Quantumsphere 10-K 28 Sep 15 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Jun. 30, 2015	Sep. 28, 2015	Dec. 28, 2014
Document And Entity Information
Entity Registrant Name	QUANTUMSPHERE, INC.
Entity Central Index Key	1,387,135
Document Type	10-K
Trading Symbol	qsim
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 36,346,376
Entity Common Stock, Shares Outstanding		22,511,884
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,015

BALANCE SHEETS

BALANCE SHEETS - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Current Assets
Cash	$ 398,570	$ 2,702,889
Inventory	65,668
Prepaid expenses and other current assets	39,081	$ 60,186
Total current assets	503,319	2,763,075
Property and Equipment, net	1,346,346	1,533,588
Patents, net	99,447	112,299
Other Assets	24,578	24,578
Total assets	1,973,690	4,433,540
Current Liabilities
Accounts payable and accrued expenses	425,582	501,051
Note payable, net of discount	197,639	$ 130,786
Convertible notes payable, net of discounts	42,500
Derivatives liabilities	1,141,700
Total current liabilities	1,807,421	$ 631,837
Note payable, long-term portion, net of discounts	276,392	358,245
Total liabilities	$ 2,083,813	$ 990,082
Stockholders' Equity (Deficit)
Convertible preferred stock - 10,000,000 shares authorized, no shares issued and outstanding
Common stock - 500,000,000 shares authorized, 22,261,884 and 21,385,217 shares issued and outstanding as of June 30, 2015 and 2014, respectively	$ 22,262	$ 21,385
Additional paid-in capital	41,987,111	40,232,630
Accumulated deficit	(42,119,496)	(36,810,557)
Total stockholders' equity (deficit)	(110,123)	3,443,458
Total liabilities and stockholders' equity (deficit)	$ 1,973,690	$ 4,433,540

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - shares	Jun. 30, 2015	Jun. 30, 2014
Statement of Financial Position [Abstract]
Convertible preferred stock, shares authorized	10,000,000	10,000,000
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	22,261,884	21,385,217
Common stock, shares outstanding	22,261,884	21,385,217

STATEMENTS OF OPERATIONS

STATEMENTS OF OPERATIONS - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Income Statement [Abstract]
Net sales	$ 20,095	$ 48,047	$ 244,061
Cost of Sales	2,311	14,448	82,761
Gross Profit	17,784	33,599	161,300
Operating Expenses
Research and development	832,432	2,137,628	911,960
Selling, marketing and advertising	19,918	73,862	28,569
General and administrative	1,627,313	2,392,467	1,349,984
Total operating expenses	2,479,663	4,603,957	2,290,513
Loss from Operations	(2,461,879)	(4,570,358)	(2,129,213)
Other (Expense) Income
Interest expense, net	(301,045)	(80,131)	(266,371)
Interest expense - amortization of note discounts	$ (313)	(228,404)	$ (303,379)
Loss from change in fair value of derivative liabilities		(449,600)
Gain on disposal of assets	$ 8,000	17,353	$ 10,000
Loss on intangible assets		(12,283)
Other income	$ 69,500	15,284
Total other expense, net	(223,858)	(737,781)	$ (559,750)
Loss Before Provision for Income Taxes	(2,685,737)	(5,308,139)	(2,688,963)
Provision for Income Taxes	800	800	800
Net Loss	$ (2,686,537)	$ (5,308,939)	$ (2,689,763)
Basic and Diluted Loss Per Common Share	$ (0.18)	$ (0.24)	$ (0.24)
Basic and Diluted Weighted-Average Common Shares Outstanding	14,971,068	21,998,528	11,056,059

STATEMENTS OF STOCKHOLDERS' EQU

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)	Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
BALANCE at Beginning at Dec. 31, 2012		$ 21,496,878	$ 8,214,260	$ (31,434,257)	$ (1,723,119)
BALANCE at Beginning (in shares) at Dec. 31, 2012		11,056,059
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of warrants with debt and related beneficial conversion feature			$ 262,276		262,276
Stock-based compensation			$ 1,130,936		1,130,936
Net loss				$ (2,689,763)	(2,689,763)
BALANCE at End at Dec. 31, 2013		$ 21,496,878	$ 9,607,472	$ (34,124,020)	(3,019,670)
BALANCE at End (in shares) at Dec. 31, 2013		11,056,059
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Conversion of notes payable and related accrued interest to common stock		$ 7,216,781			7,216,781
Conversion of notes payable and related accrued interest to common stock (in shares)		5,447,194
Shares issued for cash, $2.00 per share		$ 2,534,000			2,534,000
Shares issued for cash, $2.00 per share (in shares)		1,267,000
Common stock buy back		$ (1,173,430)			$ (1,173,430)
Common stock buy back (in shares)		(585,036)
Shares issued to Way Cool shareholders and effect of reverse merger		$ (30,052,844)	$ 30,052,844
Shares issued to Way Cool shareholders and effect of reverse merger (in shares)		4,200,000
Issuance of warrants with debt and related beneficial conversion feature
Stock-based compensation			$ 561,032		$ 561,032
Issuance of warrants with debt			11,282		11,282
Net loss				$ (2,686,537)	(2,686,537)
BALANCE at End at Jun. 30, 2014		$ 21,385	$ 40,232,630	$ (36,810,557)	3,443,458
BALANCE at End (in shares) at Jun. 30, 2014		21,385,217
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation			$ 873,613		873,613
Options exercised		$ 877	$ 879,123		$ 880,000
Options exercised (in shares)		876,667			(876,667)
Issuance of warrants with debt			$ 1,745		$ 1,745
Net loss				$ (5,308,939)	(5,308,939)
BALANCE at End at Jun. 30, 2015		$ 22,262	$ 41,987,111	$ (42,119,496)	$ (110,123)
BALANCE at End (in shares) at Jun. 30, 2015		22,261,884

STATEMENTS OF STOCKHOLDERS' EQ6

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) - $ / shares	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2013
Statement of Stockholders' Equity [Abstract]
Shares issued, price per share	$ 2	$ 2	$ 2

STATEMENTS OF CASH FLOWS

STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (2,686,537)	$ (5,308,939)	$ (2,689,763)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	$ 34,240	385,773	$ 56,209
Loss on intangible assets		12,283
Loss (gain) on disposal of fixed assets	$ (8,000)	(17,353)	$ (10,000)
Stock-based compensation	$ 561,031	873,613	$ 1,130,936
Loss from change in fair value of derivative liabilities		449,600
Interest expense - amortization of note discounts	$ 313	228,404	$ 303,379
Changes in operating assets and liabilities:
Accounts receivables	$ 15,636	2,958	$ (9,784)
Inventory		(65,668)
Prepaid expenses and other current assets	$ (27,116)	$ 18,147	$ (16,988)
Other assets	(15,817)
Accounts payable and accrued expenses	$ (298,686)	$ 36,415	$ (74,235)
Deferred revenue			(24,000)
Net cash used in operating activities	$ (2,424,936)	$ (3,384,767)	(1,334,246)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for development of patents	(5,165)	(4,483)	(18,421)
Purchase of property and equipment	(1,437,092)	(193,479)	(101,960)
Cash received from disposal of equipment	8,000	17,353	10,000
Net cash used in investing activities	(1,434,257)	$ (180,609)	$ (110,381)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock	$ 2,534,000
Proceeds from exercise of common stock options		$ 880,000
Proceeds from issuances of notes payable	$ 4,500,000	637,500	$ 2,025,000
Principal payments on notes payable	(25,000)	(144,559)	$ (250,000)
Common stock repurchase	(822,153)	(111,884)
Net cash provided by financing activities	6,186,847	1,261,057	$ 1,775,000
NET INCREASE (DECREASE) IN CASH	2,327,654	(2,304,319)	330,373
CASH - beginning of period	375,235	2,702,889	44,862
CASH - end of period	2,702,889	398,570	375,235
ADDITIONAL CASH FLOW INFORMATION
Interest paid	8,170	75,315	34,954
Income taxes paid	$ 800	$ 800	$ 800
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Number of common shares callable	20,000	321,305	700,000
Note issued fair value	$ 11,000	$ 692,000	$ 262,000
Number of options issued	15,000	35,000	560,541
Stock issued fair value	$ 13,000	$ 25,000	$ 729,000
Stock repurchased recorded as accured liability		$ 112,000
Number of common shares converted	5,447,194
Value of common shares converted	$ 7,217,000
Shares cancelled and repurchased	$ 351,000

