notes Payable		1,000,000
Total convertible notes payable
Less: Current portion
Long-term portion

STOCKHOLDERS EQUITY AND STOCK BASED COMPENSATION (Details)	9 Months Ended
	Sep. 30, 2012 shares
Number of Shares
Beginning, Unvested
Granted	1,000,000
Vested
Cancelled
Ending, Unvested	1,000,000
Weighted Average Grant Date Fair Value
Beginning, Unvested
Granted	0.65
Vested
Cancelled
Ending, Unvested	0.65

STOCKHOLDERS EQUITY AND STOCK BASED COMPENSATION (Details Narrative) - $ / shares	Sep. 30, 2012	Dec. 31, 2011
Equity [Abstract]
Preferred authorized, shares held	5,000,000	5,000,000
Preferred stock, par value	$ 0.001	$ .001
Preferred stock, shares issued	0	10
Preferred stock, shares outstanding	0	10