XG Sciences 10-Q 16 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 10, 2016
Document And Entity Information
Entity Registrant Name	XG SCIENCES INC
Entity Central Index Key	1,435,375
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Trading Symbol	XGSCI
Amendment Flag	false
Current Fiscal Year End Date	--12-31
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 Common Stock, Shares Outstanding		878,044
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
CURRENT ASSETS
Cash	$ 532,491	$ 1,060,224
Accounts receivable, less allowance for doubtful accounts of $10,000 at March 31, 2016 and December 31, 2015	22,067	54,413
Inventories	215,673	229,034
Other current assets	223,834	194,096
Total current assets	994,065	1,537,767
PROPERTY, PLANT AND EQUIPMENT, NET	3,553,382	3,753,248
RESTRICTED CASH FOR LETTER OF CREDIT	195,279	195,206
INTANGIBLE ASSETS, NET	429,590	411,789
TOTAL ASSETS	5,172,316	5,898,010
CURRENT LIABILITIES
Accounts payable and other liabilities	893,983	704,177
Short-term promissory notes	1,041,542	497,324
Current portion of capital lease obligations	193,286	178,487
Total current liabilities	2,128,811	1,379,988
LONG TERM LIABILITIES
Long term portion of capital lease obligations	300,331	354,483
Derivative liability - warrants	8,167,213	8,235,163
Total long term liabilities	8,467,544	8,589,646
TOTAL LIABILITIES	10,596,355	9,969,634
STOCKHOLDERS' DEFICIT
Common stock, no par value, 25,000,000 shares authorized, 836,544 shares issued and outstanding	8,565,225	8,565,225
Additional paid in capital	5,905,137	5,791,074
Accumulated deficit	(44,923,517)	(43,371,368)
Total stockholders' deficit	(5,424,039)	(4,071,624)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	5,172,316	5,898,010
Series A Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, value	21,377,583	21,291,912
Series B Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, value	$ 3,651,533	$ 3,651,533

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Allowance for doubtful accounts	$ 10,000	$ 10,000
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, authorized	25,000,000	25,000,000
Common stock, issued	836,544	836,544
Common stock, outstanding	836,544	836,544
Series A Convertible Preferred Stock [Member]
Preferred stock, authorized	3,000,000	3,000,000
Preferred stock, issued	1,807,836	1,800,696
Preferred stock, outstanding	1,807,836	1,800,696
Preferred stock, liquidation value	$ 21,694,056	$ 21,608,376
Series B Convertible Preferred Stock [Member]
Preferred stock, authorized	1,500,000	1,500,000
Preferred stock, issued	269,987	269,987
Preferred stock, outstanding	269,987	269,987
Preferred stock, liquidation value	$ 4,319,792	$ 4,319,792

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
REVENUES
Product sales	$ 59,742	$ 37,304
Grants	21,310	97,505
Licensing revenue	25,000	25,000
Total revenue	106,052	159,809
COST OF GOODS SOLD
Direct costs	32,032	22,003
Unallocated manufacturing expenses	343,716	398,105
Total cost of goods sold	375,748	420,108
GROSS (LOSS)	(269,696)	(260,299)
OPERATING EXPENSES
Research and development	216,350	382,649
Sales, general and administrative	1,096,220	1,046,864
Total operating expenses	1,312,570	1,429,513
OPERATING LOSS	(1,582,266)	(1,689,812)
OTHER INCOME (EXPENSE)
Incentive refund and interest income	24,153	24,455
Interest expense	(83,801)	(510,827)
Gain from change in fair value of derivative liability - warrants	89,765	96,299
Total other income (expense)	30,117	(390,073)
NET LOSS	$ (1,552,149)	$ (2,079,885)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic and diluted (in shares)	836,544	835,253
NET LOSS PER SHARE - Basic and diluted (in dollars per share)	$ (1.86)	$ (2.49)

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) (unaudited) - 3 months ended Mar. 31, 2016 - USD ($)	Series A Convertible Preferred Stock [Member]	Series B Convertible Preferred Stock [Member]	Common stock [Member]	Additional paid-in capital [Member]	Accumulated deficit [Member]	Total
Balances at beginning at Dec. 31, 2015	$ 21,291,912	$ 3,651,533	$ 8,565,225	$ 5,791,074	$ (43,371,368)	$ (4,071,624)
Balances at beginning (in shares) at Dec. 31, 2015	1,800,696	269,987	836,544
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Preferred stock issued to pay capital lease obligations	$ 85,671					85,671
Preferred stock issued to pay capital lease obligations (in shares)	7,140
Employee stock option expense				114,063		114,063
Net loss					(1,552,149)	(1,552,149)
Balances at ending at Mar. 31, 2016	$ 21,377,583	$ 3,651,533	$ 8,565,225	$ 5,905,137	$ (44,923,517)	$ (5,424,039)
Balances at ending (in shares) at Mar. 31, 2016	1,807,836	269,987	836,544