ORGANIZATION AND BUSINESS

ORGANIZATION AND BUSINESS	12 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION AND BUSINESS	1. ORGANIZATION AND BUSINESS QuantumSphere, Inc. (the “Company” or “QuantumSphere”) was organized under the laws of the State of California on January 31, 2003. The Company has developed a process to manufacture metallic nanopowders with end-use applications in the battery and chemical sectors. The Company’s products are used on a stand-alone basis, in the validation of Company nano-iron catalysts coated onto commercial iron catalysts used in the production of ammonia on a prospective basis, and research, development and initial marketing of zinc-air battery products. The Company’s major activities to date have included capital formation, research and development, and marketing of its metallic nanopowder products. In June 2014, the Company elected to change its year end from December 31 to June 30. Dr. Douglas Carpenter, our Chief Technology Officer, has been on medical leave since November 4, 2014 due to a serious medical condition. Effective May 15, 2015, Dr. Carpenter transitioned to a consulting role with the Company and served on our Scientific Advisory Board. On August 5, 2015, Dr. Carpenter’s consulting role and position on our Scientific Advisory Board ended. We anticipate undertaking a search for a new Chief Technology Officer in the second half of this year and remain confident the Company has the necessary resources to continue to handle Dr. Carpenter’s former duties. We do not believe this change will have a material effect on business operations. On May 5, 2015, the Company announced that commercial validation of its nano-iron catalyst had been achieved in a production-scale ammonia plant in China.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Jun. 30, 2015
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) in all material respects, and have been consistently applied in preparing the accompanying financial statements. Use of Estimates The accompanying financial statements are prepared in conformity with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. The use of estimates may also affect the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include, among others, fair value of derivative liabilities, realization of capitalized assets, valuation of equity instruments, and deferred income tax asset valuation allowances. Actual results could differ from those estimates. Revenue Recognition The Company recognizes revenue when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company does not grant customers the right to return the products after such products have been accepted. Amounts billed for shipping and handling are recorded as a component of net sales and the cost incurred for freight is included as a component of operating expenses in the statements of operations. Cash and Cash Equivalents The Company considers demand deposits, U.S. treasury securities and highly-liquid debt investments purchased with original maturities of three months or less to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2015 and June 30, 2014. The Company maintains its cash in major banks. From time to time, the Company’s cash balances exceed the Federal Deposit Insurance Corporation limit. The Company has not experienced and does not anticipate any losses relating to these amounts. Inventory Inventory consists primarily of manufactured nano materials and is comprised of raw materials, labor and manufacturing overhead. Inventory is stated at the lower of cost, determined on a first-in, first-out basis, or market. At June 30, 2015 and 2014, the Company did not have an excess and obsolete reserve. An inventory reserve is created when potentially slow-moving or obsolete inventories are identified in order to reflect the appropriate inventory value. Changes in economic conditions, production requirements, and lower than expected customer demand could result in additional obsolete or slow-moving inventory that cannot be sold or must be sold at reduced prices and could result in additional reserve provisions. Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. Repairs and maintenance of equipment are charged to expense as incurred. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Gains or losses on dispositions of property and equipment are included in the results of operations when realized. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Leasehold improvements are amortized over the shorter of terms of the leases or their estimated useful lives. Depreciation expense on assets acquired under capital leases is included in depreciation expense. Patents Costs incurred in applying for patents relating to the Company’s process for production of nanopowders have been capitalized. Patents are amortized to reflect the pattern of economic benefits consumed, on a straight-line basis, over the estimated periods benefited. As of June 30, 2015, nine patents have been issued and three patent are pending approval. Amortization relating to issued patents was not significant during the periods presented. Additional significant costs may be required for the continued development of end-use applications for the Company’s technology. Patents costs are reviewed periodically as to if any patents are no longer being pursued and associated costs should be written off. For the year ended June 30, 2015, the Company wrote off $12,283 in capitalized patents costs. Impairment of Long-Lived Assets Long-lived assets and intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates potential impairment by comparing the carrying amount of the assets with the estimated undiscounted future cash flows associated with them. Should the review indicate that an asset is not recoverable, the Company’s carrying value of the asset would be reduced by the estimated shortfall to fair value. Fair Value of Financial Instruments and Certain Other Assets and Liabilities The Company follows the guidance of U.S. GAAP with respect to assets and liabilities that are measured at fair value. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: · Level 1 · Level 2 · Level 3 The Company’s financial instruments consist of cash, accounts receivable, accounts payable and accrued expenses and debt. The carrying amount approximates fair value because of the short-term nature of these items. Other than derivative liabilities, the Company did not have any assets or liabilities that are measured at fair value on a recurring or nonrecurring basis during the years ended June 30, 2015 and December 31, 2013, and the six months ended June 30, 2014. Derivative Liabilities A derivative is an instrument whose value is “derived” from an underlying instrument or index such as a future, forward, swap, option contract, or other financial instrument with similar characteristics, including certain derivative instruments embedded in other contracts and for hedging activities. As a matter of policy, we do not invest in separable financial derivatives or engage in hedging transactions. However, we have entered into certain financing transactions that involve financial equity instruments containing certain features that have resulted in the instruments being deemed derivatives. We may engage in other similar complex financing transactions in the future, but not with the intention to enter into derivative instruments. Derivatives are measured at fair value using the Monte Carlo simulation pricing model and marked to market through earnings. However, such new and/or complex instruments may have immature or limited markets. As a result, the pricing models used for valuation of derivatives often incorporate significant estimates and assumptions. Changes in these subjective assumptions can materially affect the estimate of the fair value of derivative liabilities and, consequently, the related amount recognized as loss due to change in fair value of derivative liabilities on the consolidated statement of operations. Furthermore, depending on the terms of a derivative, the valuation of derivatives may be removed from the financial statements upon exercise or conversion of the underlying instrument into some other security. The classification of a derivative instrument is reassessed at each balance sheet date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified. Research and Development Costs Research and development costs are expensed as incurred. Costs incurred for research and development for new or improved processes to produce nanopowders as well as end use applications for the nanopowders are expensed until the production process or applications have been determined to be commercially viable. Costs incurred after the production process is viable and a working model of the equipment has been completed will be capitalized as long-lived assets. Income Taxes Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period, if any, and the change during the period in deferred tax assets and liabilities. The Company provides for tax contingencies, if any, for federal, state and local exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing. Although the outcome of such matters is uncertain, in management’s opinion adequate provisions for income taxes have been made for potential liabilities emanating from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on the Company’s results. Loss Per Share The Company calculates basic loss per share by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if such additional common shares had been issued and were dilutive. Potential common shares, consisting of options and warrants, totaling 12,921,728, 13,629,643, and 10,946,415, have been excluded from the computations of diluted net loss per share because the effect would have been anti-dilutive for the year ended June 30, 2015, the six months ended June 30, 2014, and the year ended December 31, 2013, respectively. Stock-Based Compensation The Company measures all employee stock-based compensation awards using the Black-Scholes-Merton valuation model and allocates the related expense over the requisite service period. The expected volatility is based on the historical volatility of the Company’s stock as determined by its private placement offerings; the expected life of the award is determined using the simplified method. The Company accounts for nonemployee stock-based transactions using the fair value of the consideration received (i.e. the value of the goods or services) or the fair value of the equity instruments issued, whichever is more reliably measurable. Reclassifications The Company has reclassified certain prior period amounts to conform with current period presentation, in particular with regard to enhanced allocation of research and development costs that were previously classified as cost of goods sold. Risks and Uncertainties The Company faces risks and uncertainties relating to its ability to successfully implement and fulfill its strategy. Among other things, these risks include the ability to obtain revenues; manage operations; competition; attract, retain and motivate qualified personnel; maintain and develop new strategic relationships; and the ability to anticipate and adapt to the changing nanotechnology market and any changes in government regulations. Therefore, the Company may be subject to the risks of delays in consummating contracts with customers and suppliers, raising sufficient capital to achieve its objectives and other uncertainties, including financial, operational, technological, regulatory and other risks associated with an emerging business, including the potential risks of business failure. Recent Accounting Pronouncements In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40).” This ASU provides guidance to determine when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. ASU 2014-15 will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. ASU 2014-15 will be effective for the Company beginning June 30, 2017. The Company does not believe that this pronouncement will have an impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In July 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the impact of adopting this guidance. Going Concern The Company has incurred recurring losses from operations from inception and has limited working capital. As of June 30, 2015, the Company had an accumulated deficit of approximately $42 million. The Company’s activities will necessitate significant uses of working capital beyond fiscal 2015. Additionally, the Company’s capital requirements will depend on many factors, including the success of its continued research and development efforts and the status of competitive products. The Company plans to continue financing its operations with cash received from financing activities. Management is currently working on securing additional debt capital from financing activities to sustain operations until the Company is able to generate sufficient cash flows from operations. There is no assurance that the Company will be able to raise sufficient capital to continue operations and, if available, on terms satisfactory to the Company. The Company currently has sufficient cash for operations through November 2015.

