Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 09, 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 | Jun. 30, 2016 | |
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 | 1,155,548 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash | $ 959,787 | $ 1,060,224 |
Accounts receivable, less allowance for doubtful accounts of $10,000 at June 30, 2016 and December 31, 2015 | 48,483 | 54,413 |
Inventories | 216,409 | 229,034 |
Other current assets | 273,412 | 194,096 |
Total current assets | 1,498,091 | 1,537,767 |
PROPERTY, PLANT AND EQUIPMENT, NET | 3,336,428 | 3,753,248 |
RESTRICTED CASH FOR LETTER OF CREDIT | 195,351 | 195,206 |
INTANGIBLE ASSETS, NET | 447,532 | 411,789 |
TOTAL ASSETS | 5,477,402 | 5,898,010 |
CURRENT LIABILITIES | ||
Accounts payable and other liabilities | 1,075,784 | 704,177 |
Short-term promissory notes | 363,968 | 497,324 |
Current portion of capital lease obligations | 209,647 | 178,487 |
Total current liabilities | 1,649,399 | 1,379,988 |
LONG TERM LIABILITIES | ||
Long term portion of capital lease obligations | 241,094 | 354,483 |
Derivative liability - warrants | 7,951,132 | 8,235,163 |
Total long term liabilities | 8,192,226 | 8,589,646 |
TOTAL LIABILITIES | 9,841,625 | 9,969,634 |
STOCKHOLDERS' DEFICIT | ||
Common stock, no par value, 25,000,000 shares authorized, 1,122,173 and 836,544 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 10,850,257 | 8,565,225 |
Additional paid in capital | 5,758,078 | 5,791,074 |
Accumulated deficit | (46,087,345) | (43,371,368) |
Total stockholders' deficit | (4,364,223) | (4,071,624) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 5,477,402 | 5,898,010 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, value | 21,463,254 | 21,291,912 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, value | $ 3,651,533 | $ 3,651,533 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) | Jun. 30, 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 | 1,122,173 | 836,544 |
Common stock, outstanding | 1,122,173 | 836,544 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, authorized | 3,000,000 | 3,000,000 |
Preferred stock, issued | 1,814,976 | 1,800,696 |
Preferred stock, outstanding | 1,814,976 | 1,800,696 |
Preferred stock, liquidation value | $ 21,779,712 | $ 21,608,376 |
Series B 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 | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
REVENUES | ||||
Product sales | $ 82,035 | $ 81,008 | $ 141,777 | $ 118,313 |
Grants | 137,055 | 121,407 | 158,365 | 218,911 |
Licensing revenue | 25,000 | 25,000 | 50,000 | 50,000 |
Total revenue | 244,090 | 227,415 | 350,142 | 387,224 |
COST OF GOODS SOLD | ||||
Direct costs | 25,020 | 30,667 | 57,052 | 52,668 |
Unallocated manufacturing expenses | 404,232 | 418,453 | 747,947 | 816,560 |
Total cost of goods sold | 429,252 | 449,120 | 804,999 | 869,228 |
GROSS LOSS | (185,162) | (221,705) | (454,857) | (482,004) |
OPERATING EXPENSES | ||||
Research and development | 419,007 | 393,338 | 635,357 | 775,987 |
Sales, general and administrative | 625,381 | 1,089,107 | 1,721,603 | 2,135,971 |
Total operating expenses | 1,044,388 | 1,482,445 | 2,356,960 | 2,911,958 |
OPERATING LOSS | (1,229,550) | (1,704,150) | (2,811,817) | (3,393,962) |
OTHER INCOME (EXPENSE) | ||||
Incentive refund and interest income | 24,073 | 27,173 | 48,223 | 51,628 |
Interest expense | (101,196) | (545,858) | (184,997) | (1,056,685) |
Gain from change in fair value of derivative liability - warrants | 142,848 | 174,715 | 232,614 | 271,014 |
Total other income (expense) | 65,725 | (343,970) | 95,840 | (734,043) |
NET LOSS | $ (1,163,825) | $ (2,048,120) | $ (2,715,977) | $ (4,128,005) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic and diluted (in shares) | 887,595 | 835,544 | 862,069 | 835,906 |
NET LOSS PER SHARE - Basic and diluted (in dollars per share) | $ (1.31) | $ (2.45) | $ (3.15) | $ (4.94) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) (unaudited) - 6 months ended Jun. 30, 2016 - USD ($) | Series A Preferred Stock [Member] | Series B 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] | ||||||
Stock issued for cash | $ 2,285,032 | $ 2,285,032 | ||||
Stock issued for cash (in shares) | 285,629 | 1,197,617 | ||||
Stock issuance fees and expenses | (336,600) | $ (336,600) | ||||
Reclassification of Derivative Liability Warrants to Equity | 51,418 | 51,418 | ||||