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (1,552,149)	$ (2,079,885)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	213,739	213,768
Amortization of intangible assets	7,035	7,035
Stock based compensation expense	114,063	122,079
Non-cash interest expense	83,762	484,280
Gain from change in fair value of derivative liability - warrants	(89,765)	(96,299)
(Increase) Decrease in:
Accounts receivable	32,346	(12,033)
Inventory	13,361	(87,478)
Other current and non-current assets	(29,811)	(35,343)
Increase (Decrease) in:
Accounts payable and other liabilities	189,804	13,687
NET CASH USED IN OPERATING ACTIVITIES	(1,017,615)	(1,470,189)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(13,873)	(29,152)
Purchases of intangible assets	(24,836)	(9,475)
NET CASH USED IN INVESTING ACTIVITIES	(38,709)	$ (38,627)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances on short-term notes	530,000
Repayments of capital lease obligations	$ (1,409)	$ (15,102)
Proceeds from issuance of common stock		14,000
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	$ 528,591	(1,102)
NET DECREASE IN CASH	(527,733)	(1,509,918)
CASH AT BEGINNING OF PERIOD	1,060,224	2,088,866
CASH AT END OF PERIOD	532,491	578,948
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	40	26,546
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING:
Value of preferred stock issued for AAOF capital lease obligations	$ 85,671	$ 85,671

NATURE OF BUSINESS AND BASIS OF

NATURE OF BUSINESS AND BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NATURE OF BUSINESS AND BASIS OF PRESENTATION	NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION XG Sciences, Inc., a Michigan company located in Lansing, Michigan and its subsidiary, XGS IP, LLC (collectively referred to as “we”, “us”, “our”, or the “Company”) manufactures graphene nanoplatelets made from graphite, using a proprietary manufacturing process to split natural flakes of crystalline graphite into very small and thin particles, which we sell as xGnP® graphene nanoplatelets. These particles are then used in products like battery electrodes, thin sheets, films, inks and coatings that we sell to other companies. We also sell our nanoparticles in the form of bulk powders or dispersions to other companies for use as additives to make composite and other materials with specially engineered characteristics. Additionally, we license our technology to other companies in exchange for royalties and other fees. Basis of Presentation The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and do not include all of the information and footnotes required by GAAP for complete financial statements. All intercompany transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes have been condensed or omitted in these interim condensed consolidated financial statements. Accordingly, the unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2015, as filed with the Securities and Exchange Commission (“SEC”) on Form S-1 (Registration No. 333-209131) with an effective date of April 13, 2016. The results of operations presented in this quarterly report are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments and accruals, consisting only of normal recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Going Concern We have historically incurred recurring losses from operations and we may continue to generate negative cash flows as we implement our business plan. Our unaudited condensed consolidated financial statements are prepared using GAAP as applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We currently do not have sufficient cash or commitments for financing to sustain our operations for the next twelve months. Our plan is to develop customer relationships and increase our revenues derived from our products and IP licensing. Although we have historically incurred operating losses, we have been able to fund such losses primarily by selling common and preferred stock and convertible notes. We expect that our cash on hand at March 31, 2016, of $532,491 and proceeds from our initial public offering of common stock (“IPO”) will sustain our operations for the next twelve months. However, we cannot make any assurances that additional financing will be available to us and, if available, completed on a timely basis, on acceptable terms, or at all. There has been no public market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not currently quoted on or traded on any exchange or on any over-the-counter market. In the event we are unable to fund our operations from existing cash on hand, operating cash flows, additional borrowings or raising equity capital, we may be forced to reduce our expenses, slow down our growth rate, or discontinue operations. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Use of Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. Actual results and outcomes may differ from our estimates, judgments and assumptions. Significant estimates, judgments and assumptions used in these condensed consolidated financial statements include, but are not limited to, those related to revenues, accounts receivable and related allowances, contingencies, useful lives and recovery of long-term assets, income taxes, the fair value of stock-based compensation and derivative financial instrument liabilities. These estimates, judgments, and assumptions are reviewed periodically and the effects of material revisions in estimates are reflected in the financial statements prospectively from the date of the change in estimate. Inventory Inventory consists of raw materials, work-in-process and finished goods, all of which are valued at standard cost, which approximates average cost. Derivative Financial Instruments We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. The terms of convertible preferred stock and convertible notes that we issue are reviewed to determine whether or not they contain embedded derivative instruments that are required by ASC 815: “Derivatives and Hedging” to be accounted for separately from the host contract, and recorded at fair value. In addition, freestanding warrants are also reviewed to determine if they achieve equity classification. Certain warrants that we have issued did not meet the conditions for equity classification and are classified as derivative instrument liabilities measured at fair value. The fair values of these derivative liabilities are revalued at each reporting date, with the change in fair value recognized in earnings. Fair Value Measurements The following is a reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2016 and 2015: 2016 2015 Balance at January 1 $ 8,235,163 $ 5,000,752 Warrants issued with additional financing 21,815 — Gain recognized in earnings (89,765 ) (96,299 ) Balance at March 31 $ 8,167,213 $ 4,904,453