SELECTED FINANCIAL STATEMENT CA

SELECTED FINANCIAL STATEMENT CAPTIONS	12 Months Ended
	Jun. 30, 2015
Disclosure Text Block Supplement [Abstract]
SELECTED FINANCIAL STATEMENT CAPTIONS	3. SELECTED FINANCIAL STATEMENT CAPTIONS Property and equipment as of June 30, 2015 and 2014 consisted of the following: June 30, 2015 June 30, 2014 Production equipment $ 1,948,794 $ 1,775,638 Computer equipment and software 57,864 53,203 Office furniture and equipment 11,972 8,751 Leasehold improvements 11,842 5,609 Scientific equipment 61,284 55,077 Lab furniture and fixtures 41,942 52,655 2,133,698 1,950,933 Accumulated depreciation and amortization (787,352 ) (417,345 ) $ 1,346,346 $ 1,533,588 Accounts payable and accrued expenses as of June 30, 2015 and 2014 consisted of the following: June 30, 2015 June 30, 2014 Stock cancellation liability (Note 6) $ 239,392 $ 351,276 Accounts payable 66,482 61,623 Other accrued professional fees 22,666 30,683 Accrued compensation and related expenses 87,581 23,747 Accrued legal — 18,493 Accrued interest 4,817 — Other accrued expenses 4,644 15,229 $ 425,582 $ 501,051

NOTE PAYABLE

NOTE PAYABLE	12 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
NOTE PAYABLE	4. NOTE PAYABLE On June 19, 2014, the Company signed a loan and security agreement with Novus Capital Group that provides up to two loans, each in the amount of $500,000. The initial loan of $500,000 was funded on June 19, 2014. The Company did not meet the additional equity requirement for funding of the second loan of $500,000. The loans accrue at an annual rate of 15.5%, have a term of thirty-six months, and monthly payments on each loan are $17,455, beginning August 10, 2014 for the initial loan. The agreement includes a warrant to purchase 30,000 shares of common stock at an exercise price of $2.00 per share that expires July 1, 2019; 20,000 warrants vested upon the initial funding of $500,000, and 10,000 warrants vest upon the second funding of $500,000. The initial vested warrants were valued at approximately $11,000, using the Black Scholes Merton option pricing model, and recorded as a discount to the note payable. On June 5, 2015, the Company signed a loan and security agreement with Novus Capital Group that provides an additional loan in the amount of $127,500. The loan accrues at an annual rate of 15.5%, has a term of thirty-six months, and monthly payments are $4,451, beginning July 10, 2015. The agreement includes a warrant to purchase 2,555 shares of common stock at an exercise price of $2.00 per share that expires June 30, 2020. The vested warrants were valued at approximately $1,745, using the Black Scholes Merton option pricing model, and recorded as a discount to the note payable. The two loans with Novus Capital Group are secured by substantially all of the Company’s assets.

CONVERTIBLE NOTES PAYABLE

CONVERTIBLE NOTES PAYABLE	12 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
CONVERTIBLE NOTES PAYABLE	5. CONVERTIBLE NOTES PAYABLE In May 2015, the Company issued convertible promissory notes (“Series O Notes”) totaling $510,000. The Series O Notes bear interest at the rate of 10% per annum, with a default rate of 18% per annum. The Series O Notes will mature upon the earlier of (i) one year from the date of the issuance of the notes, or (ii) closing of an equity financing of Four Million Dollars or more (Qualifying Equity Financing”). All outstanding principal and accrued interest under the Notes will be automatically converted into shares of common stock at the closing of a Qualifying Equity Offering based upon a conversion price equal to the lesser of (i) a twenty percent (20.0%) discount to the price per share of common stock of the Qualifying Equity Financing, or (ii) a twenty percent (20.0%) discount to the closing bid price of the Company’s common stock on the Closing Date. Alternatively, the outstanding principal and accrued interest may be voluntarily converted, at the sole discretion of the Lender, at any time prior to the close of the Qualifying Equity Offering, in whole or in part, at a conversion price per share equal to a twenty percent (20.0%) discount to the closing bid price of the Company’s common stock. In connection with the Series O Notes, the Company also issued Warrants equal to 50% of the face value of the Series O Notes based upon an exercise price equal to the lesser of (i) a twenty percent (20.0%) discount to the price per share of common stock of a Qualifying Equity Financing, or (ii) a twenty percent (20.0%) discount to the closing bid price of the Company’s common stock on the Closing Date. The Warrants shall be exercisable for a period of five (5) years. For the tables below for outstanding and exercisable warrants, the exercise price of the warrants has been set at $1.60 as this represents a 20% discount to the closing bid price of $2.00 on May 28, 2015, the closing date for the notes payable. As a Qualifying Equity Financing has not yet occurred, the total number of warrants to be issued was not yet fixed. Due to the price protection features of the convertible note as well as the variable number of warrants that can be issued in connection with these notes, both the embedded conversion feature and the warrants were considered to be derivative liabilities. As such, the Company allocated the entire face amount of the notes as a debt discount and amortized the discount using the effective interest method. As of June 30, 2015, the unamortized discount on the notes was approximately $472,000.

