Astrotech Corp. (ASTC)

[Toxic Avenger]

No, 1st Detect R&D costs are NOT in gross margin, only any DIRECT costs incurred for a 1st Detect sale.
That's the problem with negative gross margin. It indicates it's costing you more to produce your product or service than you can sell it for, BEFORE overhead like administrative, sales and marketing, R&D, interest, etc. Not a good situation.

http://www.investopedia.com/terms/c/cogs.asp
"Definition of 'Cost Of Goods Sold - COGS'

The direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs. COGS appears on the income statement and can be deducted from revenue to calculate a company's gross margin. Also referred to as "cost of sales."