PRIVATE PLACEMENT AND PREEMPTIV

PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS	3 Months Ended
	Mar. 31, 2016
Warrants and Rights Note Disclosure [Abstract]
PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS	NOTE 3 – PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS Private Placement In April 2015, we commenced a private placement offering of up to $18,000,000 in Series B Units consisting of up to 1,125,000 shares of Series B convertible preferred stock (“Series B Preferred Stock”) and warrants to purchase common stock at an offering price of $16.00 per Unit (the “Warrants”). The offering terminated on August 31, 2015 and as of such date, we had sold 266,887 shares of Series B Preferred Stock and warrants to purchase 222,262 shares of Common Stock, for aggregate gross proceeds of $4,270,192. The Series B Preferred Stock has a stated value of $16.00 per share and is convertible, at the option of the holder, at a conversion price of $16.00 per share, subject to adjustments for stock dividends, splits, combinations and similar events. The Warrants have an exercise price of $16.00 per share and expire 7 years from issuance. During the period from closing of the offering and ending on the earlier of i) December 31, 2017 and ii) the date the Company consummates the sale of new securities resulting in gross proceeds of at least $18,000,000, the holder has the right to exchange their Series B Preferred Stock and Warrants on a price per share basis into the new security on the relative price per share terms as the new securities are sold to the third party . The cash proceeds from the private placement were allocated first to the derivative liabilities resulting from warrants, at their fair values, with the residual being allocated to the Series B Preferred Stock. Preemptive Rights On January 15, 2014, as part of our financing agreements with Samsung Ventures (“Samsung”), Aspen Advanced Opportunity Fund LP (“AAOF”) and XGS II, LLC (“XGS II”), we agreed to allow all shareholders to purchase one share of Series A convertible preferred stock (“Series A Preferred Stock”) at a price of $12.00 per share for every two (2) shares of Series A Convertible Preferred Stock or Common Stock owned by the shareholder. In addition, for every two preemptive shares purchased, the Company issued the shareholder a warrant to purchase one additional share of Series A Preferred Stock with the same terms as the warrants issued to AAOF and XGS II. The Company also agreed to issue warrants with the same terms to those shareholders who exercised preemptive rights in October 2013. Under the January 15, 2014 preemptive rights offering, 101,000 shares of Series A Preferred Stock were sold to existing stockholders at a price of $12.00 per share. In addition, warrants indexed to 56,054 shares of Series A Preferred Stock were issued in conjunction with these stock purchases, including 5,554 warrants related to the preemptive rights exercised in October 2013. As part of our Series B Unit private placement in April 2015, shareholders and holders of our convertible notes were provided the right to purchase their pro rata share of any class of stock that the Company sells or issues. The sale of Series B Preferred Stock in the April 2015 offering triggered the preemptive rights. As of March 31, 2016, 3,100 shares of Series B Convertible Stock have been sold to existing shareholders at a price of $16.00 per share. In addition, Warrants indexed to 2,635 shares of common stock were issued in conjunction with these Series B Preferred Stock purchases. As of March 31, 2016, the total number of warrants issued due to the preemptive rights offerings was 58,689.

BRIDGE FINANCINGS

BRIDGE FINANCINGS	3 Months Ended
	Mar. 31, 2016
Debt Disclosure [Abstract]
BRIDGE FINANCINGS	NOTE 4 – BRIDGE FINANCINGS From December 31, 2015 through March 31, 2016, the Company entered into private placement bridge financings with 14 investors, seven (7) of whom are board members or affiliates of board members, totaling $1,080,000 (the “Bridge Financings”). The investors in the Bridge Financings received common stock warrant coverage of 30% for investments made prior to December 31, 2015 and 20% coverage thereafter. The following tables provide additional details regarding the Bridge Financings: December 2015 March 2016 Face value of notes at issuance $ 550,000 $ 530,000 Interest rate 8.0 % 8.0 % Maturity Date June 30, 2016 December 31, 2016 Common Stock Warrant Shares 20,625 10,600 Warrant Exercise Price $ 8.00 $ 10.00 Warrant Term 5 years 5 years During the period from closing of such private placement and ending on the earlier of i) December 31, 2017 and ii) the date the Company consummates the sale of new securities resulting in gross proceeds of at least $18.000,000, such warrant holders have the right to exchange their warrants on a price per share basis into the new security on the relative price per share terms as the new securities are sold to the third party. Due to the exchange rights, the warrants do not meet the conditions for equity classification and require classification as liabilities at fair value. The proceeds of the Bridge Financings were allocated first to the derivative liabilities resulting from the warrants, at their fair value, with the residual allocated to the debt instrument as follows: December 2015 March 2016 Derivative liabilities – warrants $ 52,676 $ 21,815 Bridge Financing Notes 497,324 508,185 Total allocated proceeds $ 550,000 $ 530,000

DERIVATIVE LIABILITY WARRANTS

DERIVATIVE LIABILITY WARRANTS	3 Months Ended
	Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
DERIVATIVE LIABILITY WARRANTS	NOTE 5 – DERIVATIVE LIABILITY WARRANTS As of March 31, 2016, all 1,228,842 warrants issued to AAOF, XGS II, holders of Series A and Series B Preferred Stock, and the Bridge Financings promissory notes have vested. Shares indexed to derivative liabilities as of March 31, 2016 and December 31, 2015 were as follows: Type of Exercise March December Warrants issued with Secured Convertible Notes Series A PS $ 6.40 833,333 833,333 Warrants issued with equipment financing leases Series A PS $ 6.40 83,333 83,333 Warrants issued with preemptive rights Series A PS $ 6.40 56,054 56,054 Warrants issued with preemptive rights Common $ 16.00 2,635 2,635 Warrants issued with 2015 private placement Common $ 16.00 222,262 222,262 Warrants issued with 2015 Bridge Financings Common $ 8.00 20,625 20,625 Warrants issued with 2016 Bridge Financings Common $ 10.00 10,600 — Total shares indexed to derivative liabilities 1,228,842 1,218,242 The following table summarizes the fair value of the derivative liabilities as of March 31, 2016 and December 31, 2015: March 31, 2016 December 31,2015 Warrants issued with Secured Convertible Notes $ 6,668,410 $ 6,743,997 Warrants issued with equipment financing leases 666,843 674,397 Warrants issued with preemptive rights 452,181 457,265 Warrants issued with 2015 private placement 306,546 306,828 Warrants issued with Bridge Financings 73,233 52,676 Total derivative liabilities $ 8,167,213 $ 8,235,163 The Company estimated the fair value of their warrant derivative liabilities as of March 31, 2016 and December 31, 2015, using a lattice model and the following assumptions: March 31, 2016 December 31, 2015 Fair value of underlying stock $7.63 - $12.64 $7.63 - $12.64 Equivalent risk free interest rate 0.73%- 0.98% 1.06%- 1.39% Expected term (in years) 4.76- 7.80 5.01- 8.05 Equivalent stock price volatility 39.18%- 39.75% 38.00%- 38.61% Expected dividend yield — — The fair value of the warrants is estimated using a binomial lattice model. Equivalent amounts reflect the net results of multiple modeling simulations that the lattice model applies to underlying assumptions. Because the Company is not publically traded, the expected volatility of the Company’s stock was developed using historical volatility for a peer group for a period equal to the expected term of the warrants. The fair value of the warrants will be significantly influenced by the fair value of our common stock, stock price volatility and the risk free interest components of the lattice technique. Changes in the fair value of Derivative Liabilities, carried at fair value, are reported as “Change in fair value of derivative liability - warrants” in the Statement of Operations, and were as follows: Three months ended March 31, 2016 2015 Warrants issued with Secured Convertible Notes $ 75,587 $ 82,500 Warrants issued with equipment financing leases 7,554 8,250 Warrants issued with preemptive rights 5,084 5,549 Warrants issued with 2015 private placement 282 — Warrants issued with Bridge Financings 1,258 — Total Derivative Gain $ 89,765 $ 96,299