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT)	12 Months Ended
	Jun. 30, 2015
Equity [Abstract]
STOCKHOLDERS' EQUITY (DEFICIT)	6. STOCKHOLDERS’ EQUITY (DEFICIT) Common Stock In early April 2014, the Company executed a 10,000 for 1 reverse split. As a result of the reverse split, the Company cancelled and repurchased fractional shares comprising approximately 585,000 shares of common stock for $2.00 per share. Shortly after the reverse split, the Company executed a 1 for 10,000 forward split. As of June 30, 2015, the Company had approximately $239,000 of unredeemed cancelled fractional shares, which are classified as accrued liabilities. Stock Options In 2004, the Company adopted the 2004 Stock Option and Incentive Plan (the “2004 Plan”) for directors, employees, consultants and other persons acting on behalf of the Company. Options granted under the 2004 Plan vest on the date of grant, over a fixed period of time, or upon the occurrence of certain events and are exercisable for up to ten years. As of June 30, 2015, the total shares authorized for issuance were 7,500,000 shares of common stock. As of June 30, 2015, there were 1,056,006 shares of common stock available for grant under the 2004 Plan. During the year ended June 30, 2015, 870,000 options were exercised at a price of $1.00 per share and 6,667 options were exercised at a price of $1.50 per share. During the year ended June 30, 2015, the Company issued to employees, officers, directors, advisory board and consultants options to purchase 570,000 shares of common stock, which are exercisable at a price of $2.00 per share (the “2015 Options”). During the six months ended June 30, 2014, the Company issued to employees, officers, directors, advisory board and consultants options to purchase 161,000 shares of common stock, which are exercisable at a price of $2.00 per share, collectively (the “2014 Options”). During the year ended December 31, 2013, the Company issued to employees, officers, directors, advisory board and consultants options to purchase 2,170,540 shares of common stock, which are exercisable at a price ranging from $1.30 to $1.80 per share, collectively (the “2013 Options”). As payment for a portion of accrued compensation of approximately $729,000 to consultants, 560,541 of the 2013 Options were issued. Of the 2,170,540 options granted, 200,000 options were granted each to three employees. 50,000 each vest over thirty-six months and the balance vest 50,000 each upon certain milestones being met. As of June 30, 2015, vesting milestone has been met for 50,000 additional options each (for achieving $3.0 million additional equity), leaving 100,000 each for which certain milestones have not yet been met (50,000 upon a profitable quarter, 50,000 upon $10.0 million in annual revenue). The fair value of stock options granted were estimated on their respective grant dates using the Black-Scholes-Merton option pricing model and the following assumptions for the year ended June 30, 2015, the six months ended June 30, 2014 and the year ended December 31, 2013: Year ended June 30, 2015 Six Months ended June 30, 2014 Year ended December 31, 2013 Risk free interest rate 0.9% - 1.8% 0.8% - 1.7% 1.0% - 1.4% Expected term 3 - 6 years 3 - 6 years 6 years Expected volatility 44.2% - 52.1% 44.5% - 44.9% 45.1% - 45.5% Dividend yield — — — Stock compensation expense related to options was $729,000, $544,000, and $1,044,000 for the year ended June 30, 2015, the six months ended June 30, 2014, and the year ended December 31, 2013, respectively. Unrecognized compensation costs related to non-vested stock options was $266,000 as of June 30, 2015. The related cost is expected to be recognized over the remaining weighted-average vesting period of 1.0 years. A summary of the status of the options granted is as follows: Shares Weighted- Average Outstanding – December 31, 2012 3,834,204 $1.48 Granted 2,170,540 $1.50 Forfeited or expired (30,000 ) $1.45 Outstanding – December 31, 2013 5,974,744 $1.47 6.6 Granted 161,000 $2.00 Forfeited or expired (47,666 ) $1.46 Outstanding – June 30, 2014 6,088,078 $1.48 6.3 Granted 570,000 $2.00 Exercised (876,667 ) $1.00 Forfeited or expired (214,584 ) $1.74 Outstanding – June 30, 2015 5,566,827 $1.53 6.0 Exercisable: June 30, 2014 4,639,173 $1.46 5.4 June 30, 2015 4,774,101 $1.52 5.6 A summary of the status of the Company’s nonvested options and changes are presented below: Shares Weighted- Nonvested - December 31, 2012 600,295 $0.68 Granted 2,170,540 $0.82 Vested (1,107,139 ) $1.00 Nonvested - December 31, 2013 1,663,696 $0.65 Granted 161,000 $0.60 Forfeited or expired (15,826 ) $0.55 Vested (359,965 ) $0.59 Nonvested – June 30, 2014 1,448,905 $0.67 Granted 570,000 $0.59 Vested (1,122,984 ) $0.61 Forfeited or expired (103,195 ) $0.62 Nonvested – June 30, 2015 792,726 $0.71 The aggregate intrinsic value of vested and exercisable stock options was approximately $9,839,000 and $1,296,000 as of June 30, 2015 and 2014, respectively. Warrants During the six months ended June 30, 2014, the Company issued warrants to purchase 250,000 shares of common stock that vested immediately, exercisable for a period of seven years at $2.00 per share to the board of directors of the Company. During the year ended December 31, 2013, the Company issued warrants to purchase 500,000 shares of common stock, exercisable for a period of seven years at $1.30 per share, to a member of management subject to satisfaction of certain vesting conditions and are exercisable for up to seven years. 125,000 vested immediately and the balance vest 125,000 each upon certain milestones being met. As of June 30, 2015, vesting milestones have been met for 250,000 additional warrants (125,000 for achieving $3.0 million additional equity, 125,000 upon commercial validation of nano iron in China), leaving 125,000 for which the milestone has not yet been met (upon $10.0 million in annual revenue). The fair value of warrants granted were estimated on their respective grant dates using the Black-Scholes-Merton option pricing model and the following assumptions for the year ended June 30, 2015, the six months ended June 30, 2014, and the year ended December 31, 2013: Year ended June 30, 2015 Six Months ended Year ended Risk free interest rate 1.8 % 1.8 % 1.5 % Expected term 5 years 5 years 7 years Expected volatility 52.9 % 44.9 % 45.3 % Dividend yield — — — Stock compensation expense related to warrants was $144,000, $17,000 and $87,000 for the year ended June 30, 2015, the six months ended June 30, 2014, and the year ended December 31, 2013, respectively. Unrecognized compensation costs related to non-vested warrants was approximately $2,625,000 as of June 30, 2015. The related cost is expected to be recognized over the remaining weighted-average vesting period of 3.8 years. The Company also issued warrants in connection with the issuance of notes payable. See Notes 4 and 5. A summary of the status of all warrants granted is as follows: Shares Weighted- Average Outstanding – December 31, 2012 6,417,311 $2.13 Granted 1,200,000 $0.98 Forfeited (356,944 ) $1.50 Outstanding – December 31, 2013 7,260,367 $1.97 3.0 Granted 6,219,145 $1.52 Forfeited (520,710 ) $3.25 Outstanding – June 30, 2014 12,958,802 $1.73 3.8 Granted 321,305 $1.60 Forfeited (1,507,480 ) $3.97 Outstanding – June 30, 2015 11,772,627 $1.44 3.2 Exercisable: June 30, 2014 8,990,470 $1.73 3.4 June 30, 2015 8,147,627 $1.41 2.9 A summary of the status of the Company’s nonvested warrants granted in exchange for services or under compensation arrangements is presented below: Shares Weighted- Nonvested - December 31, 2012 1,022,221 $0.56 Granted 1,200,000 $0.98 Forfeited (356,944 ) $0.57 Vested (1,240,277 ) $0.55 Nonvested - December 31, 2013 625,000 $0.59 Granted 6,219,145 $0.72 Vested (2,875,813 ) $0.70 Nonvested – June 30, 2014 3,968,332 $0.71 Granted 321,305 $1.07 Forfeited (10,000 ) $0.58 Vested (654,637 ) $0.56 Nonvested – June 30, 2015 3,625,000 $0.72 The aggregate intrinsic value of vested and exercisable warrants was approximately $15,740,000 and $1,892,000 as of June 30, 2015 and 2014, respectively.

INCOME TAXES

INCOME TAXES	12 Months Ended
	Jun. 30, 2015
Income Tax Disclosure [Abstract]
INCOME TAXES	7. INCOME TAXES For the year ended June 30, 2015, the six months ended June 30, 2014 and the year ended December 31, 2013, the provision for income taxes consists entirely of state income taxes. The following is a reconciliation of the provision for income taxes computed at the statutory federal rate of 34% to the net provision for income taxes for the year ended June 30, 2015, the six months ended June 30, 2014, and the year ended December 31, 2013: 2015 2014 2013 Benefit at statutory rate (34%) $ (1,805,000 ) $ (913,000 ) $ (914,000 ) State tax benefit, net of federal tax benefit (224,000 ) (124,000 ) (115,000 ) Stock based compensation and other 378,000 192,000 240,000 Change in valuation allowance 1,651,800 845,800 789,800 Net provision for income taxes $ 800 $ 800 $ 800 Significant components of deferred tax assets and liabilities at June 30, 2015 and June 30, 2014 and consist of tax net operating loss carryforwards offset by full valuation allowances on deferred tax assets. Management believes that, based on a number of factors, including the available objective evidence it is more likely than not that deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. As of June 30, 2015 and June 30, 2014, the Company’s deferred tax assets were primarily comprised of net operating losses totaling approximately $11,247,000 and $9,800,000, respectively. As of June 30, 2015, the Company had federal and state tax net operating loss carryforwards of approximately $28,528,000 and $26,636,000, respectively. If unused, the federal and state net operating losses begin to expire in 2025 and 2015, respectively. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation due to the complexity and cost associated with such a study, and the fact that there may be additional such ownership changes in the future. The Company does not believe it has any uncertain income tax positions that could materially affect its financial statements. The Company’s federal and state income tax returns remain open to agency examination for the standard statute length of time after filing.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Jun. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	8. COMMITMENTS AND CONTINGENCIES The Company has noncancelable operating lease commitments for equipment through December 2016 and real property through February 2017. Rent expense under operating leases is recognized on the straight-line basis over the term of the leases. Rent expense for the year ended June 30, 2015, the six months ended June 30, 2014 and the year ended December 31, 2013 were approximately $105,000, $42,000 and $104,000, respectively. Future minimum lease payments under operating leases approximate the following for the fiscal years ending June 30: 2016 $ 105,000 2017 71,000 $ 176,000

CONCENTRATIONS

CONCENTRATIONS	12 Months Ended
	Jun. 30, 2015
Risks and Uncertainties [Abstract]
CONCENTRATIONS	9. CONCENTRATIONS For the twelve months ended June 30, 2015, 36% of net sales were to South Korea and 13% of net sales were to Canada. For the six months ended June 30, 2014, 44% of net sales were to South Korea and 17% of net sales were to Japan. For the year ended December 31, 2013, 65% of net sales were to Israel. For the year ended June 30, 2015, 30% of net sales were to one customer. For the six months ended June 30, 2014, 56% of net sales were to two customers. For the year ended December 31, 2013, 65%, of net sales were to one customer. No other significant customers or foreign sales were noted during the year ended June 30, 2015, the six months ended June 30, 2014, or the year ended December 31, 2013.