Warrants issued with Bridge Financings | 24,060 | 24,060 | ||||
Preferred stock issued to pay capital lease obligations | $ 171,342 | 171,342 | ||||
Preferred stock issued to pay capital lease obligations (in shares) | 14,280 | |||||
Stock based compensation expense | 228,126 | 228,126 | ||||
Net loss | (2,715,977) | (2,715,977) | ||||
Balances at ending at Jun. 30, 2016 | $ 21,463,254 | $ 3,651,533 | $ 10,850,257 | $ 5,758,078 | $ (46,087,345) | $ (4,364,223) |
Balances at ending (in shares) at Jun. 30, 2016 | 1,814,976 | 269,987 | 1,122,173 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (2,715,977) | $ (4,128,005) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 456,133 | 427,536 |
Amortization of intangible assets | 17,904 | 14,070 |
Provision for bad debts | 5,955 | |
Stock based compensation expense | 228,126 | 270,642 |
Non-cash interest expense | 157,903 | 991,103 |
Gain from change in fair value of derivative liability - warrants | (232,614) | (271,014) |
(Increase) Decrease in: | ||
Accounts receivable | 5,930 | (64,516) |
Inventory | 12,624 | (77,559) |
Other current and non-current assets | (79,461) | 56,310 |
Increase (Decrease) in: | ||
Accounts payable and other liabilities | 371,606 | (505,253) |
NET CASH USED IN OPERATING ACTIVITIES | (1,777,826) | (3,280,731) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (39,314) | (108,478) |
Purchases of intangible assets | (53,647) | (23,429) |
NET CASH USED IN INVESTING ACTIVITIES | (92,961) | (131,907) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayments of capital lease obligations | (2,832) | (26,588) |
Repayments of short-term notes | (750,000) | |
Advances on short-term notes | 574,750 | |
Proceeds from issuance of preferred stock and warrants | 4,319,792 | |
Proceeds from issuance of common stock | 2,285,032 | 14,000 |
Common stock issuance fees and expenses | (336,600) | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,770,350 | 4,307,204 |
NET INCREASE (DECREASE) IN CASH | (100,437) | 894,566 |
CASH AT BEGINNING OF PERIOD | 1,060,224 | 2,088,866 |
CASH AT END OF PERIOD | 959,787 | 2,983,432 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 77,646 | 65,582 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING: | ||
Value of preferred stock issued for AAOF capital lease obligations | $ 171,342 | $ 171,343 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 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 Companys 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 | 6 Months Ended |
Jun. 30, 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 June 30, 2016, of $959,787 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 to our knowledge, 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 six months ended June 30, 2016 and 2015: 2016 2015 Balance at January 1 $ 8,235,163 $ 5,000,752 Warrants issued with private placement of Series B Preferred Stock 660,378 Warrants issued with preferred stock sold under preemptive rights 7,881 Warrants reclassified to equity (51,418 ) Gain recognized in earnings (232,613 ) (271,013 ) Balance at June 30 $ 7,951,132 $ 5,397,998 |
PRIVATE PLACEMENT AND PREEMPTIV
PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS | 6 Months Ended |
Jun. 30, 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 (the Warrants) at an offering price of $16.00 per Unit. The offering terminated on August 31, 2015 and as of such date, we had sold 266,987 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 into common shares, 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 Units (Series B Preferred Stock and Warrants) into any new security sold to third parties at the same relative price per share and other terms at which such new security is sold to such third parties. 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 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 June 30, 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, the Warrants indexed to 2,635 shares of common stock were issued as part of the Series B Units. As of June 30, 2016, the total number of warrants issued due to the preemptive rights offerings was 58,689. |
BRIDGE FINANCINGS
BRIDGE FINANCINGS | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