OTHER COMMON STOCK WARRANTS

OTHER COMMON STOCK WARRANTS	3 Months Ended
	Mar. 31, 2016
Statement of Stockholders' Equity [Abstract]
OTHER COMMON STOCK WARRANTS	NOTE 6 – OTHER COMMON STOCK WARRANTS In addition to the warrants described in Note 5, which are accounted for as derivative liabilities, we had 42,694 warrants to purchase common stock that were issued in 2012 and prior years which are accounted for as equity instruments. As of March 31, 2016, the remaining warrants, all of which are exercisable, have exercise prices ranging from $8.00 to $12.00 and expire at various dates through 2027, as follows: Date Issued Expiration Date Exercise Price Number of 7/1/2009 7/1/2019 $ 8.00 6,000 10/8/2012 10/8/2027 $ 12.00 5,000 11,000

INCENTIVE STOCK OPTION PLAN

INCENTIVE STOCK OPTION PLAN	3 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
INCENTIVE STOCK OPTION PLAN	NOTE 7 - INCENTIVE STOCK OPTION PLAN We have established an incentive stock option plan (the “Plan”) under which the Company may grant key employees and directors options to purchase common stock of the Company at not less than fair market value as of the grant date. Options for up to 600,000 shares may be awarded under the Plan. Each option is exercisable into one share of common stock of the Company. The Plan expires in December 2017. The fair value of the options granted was estimated on the dates of grant using the Black Scholes option-pricing model. As of March 31, 2016, 419,750 option shares have been granted and are outstanding, of which 221,824 are exercisable at an exercise price of $12. Vesting of the options ranges from immediately to 20% per year, with most options vesting on a straight-line basis over a three or four year period from the date issued. Rights to exercise the options vest immediately upon a change in control of the Company or termination of the employee’s continuous service due to death or disability. The options expire at various dates through October 2023.

CAPITAL LEASES

CAPITAL LEASES	3 Months Ended
	Mar. 31, 2016
Capital Leases of Lessee [Abstract]
CAPITAL LEASES	NOTE 8 – CAPITAL LEASES As of March 31, 2016 and December 31, 2015, we have capital lease obligations as follows: March 31, 2016 December 31, 2015 Capital lease obligations $ 620,163 $ 682,564 Unamortized warrant discount (126,546 ) (149,594 ) Net obligations 493,617 532,970 Short-term portion of obligations (193,286 ) (178,487 ) Long-term portion of obligations $ 300,331 $ 354,483 The 83,333 common stock warrants issued as consideration for the equipment financing leases are recorded as derivative liabilities at fair value. The initial value of these warrants was recorded as a reduction of the capital lease obligation and is being amortized as part of the effective interest cost on the capital lease obligations.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2016
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 9 - RELATED PARTY TRANSACTIONS We have a licensing agreement for exclusive use of patents and pending patents with Michigan State University (“MSU”), a shareholder of the Company via the MSU Foundation. During the three months ended March 31, 2016 and 2015, we incurred expenses of $12,500. We have also entered into product licensing agreements with certain other shareholders. No royalty expenses have been recognized related to these agreements during the three months ended March 31, 2016 and 2015. Beginning in 2014, POSCO Corporation (“POSCO”), one of our shareholders, has a contractual obligation to pay us a minimum of $100,000 per year to license certain technologies we license from MSU. This obligation is due annually on February 28 of the following year. We record this license revenue at a rate of $25,000 per quarter. POSCO is disputing that they are obligated to pay the royalties. A petition for arbitration has been filed for this matter by the Company on March 9, 2016. An allowance in the amount of $112,500 and $100,000 has been recorded at March 31, 2016 and December 31, 2015, respectively, to reflect an estimate of the portion of the 2016, 2015 and 2014 royalties that we believe may not be collectible. The accrued royalty and allowance are netted together and reflected in other current assets on the condensed consolidated balance sheet. The financing arrangements as previously disclosed were provided by AAOF and XGS II, two (2) private funds that were formed for the sole purpose of investing in the Company by two investors affiliated with ASC-XGS, LLC, a shareholder of the Company. Pursuant to the Company’s Shareholders’ Agreement dated March 18, 2013 (as amended on February 26, 2016), a principal of each private fund serves as a director of the Company. The Bridge Financings discussed in Note 4 above include loans from entities controlled by existing shareholders. Three of these shareholders are also directors of the Company. In conjunction with these short-term borrowings, the Company issued warrants (see also discussed in Note 5).