COMPARABLE YEAR INFORMATION (UN

COMPARABLE YEAR INFORMATION (UNAUDITED)	12 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
COMPARABLE YEAR INFORMATION	10. COMPARABLE YEAR INFORMATION (UNAUDITED) The Company’s condensed statement of operations was as follows for the twelve months ended June 30, 2014: Net Sales $ 176,382 Cost of Sales 55,594 Gross Profit 120,788 Operating Expenses Research and development 1,365,111 Selling, marketing and advertising 46,313 General and administrative 2,563,441 Total Operating Expenses 3,974,865 Loss from Operations (3,854,077 ) Other Income (Expense) (505,611 ) Net Loss $ (4,359,688 ) Basic and Diluted Loss Per Common Share $ (0.34 ) Basic and Diluted Weighted-Average Common Shares Outstanding 12,997,474 Potential common shares, consisting of options and warrants, totaling 13,629,643 have been excluded from the computations of diluted net loss per share because the effect would have been anti-dilutive.

SUBSEQUENT EVENTS (UNAUDITED)

SUBSEQUENT EVENTS (UNAUDITED)	12 Months Ended
	Jun. 30, 2015
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	11. SUBSEQUENT EVENTS (UNAUDITED) The Company has evaluated subsequent events from June 30, 2015 through the date the accompanying financial statements were filed with the Securities and Exchange Commission. In September 2015, the Company issued $325,000 in unsecured notes. The notes mature in six months and have warrants attached. See the 8-K filed September 21, 2015 for further discussion of such notes.

SUMMARY OF SIGNIFICANT ACCOUN19

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Jun. 30, 2015
Accounting Policies [Abstract]
Use of Estimates	Use of Estimates The accompanying financial statements are prepared in conformity with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. The use of estimates may also affect the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include, among others, fair value of derivative liabilities, realization of capitalized assets, valuation of equity instruments, and deferred income tax asset valuation allowances. Actual results could differ from those estimates.
Revenue Recognition	Revenue Recognition The Company recognizes revenue when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company does not grant customers the right to return the products after such products have been accepted. Amounts billed for shipping and handling are recorded as a component of net sales and the cost incurred for freight is included as a component of operating expenses in the statements of operations.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers demand deposits, U.S. treasury securities and highly-liquid debt investments purchased with original maturities of three months or less to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2015 and June 30, 2014. The Company maintains its cash in major banks. From time to time, the Company’s cash balances exceed the Federal Deposit Insurance Corporation limit. The Company has not experienced and does not anticipate any losses relating to these amounts.
Inventory	Inventory Inventory consists primarily of manufactured nano materials and is comprised of raw materials, labor and manufacturing overhead. Inventory is stated at the lower of cost, determined on a first-in, first-out basis, or market. At June 30, 2015 and 2014, the Company did not have an excess and obsolete reserve. An inventory reserve is created when potentially slow-moving or obsolete inventories are identified in order to reflect the appropriate inventory value. Changes in economic conditions, production requirements, and lower than expected customer demand could result in additional obsolete or slow-moving inventory that cannot be sold or must be sold at reduced prices and could result in additional reserve provisions.
Property and Equipment	Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. Repairs and maintenance of equipment are charged to expense as incurred. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Gains or losses on dispositions of property and equipment are included in the results of operations when realized. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Leasehold improvements are amortized over the shorter of terms of the leases or their estimated useful lives. Depreciation expense on assets acquired under capital leases is included in depreciation expense.
Patents	Patents Costs incurred in applying for patents relating to the Company’s process for production of nanopowders have been capitalized. Patents are amortized to reflect the pattern of economic benefits consumed, on a straight-line basis, over the estimated periods benefited. As of June 30, 2015, nine patents have been issued and three patent are pending approval. Amortization relating to issued patents was not significant during the periods presented. Additional significant costs may be required for the continued development of end-use applications for the Company’s technology. Patents costs are reviewed periodically as to if any patents are no longer being pursued and associated costs should be written off. For the year ended June 30, 2015, the Company wrote off $12,283 in capitalized patents costs.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets Long-lived assets and intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates potential impairment by comparing the carrying amount of the assets with the estimated undiscounted future cash flows associated with them. Should the review indicate that an asset is not recoverable, the Company’s carrying value of the asset would be reduced by the estimated shortfall to fair value.
Fair Value of Financial Instruments and Certain Other Assets and Liabilities	Fair Value of Financial Instruments and Certain Other Assets and Liabilities The Company follows the guidance of U.S. GAAP with respect to assets and liabilities that are measured at fair value. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: · Level 1 · Level 2 · Level 3 The Company’s financial instruments consist of cash, accounts receivable, accounts payable and accrued expenses and debt. The carrying amount approximates fair value because of the short-term nature of these items. Other than derivative liabilities, the Company did not have any assets or liabilities that are measured at fair value on a recurring or nonrecurring basis during the years ended June 30, 2015 and December 31, 2013, and the six months ended June 30, 2014.
Derivative Liabilities	Derivative Liabilities A derivative is an instrument whose value is “derived” from an underlying instrument or index such as a future, forward, swap, option contract, or other financial instrument with similar characteristics, including certain derivative instruments embedded in other contracts and for hedging activities. As a matter of policy, we do not invest in separable financial derivatives or engage in hedging transactions. However, we have entered into certain financing transactions that involve financial equity instruments containing certain features that have resulted in the instruments being deemed derivatives. We may engage in other similar complex financing transactions in the future, but not with the intention to enter into derivative instruments. Derivatives are measured at fair value using the Monte Carlo simulation pricing model and marked to market through earnings. However, such new and/or complex instruments may have immature or limited markets. As a result, the pricing models used for valuation of derivatives often incorporate significant estimates and assumptions. Changes in these subjective assumptions can materially affect the estimate of the fair value of derivative liabilities and, consequently, the related amount recognized as loss due to change in fair value of derivative liabilities on the consolidated statement of operations. Furthermore, depending on the terms of a derivative, the valuation of derivatives may be removed from the financial statements upon exercise or conversion of the underlying instrument into some other security. The classification of a derivative instrument is reassessed at each balance sheet date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.
Research and Development Costs	Research and Development Costs Research and development costs are expensed as incurred. Costs incurred for research and development for new or improved processes to produce nanopowders as well as end use applications for the nanopowders are expensed until the production process or applications have been determined to be commercially viable. Costs incurred after the production process is viable and a working model of the equipment has been completed will be capitalized as long-lived assets.
Income Taxes	Income Taxes Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period, if any, and the change during the period in deferred tax assets and liabilities. The Company provides for tax contingencies, if any, for federal, state and local exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing. Although the outcome of such matters is uncertain, in management’s opinion adequate provisions for income taxes have been made for potential liabilities emanating from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on the Company’s results.
Loss Per Share	Loss Per Share The Company calculates basic loss per share by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if such additional common shares had been issued and were dilutive. Potential common shares, consisting of options and warrants, totaling 12,921,728, 13,629,643, and 10,946,415, have been excluded from the computations of diluted net loss per share because the effect would have been anti-dilutive for the year ended June 30, 2015, the six months ended June 30, 2014, and the year ended December 31, 2013, respectively.
Stock-Based Compensation	Stock-Based Compensation The Company measures all employee stock-based compensation awards using the Black-Scholes-Merton valuation model and allocates the related expense over the requisite service period. The expected volatility is based on the historical volatility of the Company’s stock as determined by its private placement offerings; the expected life of the award is determined using the simplified method. The Company accounts for nonemployee stock-based transactions using the fair value of the consideration received (i.e. the value of the goods or services) or the fair value of the equity instruments issued, whichever is more reliably measurable.
Reclassifications	Reclassifications The Company has reclassified certain prior period amounts to conform with current period presentation, in particular with regard to enhanced allocation of research and development costs that were previously classified as cost of goods sold.
Risks and Uncertainties	Risks and Uncertainties The Company faces risks and uncertainties relating to its ability to successfully implement and fulfill its strategy. Among other things, these risks include the ability to obtain revenues; manage operations; competition; attract, retain and motivate qualified personnel; maintain and develop new strategic relationships; and the ability to anticipate and adapt to the changing nanotechnology market and any changes in government regulations. Therefore, the Company may be subject to the risks of delays in consummating contracts with customers and suppliers, raising sufficient capital to achieve its objectives and other uncertainties, including financial, operational, technological, regulatory and other risks associated with an emerging business, including the potential risks of business failure.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40).” This ASU provides guidance to determine when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. ASU 2014-15 will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. ASU 2014-15 will be effective for the Company beginning June 30, 2017. The Company does not believe that this pronouncement will have an impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In July 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the impact of adopting this guidance.
Going Concern	Going Concern The Company has incurred recurring losses from operations from inception and has limited working capital. As of June 30, 2015, the Company had an accumulated deficit of approximately $42 million. The Company’s activities will necessitate significant uses of working capital beyond fiscal 2015. Additionally, the Company’s capital requirements will depend on many factors, including the success of its continued research and development efforts and the status of competitive products. The Company plans to continue financing its operations with cash received from financing activities. Management is currently working on securing additional debt capital from financing activities to sustain operations until the Company is able to generate sufficient cash flows from operations. There is no assurance that the Company will be able to raise sufficient capital to continue operations and, if available, on terms satisfactory to the Company. The Company currently has sufficient cash for operations through November 2015.