BRIDGE FINANCINGS | NOTE 4 BRIDGE FINANCINGS From December 31, 2015 through April 7, 2016, the Company entered into private placement bridge financings with 14 investors, seven of whom are board members or affiliates of board members, totaling $1,124,750 (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. During June 2016 the Company repaid i) outstanding principal of $550,000 plus accrued interest of $22,000 to the December 2015 Bridge Financing investors and ii) outstanding principal of $200,000 plus accrued interest of $5,032 to two of the March 2016 Bridge Financing investors. These investors, who are also members of the board of directors of the Company, used the proceeds from repayment of their notes, plus additional funds, to purchase 199,879 additional shares of the Companys common stock for approximately $1.6 million. The following tables provide additional details regarding the Bridge Financings: December 2015 March 2016 April 2016 Total Bridge Financing Bridge Financing Bridge Financing Bridge Financing Face value of notes at issuance $ 550,000 $ 530,000 $ 44,750 $ 1,124,750 Outstanding principal on June 30, 2016 $ -- $ 330,000 $ 44,750 $ 374,750 Interest rate 8.0 % 8.0 % 8.0 % 8.0 % Maturity Date June 30, 2016 December 31, 2016 December 31, 2016 Common Stock Warrant Shares 20,625 10,600 895 32,120 Warrant Exercise Price $ 8.00 $ 10.00 $ 10.00 Warrant Term 5 years 5 years 5 years 5 years The Bridge Financing Warrants issued in December 2015 inadvertently provided the holder with the right to exchange their warrants on a price per share basis into a new security on the same relative price per share terms as any new securities sold to third parties resulting in gross proceeds of at least $18,000,000. As a result of these exchange rights, the December 2015 Bridge Financing warrants did not achieve equity classification at inception and were recorded as derivative liabilities, at fair value. During the second quarter of 2016, the warrant holders agreed to waive their exchange rights at which time the warrants were reclassified to equity and $52,676 of derivative liabilities related to such December 2015 Bridge Financing warrants was reclassified to equity. The following table reconciles the Bridge Financings balance recorded on the balance sheet at June 30, 2016: 2016 Balance at January 1 $ 550,000 Proceeds from Bridge Financings received January through April 7 574,750 Subtotal 1,124,750 Proceeds allocated to warrants liability (52,676 ) Proceeds allocated to warrants equity (24,059 ) Accrued interest January through June 30 92,985 Payoff of principal ($750,000) and accrued interest (777,032 ) Balance at June 30, 2016 $ 363,968 |
DERIVATIVE LIABILITY WARRANTS
DERIVATIVE LIABILITY WARRANTS | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITY WARRANTS | NOTE 5 DERIVATIVE LIABILITY WARRANTS As of June 30, 2016, all 1,197,617 derivative liability classified warrants issued to AAOF, XGS II, and holders of Series A and Series B Preferred Stock have vested. Shares indexed to derivative liabilities as of June 30, 2016 and December 31, 2015 were as follows: Type of Exercise June 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 Series A preemptive rights Series A PS $ 6.40 56,054 56,054 Warrants issued with Series B preemptive rights Common $ 16.00 2,635 2,635 Warrants issued with Series B Units Common $ 16.00 222,262 222,262 Warrants issued with Bridge Financings Common $ 8.00 20,625 Total shares indexed to derivative liabilities 1,197,617 1,218,242 The following table summarizes the fair value of the derivative liabilities as of June 30, 2016 and December 31, 2015: June 30, 2016 December 31,2015 Warrants issued with Secured Convertible Notes $ 6,565,326 $ 6,743,997 Warrants issued with equipment financing leases 656,535 674,397 Warrants issued with preemptive rights 444,984 457,265 Warrants issued with 2015 Series B Unit private placement 284,287 306,828 Warrants issued with Bridge Financings 52,676 Total derivative liabilities $ 7,951,132 $ 8,235,163 The Company estimated the fair value of their warrant derivative liabilities as of June 30, 2016 and December 31, 2015, using a lattice model and the following assumptions: June 30, 2016 December 31, 2015 Fair value of underlying stock $7.63 - $12.64 $7.63 - $12.64 Equivalent risk free interest rate 0.68%- 0.79% 1.06%- 1.39% Expected term (in years) 5.84- 7.55 5.01- 8.05 Equivalent stock price volatility 39.03%- 39.21% 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 Companys common stock is not publicly traded on a national exchange or to our knowledge, an over-the-counter market, the expected volatility of the Companys 