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2016
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 10 – SUBSEQUENT EVENTS During the period from April 1 through the date May 16, 2016, we issued promissory notes in an aggregate amount of $44,750 and issued warrants to purchase 895 shares of common stock. Effective April 13, 2016 the company filed a Form S-1 Registration Statement under the Securities Act of 1933 with the United States Securities and Exchange Commission (SEC), registration no. 333-209131. This is the initial public offering of common stock of XG Sciences, Inc., and no public market currently exists for the securities being offered. We are registering for sale a total of 3,000,000 shares of common stock at a fixed price of $8.00 per share to the general public in a self-underwritten, best efforts offering. We intend to engage the services of non-exclusive sales agents to assist us with selling the shares. Proceeds from the sale of common stock between April 13, 2016 and May 16, 2016 totaled $332,000 for 41,500 common shares.

SUMMARY OF SIGNIFICANT ACCOUN17

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Going Concern	Going Concern We have historically incurred recurring losses from operations and we may continue to generate negative cash flows as we implement our business plan. Our unaudited condensed consolidated financial statements are prepared using GAAP as applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We currently do not have sufficient cash or commitments for financing to sustain our operations for the next twelve months. Our plan is to develop customer relationships and increase our revenues derived from our products and IP licensing. Although we have historically incurred operating losses, we have been able to fund such losses primarily by selling common and preferred stock and convertible notes. We expect that our cash on hand at March 31, 2016, of $532,491 and proceeds from our initial public offering of common stock (“IPO”) will sustain our operations for the next twelve months. However, we cannot make any assurances that additional financing will be available to us and, if available, completed on a timely basis, on acceptable terms, or at all. There has been no public market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not currently quoted on or traded on any exchange or on any over-the-counter market. In the event we are unable to fund our operations from existing cash on hand, operating cash flows, additional borrowings or raising equity capital, we may be forced to reduce our expenses, slow down our growth rate, or discontinue operations. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Use of Estimates	Use of Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. Actual results and outcomes may differ from our estimates, judgments and assumptions. Significant estimates, judgments and assumptions used in these condensed consolidated financial statements include, but are not limited to, those related to revenues, accounts receivable and related allowances, contingencies, useful lives and recovery of long-term assets, income taxes, the fair value of stock-based compensation and derivative financial instrument liabilities. These estimates, judgments, and assumptions are reviewed periodically and the effects of material revisions in estimates are reflected in the financial statements prospectively from the date of the change in estimate.
Inventory	Inventory Inventory consists of raw materials, work-in-process and finished goods, all of which are valued at standard cost, which approximates average cost.
Derivative Financial Instruments	Derivative Financial Instruments We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. The terms of convertible preferred stock and convertible notes that we issue are reviewed to determine whether or not they contain embedded derivative instruments that are required by ASC 815: “Derivatives and Hedging” to be accounted for separately from the host contract, and recorded at fair value. In addition, freestanding warrants are also reviewed to determine if they achieve equity classification. Certain warrants that we have issued did not meet the conditions for equity classification and are classified as derivative instrument liabilities measured at fair value. The fair values of these derivative liabilities are revalued at each reporting date, with the change in fair value recognized in earnings.
Fair Value Measurements	Fair Value Measurements The following is a reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2016 and 2015: 2016 2015 Balance at January 1 $ 8,235,163 $ 5,000,752 Warrants issued with additional financing 21,815 — Gain recognized in earnings (89,765 ) (96,299 ) Balance at March 31 $ 8,167,213 $ 4,904,453

SUMMARY OF SIGNIFICANT ACCOUN18

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Schedule of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3)	The following is a reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2016 and 2015: 2016 2015 Balance at January 1 $ 8,235,163 $ 5,000,752 Warrants issued with additional financing 21,815 — Gain recognized in earnings (89,765 ) (96,299 ) Balance at March 31 $ 8,167,213 $ 4,904,453

BRIDGE FINANCINGS (Tables)

BRIDGE FINANCINGS (Tables)	3 Months Ended
	Mar. 31, 2016
Debt Disclosure [Abstract]
Schedule of bridge financings	The following tables provide additional details regarding the Bridge Financings: December 2015 March 2016 Face value of notes at issuance $ 550,000 $ 530,000 Interest rate 8.0 % 8.0 % Maturity Date June 30, 2016 December 31, 2016 Common Stock Warrant Shares 20,625 10,600 Warrant Exercise Price $ 8.00 $ 10.00 Warrant Term 5 years 5 years
Schedule of residual allocated to the debt instrument	The proceeds of the Bridge Financings were allocated first to the derivative liabilities resulting from the warrants, at their fair value, with the residual allocated to the debt instrument as follows: December 2015 March 2016 Derivative liabilities – warrants $ 52,676 $ 21,815 Bridge Financing Notes 497,324 508,185 Total allocated proceeds $ 550,000 $ 530,000