SELECTED FINANCIAL STATEMENT 20

SELECTED FINANCIAL STATEMENT CAPTIONS (Tables)	12 Months Ended
	Jun. 30, 2015
Disclosure Text Block Supplement [Abstract]
Schedule of Property and Equipment	Property and equipment as of June 30, 2015 and 2014 consisted of the following: June 30, 2015 June 30, 2014 Production equipment $ 1,948,794 $ 1,775,638 Computer equipment and software 57,864 53,203 Office furniture and equipment 11,972 8,751 Leasehold improvements 11,842 5,609 Scientific equipment 61,284 55,077 Lab furniture and fixtures 41,942 52,655 2,133,698 1,950,933 Accumulated depreciation and amortization (787,352 ) (417,345 ) $ 1,346,346 $ 1,533,588
Schedule of Accounts Payable and Accrued Expenses	Accounts payable and accrued expenses as of June 30, 2015 and 2014 consisted of the following: June 30, 2015 June 30, 2014 Stock cancellation liability (Note 6) $ 239,392 $ 351,276 Accounts payable 66,482 61,623 Other accrued professional fees 22,666 30,683 Accrued compensation and related expenses 87,581 23,747 Accrued legal — 18,493 Accrued interest 4,817 — Other accrued expenses 4,644 15,229 $ 425,582 $ 501,051

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT) (Tables)	12 Months Ended
	Jun. 30, 2015
Equity [Abstract]
Schedule of fair value of stock options granted	The fair value of stock options granted were estimated on their respective grant dates using the Black-Scholes-Merton option pricing model and the following assumptions for the year ended June 30, 2015, the six months ended June 30, 2014 and the year ended December 31, 2013: Year ended June 30, 2015 Six Months ended June 30, 2014 Year ended December 31, 2013 Risk free interest rate 0.9% - 1.8% 0.8% - 1.7% 1.0% - 1.4% Expected term 3 - 6 years 3 - 6 years 6 years Expected volatility 44.2% - 52.1% 44.5% - 44.9% 45.1% - 45.5% Dividend yield — — —
Schedule of the status of the options granted	A summary of the status of the options granted is as follows: Shares Weighted- Average Outstanding – December 31, 2012 3,834,204 $1.48 Granted 2,170,540 $1.50 Forfeited or expired (30,000 ) $1.45 Outstanding – December 31, 2013 5,974,744 $1.47 6.6 Granted 161,000 $2.00 Forfeited or expired (47,666 ) $1.46 Outstanding – June 30, 2014 6,088,078 $1.48 6.3 Granted 570,000 $2.00 Exercised (876,667 ) $1.00 Forfeited or expired (214,584 ) $1.74 Outstanding – June 30, 2015 5,566,827 $1.53 6.0 Exercisable: June 30, 2014 4,639,173 $1.46 5.4 June 30, 2015 4,774,101 $1.52 5.6
Schedule of the status of the Company's nonvested options and changes	A summary of the status of the Company’s nonvested options and changes are presented below: Shares Weighted- Nonvested - December 31, 2012 600,295 $0.68 Granted 2,170,540 $0.82 Vested (1,107,139 ) $1.00 Nonvested - December 31, 2013 1,663,696 $0.65 Granted 161,000 $0.60 Forfeited or expired (15,826 ) $0.55 Vested (359,965 ) $0.59 Nonvested – June 30, 2014 1,448,905 $0.67 Granted 570,000 $0.59 Vested (1,122,984 ) $0.61 Forfeited or expired (103,195 ) $0.62 Nonvested – June 30, 2015 792,726 $0.71
Schedule of fair value of warrants granted	The fair value of warrants granted were estimated on their respective grant dates using the Black-Scholes-Merton option pricing model and the following assumptions for the year ended June 30, 2015, the six months ended June 30, 2014, and the year ended December 31, 2013: Year ended June 30, 2015 Six Months ended Year ended Risk free interest rate 1.8 % 1.8 % 1.5 % Expected term 5 years 5 years 7 years Expected volatility 52.9 % 44.9 % 45.3 % Dividend yield — — —
Schedule of the status of all warrants granted	A summary of the status of all warrants granted is as follows: Shares Weighted- Average Outstanding – December 31, 2012 6,417,311 $2.13 Granted 1,200,000 $0.98 Forfeited (356,944 ) $1.50 Outstanding – December 31, 2013 7,260,367 $1.97 3.0 Granted 6,219,145 $1.52 Forfeited (520,710 ) $3.25 Outstanding – June 30, 2014 12,958,802 $1.73 3.8 Granted 321,305 $1.60 Forfeited (1,507,480 ) $3.97 Outstanding – June 30, 2015 11,772,627 $1.44 3.2 Exercisable: June 30, 2014 8,990,470 $1.73 3.4 June 30, 2015 8,147,627 $1.41 2.9
Schedule of the status of the Company's nonvested warrants granted	A summary of the status of the Company’s nonvested warrants granted in exchange for services or under compensation arrangements is presented below: Shares Weighted- Nonvested - December 31, 2012 1,022,221 $0.56 Granted 1,200,000 $0.98 Forfeited (356,944 ) $0.57 Vested (1,240,277 ) $0.55 Nonvested - December 31, 2013 625,000 $0.59 Granted 6,219,145 $0.72 Vested (2,875,813 ) $0.70 Nonvested – June 30, 2014 3,968,332 $0.71 Granted 321,305 $1.07 Forfeited (10,000 ) $0.58 Vested (654,637 ) $0.56 Nonvested – June 30, 2015 3,625,000 $0.72

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Schedule of Income Tax Provision	The following is a reconciliation of the provision for income taxes computed at the statutory federal rate of 34% to the net provision for income taxes for the year ended June 30, 2015, the six months ended June 30, 2014, and the year ended December 31, 2013: 2015 2014 2013 Benefit at statutory rate (34%) $ (1,805,000 ) $ (913,000 ) $ (914,000 ) State tax benefit, net of federal tax benefit (224,000 ) (124,000 ) (115,000 ) Stock based compensation and other 378,000 192,000 240,000 Change in valuation allowance 1,651,800 845,800 789,800 Net provision for income taxes $ 800 $ 800 $ 800

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	12 Months Ended
	Jun. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Schedule of Future Minimum Lease Payments under Operating Leases	Future minimum lease payments under operating leases approximate the following for the fiscal years ending June 30: 2016 $ 105,000 2017 71,000 $ 176,000

COMPARABLE YEAR INFORMATION (24

COMPARABLE YEAR INFORMATION (UNAUDITED) (Tables)	12 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of Condensed Statement of Operations	The Company’s condensed statement of operations was as follows for the twelve months ended June 30, 2014: Net Sales $ 176,382 Cost of Sales 55,594 Gross Profit 120,788 Operating Expenses Research and development 1,365,111 Selling, marketing and advertising 46,313 General and administrative 2,563,441 Total Operating Expenses 3,974,865 Loss from Operations (3,854,077 ) Other Income (Expense) (505,611 ) Net Loss $ (4,359,688 ) Basic and Diluted Loss Per Common Share $ (0.34 ) Basic and Diluted Weighted-Average Common Shares Outstanding 12,997,474

SUMMARY OF SIGNIFICANT ACCOUN25

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	6 Months Ended	12 Months Ended
	Jun. 30, 2014USD ($)shares	Jun. 30, 2015USD ($)Numbershares	Dec. 31, 2013shares
Potential common shares excluded from earnings per share (in shares) | shares	13,629,643	12,921,728	10,946,415
Accumulated deficit | $	$ (36,810,557)	$ (42,119,496)
Patents [Member]
Number of assets issued		9
Number of assets pending for approval		3
Write-down capitalized costs | $		$ 12,283
Maximum [Member]
Estimated useful lives		7 years
Minimum [Member]
Estimated useful lives		3 years

SELECTED FINANCIAL STATEMENT 26

SELECTED FINANCIAL STATEMENT CAPTIONS (Details) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Property and equipment, gross	$ 2,133,698	$ 1,950,933
Accumulated depreciation and amortization	(787,352)	(417,345)
Property, plant and equipment, net	1,346,346	1,533,588
Production Equipment [Member]
Property and equipment, gross	1,948,794	1,775,638
Computer Equipment And Software [Member]
Property and equipment, gross	57,864	53,203
Office Furniture And Equipment [Member]
Property and equipment, gross	11,972	8,751
Leasehold Improvements [Member]
Property and equipment, gross	11,842	5,609
Scientific Equipment [Member]
Property and equipment, gross	61,284	55,077
Lab Furniture And Fixtures [Member]
Property and equipment, gross	$ 41,942	$ 52,655

SELECTED FINANCIAL STATEMENT 27

SELECTED FINANCIAL STATEMENT CAPTIONS (Details 1) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Disclosure Text Block Supplement [Abstract]
Stock cancellation liability (Note 6)	$ 239,392	$ 351,276
Accounts payable	66,482	61,623
Other accrued professional fees	22,666	30,683
Accrued compensation and related expenses	$ 87,581	23,747
Accrued legal		$ 18,493
Accrued interest	$ 4,817
Other accrued expenses	4,644	$ 15,229
Accounts payable and accrued expenses, Total	$ 425,582	$ 501,051

NOTE PAYABLE (Details Narrative

NOTE PAYABLE (Details Narrative) - USD ($)	Jul. 10, 2015	Jun. 05, 2015	Aug. 10, 2014	Jun. 19, 2014	Jun. 30, 2014
Number of warrants vested					20,000
Novus Capital Group (Loan and Security Agreement) [Member] | Primary Notes Payable Loan [Member]
Debt face amount				$ 500,000
Debt monthly payment amount			$ 17,455
Novus Capital Group (Loan and Security Agreement) [Member] | Primary Notes Payable Loan [Member] | Warrant [Member]
Number of warrants vested				20,000
Debt discount				$ 11,000
Novus Capital Group (Loan and Security Agreement) [Member] | Secondary Notes Payable Loan [Member]
Debt face amount				$ 500,000
Novus Capital Group (Loan and Security Agreement) [Member] | Secondary Notes Payable Loan [Member] | Warrant [Member]
Number of warrants vested				10,000
Novus Capital Group (Loan and Security Agreement) [Member] | Total Notes Payable Loan [Member]
Annual debt interest rate				15.50%
Debt term				36 months
Debt frequency of payments				Monthly
Novus Capital Group (Loan and Security Agreement) [Member] | Total Notes Payable Loan [Member] | Warrant [Member]
Number of common shares callable (in shares)				30,000
Exercise price (in dollars per share)				$ 2
Warrant expiration date				Jul. 1, 2019
Novus Capital Group (Loan and Security Agreement) [Member] | Notes Payable Loan [Member]
Debt face amount		$ 127,500
Annual debt interest rate		15.50%
Debt term		36 months
Debt frequency of payments		Monthly
Debt monthly payment amount	$ 4,451
Novus Capital Group (Loan and Security Agreement) [Member] | Notes Payable Loan [Member] | Warrant [Member]
Number of common shares callable (in shares)		2,555
Exercise price (in dollars per share)		$ 2
Warrant expiration date		Jun. 30, 2020
Debt discount		$ 1,745

CONVERTIBLE NOTES PAYABLE (Deta

CONVERTIBLE NOTES PAYABLE (Details Narrative) - Convertible Promissory Notes Series O [Member] - USD ($)	1 Months Ended
	May. 31, 2015	Jun. 30, 2015
Convertible notes payable	$ 510,000
Annual debt interest rate	10.00%
Annual debt default rate	18.00%
Description on maturity of debt	Mature upon the earlier of (i) one year from the date of the issuance of the notes, or (ii) closing of an equity financing of Four Million Dollars or more (Qualifying Equity Financing”).
Description of conversion price of debt	Conversion price equal to the lesser of (i) a twenty percent (20.0%) discount to the price per share of common stock of the Qualifying Equity Financing, or (ii) a twenty percent (20.0%) discount to the closing bid price of the Company’s common stock on the Closing Date. Alternatively, the outstanding principal and accrued interest may be voluntarily converted, at the sole discretion of the Lender, at any time prior to the close of the Qualifying Equity Offering, in whole or in part, at a conversion price per share equal to a twenty percent (20.0%) discount to the closing bid price of the Company’s common stock.
Unamortized discount on notes		$ 472,000
Warrant [Member]
Percentage of common stock issued	50.00%
Description of exercise price	Exercise price equal to the lesser of (i) a twenty percent (20.0%) discount to the price per share of common stock of a Qualifying Equity Financing, or (ii) a twenty percent (20.0%) discount to the closing bid price of the Company’s common stock on the Closing Date.
Maturity period	5 years
Exercise price (in dollars per share)	$ 1.60

STOCKHOLDERS' EQUITY (DEFICIT30

STOCKHOLDERS' EQUITY (DEFICIT) (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Expected term			6 years
Dividend yield
Minimum [Member]
Risk free interest rate	0.80%	0.90%	1.00%
Expected term	3 years	3 years
Expected volatility	44.50%	44.20%	45.10%
Maximum [Member]
Risk free interest rate	1.70%	1.80%	1.40%
Expected term	6 years	6 years
Expected volatility	44.90%	52.10%	45.50%

STOCKHOLDERS' EQUITY (DEFICIT31

STOCKHOLDERS' EQUITY (DEFICIT) (Details 1) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, beginning	5,974,744	6,088,078	3,834,204
Granted	161,000	570,000	2,170,540
Exercised		(876,667)
Forfeited or expired	(47,666)	(214,584)	(30,000)
Outstanding, ending	6,088,078	5,566,827	5,974,744
Exercisable	4,639,173	4,774,101
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning	$ 1.47	$ 1.48	$ 1.48
Granted	2	2	1.50
Exercised		1
Forfeited or expired	1.46	1.74	1.45
Outstanding, ending	1.48	1.53	$ 1.47
Exercisable	$ 1.46	$ 1.52
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Average Remaining Contractual Term [Roll Forward]
Outstanding, ending	6 years 3 months 18 days	6 years	6 years 7 months 6 days
Exercisable	5 years 4 months 24 days	5 years 7 months 6 days

STOCKHOLDERS' EQUITY (DEFICIT32

STOCKHOLDERS' EQUITY (DEFICIT) (Details 2) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Nonvested, beginning	1,663,696	1,448,905	600,295
Granted	161,000	570,000	2,170,540
Vested	(359,965)	(1,122,984)	(1,107,139)
Forfeited or expired	(15,826)	(103,195)
Nonvested, ending	1,448,905	792,726	1,663,696
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Nonvested, beginning	$ 0.65	$ 0.67	$ 0.68
Granted	0.60	0.59	0.82
Vested	0.59	0.61	1
Forfeited or expired	0.55	0.62
Nonvested, ending	$ 0.67	$ 0.71	$ 0.65

STOCKHOLDERS' EQUITY (DEFICIT33

STOCKHOLDERS' EQUITY (DEFICIT) (Details 3) - Warrant [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Risk free interest rate	1.80%	1.80%	1.50%
Expected term	5 years	5 years	7 years
Expected volatility	44.90%	52.90%	45.30%
Dividend yield