DERIVATIVE LIABILITY WARRANTS (

DERIVATIVE LIABILITY WARRANTS (Tables)	3 Months Ended
	Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of shares indexed to derivative liabilities	Shares indexed to derivative liabilities as of March 31, 2016 and December 31, 2015 were as follows: Type of Exercise March December Warrants issued with Secured Convertible Notes Series A PS $ 6.40 833,333 833,333 Warrants issued with equipment financing leases Series A PS $ 6.40 83,333 83,333 Warrants issued with preemptive rights Series A PS $ 6.40 56,054 56,054 Warrants issued with preemptive rights Common $ 16.00 2,635 2,635 Warrants issued with 2015 private placement Common $ 16.00 222,262 222,262 Warrants issued with 2015 Bridge Financings Common $ 8.00 20,625 20,625 Warrants issued with 2016 Bridge Financings Common $ 10.00 10,600 — Total shares indexed to derivative liabilities 1,228,842 1,218,242
Schedule of fair value of the derivative liabilities	The following table summarizes the fair value of the derivative liabilities as of March 31, 2016 and December 31, 2015: March 31, 2016 December 31,2015 Warrants issued with Secured Convertible Notes $ 6,668,410 $ 6,743,997 Warrants issued with equipment financing leases 666,843 674,397 Warrants issued with preemptive rights 452,181 457,265 Warrants issued with 2015 private placement 306,546 306,828 Warrants issued with Bridge Financings 73,233 52,676 Total derivative liabilities $ 8,167,213 $ 8,235,163
Schedule of warrant derivative liabilities	The Company estimated the fair value of their warrant derivative liabilities as of March 31, 2016 and December 31, 2015, using a lattice model and the following assumptions: March 31, 2016 December 31, 2015 Fair value of underlying stock $ 7.63 - $12.64 $ 7.63 - $12.64 Equivalent risk free interest rate 0.73%- 0.98% 1.06%- 1.39% Expected term (in years) 4.76- 7.80 5.01- 8.05 Equivalent stock price volatility 39.18%- 39.75% 38.00%- 38.61% Expected dividend yield — —
Schedule of change in fair value of derivative liability - warrants	Changes in the fair value of Derivative Liabilities, carried at fair value, are reported as “Change in fair value of derivative liability - warrants” in the Statement of Operations, and were as follows: Three months ended March 31, 2016 2015 Warrants issued with Secured Convertible Notes $ 75,587 $ 82,500 Warrants issued with equipment financing leases 7,554 8,250 Warrants issued with preemptive rights 5,084 5,549 Warrants issued with 2015 private placement 282 — Warrants issued with Bridge Financings 1,258 — Total Derivative Gain $ 89,765 $ 96,299

OTHER COMMON STOCK WARRANTS (Ta

OTHER COMMON STOCK WARRANTS (Tables)	3 Months Ended
	Mar. 31, 2016
Statement of Stockholders' Equity [Abstract]
Schedule of exercise price	As of March 31, 2016, the remaining warrants, all of which are exercisable, have exercise prices ranging from $8.00 to $12.00 and expire at various dates through 2027, as follows: Date Issued Expiration Date Exercise Price Number of 7/1/2009 7/1/2019 $ 8.00 6,000 10/8/2012 10/8/2027 $ 12.00 5,000 11,000

CAPITAL LEASES (Tables)

CAPITAL LEASES (Tables)	3 Months Ended
	Mar. 31, 2016
Capital Leases of Lessee [Abstract]
Schedule of capital lease obligations	As of March 31, 2016 and December 31, 2015, we have capital lease obligations as follows: March 31, 2016 December 31, 2015 Capital lease obligations $ 620,163 $ 682,564 Unamortized warrant discount (126,546 ) (149,594 ) Net obligations 493,617 532,970 Short-term portion of obligations (193,286 ) (178,487 ) Long-term portion of obligations $ 300,331 $ 354,483

SUMMARY OF SIGNIFICANT ACCOUN23

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Significant Unobservable Inputs (Level 3) [Member] - Recurring [Member] - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning	$ 8,235,163	$ 5,000,752
Gain recognized in earnings	(89,765)	(96,299)
Balance at ending	8,167,213	$ 4,904,453
Warrant [Member]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Warrants issued with additional financing	$ 21,815

SUMMARY OF SIGNIFICANT ACCOUN24

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Accounting Policies [Abstract]
Cash in hand	$ 532,491	$ 1,060,224	$ 578,948	$ 2,088,866

PRIVATE PLACEMENT AND PREEMPT25

PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS (Details Narrative) - USD ($)	Jan. 15, 2014	Apr. 30, 2015	Oct. 31, 2013	Mar. 31, 2016	Dec. 31, 2015	Dec. 31, 2012
Number of shares issued				1,228,842	1,218,242
Warrant [Member]
Number of shares issued				1,228,842		42,694
Exercise price (in dollars per share)				$ 8
Private Placement [Member]
Proceeds from private placement				$ 4,270,192
Description of private placement offering terms				From closing of the offering and ending on the earlier of i) December 31, 2017 and ii) the date the Company consummates the sale of new securities resulting in gross proceeds of at least $18,000,000, the holder has the right to exchange their Series B Preferred Stock and Warrants on a price per share basis into the new security on the relative price per share terms as the new securities are sold to the third party .
Private Placement [Member] | Warrant [Member]
Number of shares issued				222,262	222,262
Exercise price (in dollars per share)				$ 16
Expiration period				7 years
Private Placement [Member] | Warrant [Member] | Existing Stockholders [Member]
Number of shares issued				2,635	2,635
Exercise price (in dollars per share)				$ 16
Private Placement [Member] | Warrant [Member]
Share price (in dollars per unit)		$ 16
Private Placement [Member] | Series B Units [Member]
Proceeds from private placement		$ 18,000,000
Termination date		Aug. 31, 2015
Private Placement [Member] | Series B Convertible Preferred Stock [Member]
Number of shares issued		1,125,000		266,887
Share price (in dollars per share)				$ 16
Conversion price (in dollars per share)				$ 16
Private Placement [Member] | Series B Convertible Preferred Stock [Member] | Existing Stockholders [Member]
Number of shares issued				3,100
Share price (in dollars per share)				$ 16
Preemptive Rights Offering [Member] | Warrant [Member] | Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member]
Number of shares issued				58,689
Preemptive Rights Offering [Member] | Series A Convertible Preferred Stock [Member] | Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member]
Number of shares issued	1
Share price (in dollars per share)	$ 12
Number of shares held by shareholders	2
Preemptive Rights Offering [Member] | Series A Convertible Preferred Stock [Member] | Warrant [Member] | Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member]
Number of shares issued				56,054	56,054
Exercise price (in dollars per share)				$ 6.40
Preemptive Rights Offering [Member] | Preemptive Shares [Member] | Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member]
Number of shares issued				2
Preemptive Rights Offering [Member] | Preemptive Shares [Member] | Warrant [Member] | Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member]
Number of shares issued	56,054		5,554
Preemptive Rights Offering [Member] | Preemptive Shares [Member] | Series A Convertible Preferred Stock [Member] | Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member]
Number of shares issued	101,000
Share price (in dollars per share)	$ 12

BRIDGE FINANCINGS (Details)

BRIDGE FINANCINGS (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Common Stock Warrant Shares	11,000
Warrant [Member]
Common Stock Warrant Shares	6,000
Warrant Exercise Price	$ 8
Bridge Financings [Member] | 14 Investors [Member]
Face value of notes at issuance	$ 530,000	$ 550,000
Interest rate	8.00%	8.00%
Maturity Date	Dec. 31, 2016	Jun. 30, 2016
Bridge Financings [Member] | 14 Investors [Member] | Warrant [Member]
Common Stock Warrant Shares	10,600	20,625
Warrant Exercise Price	$ 8
Warrant Term	5 years	5 years

BRIDGE FINANCINGS (Details 1)

BRIDGE FINANCINGS (Details 1) - Bridge Financings [Member] - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Total allocated proceeds	$ 530,000	$ 550,000
14 Investors [Member]
Total allocated proceeds	508,185	497,324
14 Investors [Member] | Warrant [Member]
Total allocated proceeds	$ 21,815	$ 52,676

BRIDGE FINANCINGS (Details Narr

BRIDGE FINANCINGS (Details Narrative) - Bridge Financings [Member] - 14 Investors [Member] - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Percentage of common stock warrant coverage	20.00%	30.00%
Proceeds from private placement	$ 18,000,000

DERIVATIVE LIABILITY WARRANTS29

DERIVATIVE LIABILITY WARRANTS (Details) - $ / shares	Jan. 15, 2014	Mar. 31, 2016	Dec. 31, 2015	Dec. 31, 2012
Total shares indexed to derivative liabilities		1,228,842	1,218,242
Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member] | Preemptive Rights Offering [Member] | Series A Convertible Preferred Stock [Member]
Total shares indexed to derivative liabilities	1
Warrant [Member]
Total shares indexed to derivative liabilities		1,228,842		42,694
Exercise Price		$ 8
Warrant [Member] | Private Placement [Member]
Total shares indexed to derivative liabilities		222,262	222,262
Exercise Price		$ 16
Type Of Shares Indexed		Common
Warrant [Member] | Private Placement [Member] | Existing Stockholders [Member]
Total shares indexed to derivative liabilities		2,635	2,635
Exercise Price		$ 16
Type Of Shares Indexed		Common
Warrant [Member] | Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member] | Preemptive Rights Offering [Member]
Total shares indexed to derivative liabilities		58,689
Warrant [Member] | Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member] | Preemptive Rights Offering [Member] | Series A Convertible Preferred Stock [Member]
Total shares indexed to derivative liabilities		56,054	56,054
Exercise Price		$ 6.40
Type Of Shares Indexed		Series A PS
Warrant 1 [Member]
Exercise Price		$ 12
Secured Convertible Notes [Member] | Warrant [Member]
Total shares indexed to derivative liabilities		833,333	833,333
Exercise Price		$ 6.40
Type Of Shares Indexed		Series A PS
Equipment Financing Leases [Member] | Warrant [Member]
Total shares indexed to derivative liabilities		83,333	83,333
Exercise Price		$ 6.40
Type Of Shares Indexed		Series A PS
Bridge Financings [Member] | Warrant [Member] | 14 Investors [Member]
Total shares indexed to derivative liabilities		20,625	20,625
Exercise Price		$ 8
Type Of Shares Indexed		Common
Bridge Financings [Member] | Warrant 1 [Member] | 14 Investors [Member]
Total shares indexed to derivative liabilities		10,600
Exercise Price		$ 10
Type Of Shares Indexed		Common

DERIVATIVE LIABILITY WARRANTS30

DERIVATIVE LIABILITY WARRANTS (Details 1) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Total derivative liabilities	$ 8,167,213	$ 8,235,163
Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member] | Preemptive Rights Offering [Member] | Series A Convertible Preferred Stock [Member]
Total derivative liabilities	452,181	457,265
Warrant [Member] | Private Placement [Member]
Total derivative liabilities	306,546	306,828
Secured Convertible Notes [Member] | Warrant [Member]
Total derivative liabilities	6,668,410	6,743,997
Equipment Financing Leases [Member] | Warrant [Member]
Total derivative liabilities	666,843	674,397
Bridge Financings [Member] | Warrant 1 [Member] | 14 Investors [Member]
Total derivative liabilities	$ 73,233	$ 52,676