STOCKHOLDERS' EQUITY (DEFICIT34

STOCKHOLDERS' EQUITY (DEFICIT) (Details 4) - Warrant [Member] - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments, Outstanding [Roll Forward]
Outstanding, beginning	7,260,367	12,958,802	6,417,311
Granted	6,219,145	321,305	1,200,000
Forfeited	(520,710)	(1,507,480)	(356,944)
Outstanding, ending	12,958,802	11,772,627	7,260,367
Exercisable	8,990,470	8,147,627
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning	$ 1.97	$ 1.73	$ 2.13
Granted	$ 1.52	$ 1.60	$ 0.98
Forfeited	3.25	3.97	1.50
Outstanding, ending	$ 1.73	$ 1.44	$ 1.97
Exercisable	$ 1.73	$ 1.41
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments, Outstanding, Average Remaining Contractual Term [Roll Forward]
Outstanding, ending	3 years 9 months 18 days	3 years 2 months 18 days	3 years
Exercisable	3 years 4 months 24 days	2 years 10 months 24 days

STOCKHOLDERS' EQUITY (DEFICIT35

STOCKHOLDERS' EQUITY (DEFICIT) (Details 5) - Warrant [Member] - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested, beginning	625,000	3,968,332	1,022,221
Granted	6,219,145	321,305	1,200,000
Forfeited or expired		(10,000)	(356,944)
Vested	(2,875,813)	(654,637)	(1,240,277)
Nonvested, ending	3,968,332	3,625,000	625,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Nonvested, beginning	$ 0.59	$ 0.71	$ 0.56
Granted	0.72	1.07	0.98
Forfeited or expired		0.58	0.57
Vested	0.70	0.56	0.55
Nonvested, ending	$ 0.71	$ 0.72	$ 0.59

STOCKHOLDERS' EQUITY (DEFICIT36

STOCKHOLDERS' EQUITY (DEFICIT) (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended	12 Months Ended
	Apr. 30, 2014	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Description of reverse stock split	10,000 for 1
Number of shares cancelled and repurchased	585,000
Share price (in dollars per share)	$ 2
Accrued liabilities			$ 239,000
Description of forward stock split	1 for 10,000
Number of options exercised			(876,667)
Exercise price of options exercises (in dollars per share)			$ 1
Number of options issued		161,000	570,000
Exercise price of options issued (in dollars per share)		$ 2	$ 2	$ 1.50
Stock compensation expense		$ 544,000	$ 729,000	$ 1,044,000
Unrecognized compensation costs			$ 266,000
Remaining weighted-average vesting period			1 year
Aggregate intrinsic value of vested and exercisable		$ 1,296,000	$ 9,839,000
Number of warrants vested		20,000
Warrant [Member]
Description of certain milestone achievement			Vesting milestones have been met for 250,000 additional warrants (125,000 for achieving $3.0 million additional equity, 125,000 upon commercial validation of nano iron in China), leaving 125,000 for which the milestone has not yet been met (upon $10.0 million in annual revenue).
Stock compensation expense		$ 17,000	$ 144,000	$ 87,000
Unrecognized compensation costs			$ 2,625,000
Remaining weighted-average vesting period			3 years 9 months 18 days
Aggregate intrinsic value of vested and exercisable		$ 1,892,000	$ 15,740,000
Number of warrants vested		250,000		500,000
Exercise price (in dollars per share)		$ 2		$ 1.30
Maturity period		7 years		7 years
Tranche One [Member] | Warrant [Member]
Number of warrants vested				125,000
Tranche Two [Member] | Warrant [Member]
Number of warrants vested			250,000
Three Employees [Member]
Number of options granted to each employee				200,000
Three Employees [Member] | Tranche One [Member]
Vesting period				36 months
Number of option vested				50,000
Three Employees [Member] | Tranche Two [Member]
Number of option vested			50,000
Description of certain milestone achievement			Vesting milestone has been met for 50,000 additional options each (for achieving $3.0 million additional equity), leaving 100,000 each for which certain milestones have not yet been met (50,000 upon a profitable quarter, 50,000 upon $10.0 million in annual revenue).
Consultants [Member]
Number of shares available for grant				560,541
Accrued compensation				$ 729,000
2004 Stock Option and Incentive Plan [Member]
Number of shares authorized for issuance			7,500,000
Vesting period			10 years
Number of shares available for grant			1,056,006
2005 Stock Option and Incentive Plan [Member]
Number of options exercised			870,000
Exercise price of options exercises (in dollars per share)			$ 1
Number of options exercised			6,667
Exercise price of options exercises (in dollars per share)			$ 1.50
2003 Stock Option and Incentive Plan [Member]
Number of options issued				2,170,540
2003 Stock Option and Incentive Plan [Member] | Maximum [Member]
Exercise price of options issued (in dollars per share)				$ 1.30
2003 Stock Option and Incentive Plan [Member] | Minimum [Member]
Exercise price of options issued (in dollars per share)				$ 1.80

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Income Tax Disclosure [Abstract]
Benefit at statutory rate (34%)	$ (913,000)	$ (1,805,000)	$ (914,000)
State tax benefit, net of federal tax benefit	(124,000)	(224,000)	(115,000)
Stock based compensation and other	192,000	378,000	240,000
Change in valuation allowance	845,800	1,651,800	789,800
Net provision for income taxes	$ 800	$ 800	$ 800

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Income Tax Disclosure [Abstract]
Statutory federal tax rate	34.00%	34.00%	34.00%
Deferred tax assets	$ 9,800,000	$ 11,247,000
Net operating loss carryforwards	$ 26,636,000	$ 28,528,000
Expiration date	Jan. 1, 2015	Jan. 1, 2025

COMMITMENTS AND CONTINGENCIES39

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 42,000	$ 105,000	$ 104,000

COMMITMENTS AND CONTINGENCIES40

COMMITMENTS AND CONTINGENCIES (Details)	Jun. 30, 2015USD ($)
Future minimum lease payments under operating leases approximate the following for the fiscal years ending June 30:
2,016	$ 105,000
2,017	71,000
Total	$ 176,000

CONCENTRATIONS (Details Narrati

CONCENTRATIONS (Details Narrative) - Net Sales [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
One Customer [Member]
Concentration risk percentage		30.00%	65.00%
Two Customers [Member]
Concentration risk percentage	56.00%
SOUTH KOREA [Member]
Concentration risk percentage	44.00%	36.00%
CANADA [Member]
Concentration risk percentage		13.00%
JAPAN [Member]
Concentration risk percentage	17.00%
ISRAEL [Member]
Concentration risk percentage			65.00%

COMPARABLE YEAR INFORMATION (42

COMPARABLE YEAR INFORMATION (UNAUDITED) (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2014	Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net Sales	$ 20,095	$ 48,047	$ 176,382	$ 244,061
Cost of Sales	2,311	14,448	55,594	82,761
Gross Profit	17,784	33,599	120,788	161,300
Operating Expenses
Research and development	832,432	2,137,628	1,365,111	911,960
Selling, marketing and advertising	19,918	73,862	46,313	28,569
General and administrative	1,627,313	2,392,467	2,563,441	1,349,984
Total Operating Expenses	2,479,663	4,603,957	3,974,865	2,290,513
Loss from Operations	(2,461,879)	(4,570,358)	(3,854,077)	(2,129,213)
Other Income (Expense)	(223,858)	(737,781)	(505,611)	(559,750)
Net Loss	$ (2,686,537)	$ (5,308,939)	$ (4,359,688)	$ (2,689,763)
Basic and Diluted Loss Per Common Share	$ (0.18)	$ (0.24)	$ (0.34)	$ (0.24)
Basic and Diluted Weighted-Average Common Shares Outstanding	14,971,068	21,998,528	12,997,474	11,056,059

COMPARABLE YEAR INFORMATION (43

COMPARABLE YEAR INFORMATION (UNAUDITED) (Details Narrative) - shares	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Potential common shares excluded from earnings per share (in shares)	13,629,643	12,921,728	10,946,415

SUBSEQUENT EVENTS (UNAUDITED) (

SUBSEQUENT EVENTS (UNAUDITED) (Details Narrative) - Unsecured debt [Member]	1 Months Ended
	Sep. 30, 2015USD ($)
Debt face amount	$ 325,000
Debt term	6 months