DERIVATIVE LIABILITY WARRANTS31

DERIVATIVE LIABILITY WARRANTS (Details 2) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Maximum [Member]
Fair value of underlying stock	$ 12.64	$ 12.64
Equivalent risk free interest rate	0.98%	1.39%
Expected term (in years)	7 years 9 months 18 days	8 years 18 days
Equivalent stock price volatility	39.75%	38.61%
Expected dividend yield
Minimum [Member]
Fair value of underlying stock	$ 7.63	$ 7.63
Equivalent risk free interest rate	0.73%	1.06%
Expected term (in years)	4 years 9 months 4 days	5 years 4 days
Equivalent stock price volatility	39.18%	38.00%
Expected dividend yield

DERIVATIVE LIABILITY WARRANTS32

DERIVATIVE LIABILITY WARRANTS (Details 3) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Total Derivative Gain	$ 89,765	$ 96,299
Financing Agreements With Samsung, Ventures And Aspen Advanced Opportunity Fund LP, AAOF and XGS II [Member] | Preemptive Rights Offering [Member] | Series A Convertible Preferred Stock [Member]
Total Derivative Gain	5,084	$ 5,549
Warrant [Member] | Private Placement [Member]
Total Derivative Gain	282
Secured Convertible Notes [Member] | Warrant [Member]
Total Derivative Gain	75,587	$ 82,500
Equipment Financing Leases [Member] | Warrant [Member]
Total Derivative Gain	7,554	$ 8,250
Bridge Financings [Member] | Warrant [Member] | 14 Investors [Member]
Total Derivative Gain	$ 1,258

DERIVATIVE LIABILITY WARRANTS33

DERIVATIVE LIABILITY WARRANTS (Details Narrative) - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Dec. 31, 2012
Total number of shares issued	1,228,842	1,218,242
Warrant [Member]
Total number of shares issued	1,228,842		42,694

OTHER COMMON STOCK WARRANTS (De

OTHER COMMON STOCK WARRANTS (Details)	3 Months Ended
	Mar. 31, 2016$ / sharesshares
Number of Warrants	11,000
Warrant [Member]
Date Issued	Jan. 7, 2009
Expiration Date	Jan. 7, 2019
Exercise Price | $ / shares	$ 8
Number of Warrants	6,000
Warrant [Member]
Date Issued	Aug. 10, 2012
Expiration Date	Aug. 10, 2027
Exercise Price | $ / shares	$ 12
Number of Warrants	5,000

OTHER COMMON STOCK WARRANTS (35

OTHER COMMON STOCK WARRANTS (Details Narrative) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Dec. 31, 2012
Total number of shares issued	1,228,842	1,218,242
Warrant [Member]
Total number of shares issued	1,228,842		42,694
Exercise price (in dollars per share)	$ 8
Warrant [Member] | Maximum [Member]
Exercise price (in dollars per share)	12
Warrant [Member] | Minimum [Member]
Exercise price (in dollars per share)	$ 8

INCENTIVE STOCK OPTION PLAN (De

INCENTIVE STOCK OPTION PLAN (Details Narrative) - Incentive Stock Option Plan [Member]	3 Months Ended
	Mar. 31, 2016$ / sharesshares
Maximum number of options authorized	600,000
Description of option execisable terms	Each option is exercisable into one share of common stock of the Company.
Plan expiration year	2,017
Number of option granted	419,750
Number of option outstanding	419,750
Number of option exercisable	221,824
Exercise price (in dollars per share) | $ / shares	$ 12
Vesting percent, per year	20.00%
Description of vesting terms	Vesting of the options ranges from immediately to 20% per year, with most options vesting on a straight-line basis over a three or four year period from the date issued.
Options expiration year	2,023

CAPITAL LEASES (Details)

CAPITAL LEASES (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Capital Leases of Lessee [Abstract]
Capital lease obligations	$ 620,163	$ 682,564
Unamortized warrant discount	(126,546)	(149,594)
Net obligations	493,617	532,970
Short-term portion of obligations	(193,286)	(178,487)
Long-term portion of obligations	$ 300,331	$ 354,483

CAPITAL LEASES (Details Narrati

CAPITAL LEASES (Details Narrative) - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Dec. 31, 2012
Total number of shares issued	1,228,842	1,218,242
Warrant [Member]
Total number of shares issued	1,228,842		42,694
Equipment Financing Leases [Member] | Warrant [Member]
Total number of shares issued	83,333	83,333

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative) - Licensing Agreement [Member] - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015	Dec. 31, 2014
Michigan State University (Patents and Pending Patents) [Member]
Licensing expenses	$ 12,500	$ 12,500
POSCO [Member]
Minimum yearly contractual obligation				$ 100,000
Quarterly license revenue				$ 25,000
Allowance contractual obligation	$ 112,500		$ 100,000

SUBSEQUENT EVENTS (Details Narr

SUBSEQUENT EVENTS (Details Narrative) - USD ($)	Apr. 13, 2016	May. 16, 2016	May. 16, 2016	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Number of shares issued				1,228,842		1,218,242
Proceeds from sale of common stock					$ 14,000
Subsequent Event [Member] | Common stock [Member]
Number of shares issued		41,500
Proceeds from sale of common stock		$ 332,000
Subsequent Event [Member] | IPO [Member]
Number of shares issued	3,000,000
Share price (in dollars per share)	$ 8
Subsequent Event [Member] | Promissory Notes [Member]
Principle amount		$ 44,750	$ 44,750
Number of shares issued			895