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 June 30, 2016 2015 Warrants issued with Secured Convertible Notes $ 103,084 $ 120,833 Warrants issued with equipment financing leases 10,308 12,083 Warrants issued with preemptive rights 7,197 8,580 Warrants issued with 2015 private placement 22,259 33,219 Total Derivative Gain $ 142,848 $ 174,715 Six months ended June 30, 2016 2015 Warrants issued with Secured Convertible Notes $ 178,671 $ 203,333 Warrants issued with equipment financing leases 17,862 20,333 Warrants issued with preemptive rights 12,281 14,129 Warrants issued with 2015 private placement 22,541 33,219 Warrants issued with Bridge Financings 1,259 Total Derivative Gain $ 232,614 $ 271,014 |
OTHER COMMON STOCK WARRANTS
OTHER COMMON STOCK WARRANTS | 6 Months Ended |
Jun. 30, 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, 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 June 30, 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 | 6 Months Ended |
Jun. 30, 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 June 30, 2016, 419,750 option shares have been granted and are outstanding, of which 221,824 are exercisable at an exercise price of $12.00. 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 employees continuous service due to death or disability. The options expire at various dates through October 2023. |
CAPITAL LEASES
CAPITAL LEASES | 6 Months Ended |
Jun. 30, 2016 | |
Capital Leases of Lessee [Abstract] | |
CAPITAL LEASES | NOTE 8 CAPITAL LEASES As of June 30, 2016 and December 31, 2015, we have capital lease obligations as follows: June 30, 2016 December 31, 2015 Capital lease obligations $ 555,433 $ 682,564 Unamortized warrant discount (104,692 ) (149,594 ) Net obligations 450,741 532,970 Short-term portion of obligations (209,647 ) (178,487 ) Long-term portion of obligations $ 241,094 $ 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 | 6 Months Ended |
Jun. 30, 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 and six months ended June 30, 2016 and 2015 we incurred expenses of $12,500 and $25,000, respectively. We have also entered into product licensing agreements with certain other shareholders. No royalty revenue or expenses have been recognized related to these agreements during the six months ended June 30, 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. On July 7 we received a letter from the International Court of Arbitration and they have assigned an arbitrator to the case. No assessment or decision has made by the arbitrator as of the filing date of these financial statements. An allowance in the amount of $125,000 and $100,000 has been recorded at June 30, 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 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 Companys 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 | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 SUBSEQUENT EVENTS During the period from July1 through August 9, 2016, we received common stock proceeds of $267,000 for the sale of 33,375 shares. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 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 June 30, 2016, of $959,787 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 to our knowledge, 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 six months ended June 30, 2016 and 2015: 2016 2015 Balance at January 1 $ 8,235,163 $ 5,000,752 Warrants issued with private placement of Series B Preferred Stock 660,378 Warrants issued with preferred stock sold under preemptive rights 7,881 Warrants reclassified to equity (51,418 ) Gain recognized in earnings (232,613 ) (271,013 ) Balance at June 30 $ 7,951,132 $ 5,397,998 |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 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 six months ended June 30, 2016 and 2015: 2016 2015 Balance at January 1 $ 8,235,163 $ 5,000,752 Warrants issued with private placement of Series B Preferred Stock 660,378 Warrants issued with preferred stock sold under preemptive rights 7,881 Warrants reclassified to equity (51,418 ) Gain recognized in earnings (232,613 ) (271,013 ) Balance at June 30 $ 7,951,132 $ 5,397,998 |
BRIDGE FINANCINGS (Tables)
BRIDGE FINANCINGS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of bridge financings | The following tables provide additional details regarding the Bridge Financings: December 2015 March 2016 April 2016 Total Bridge Financing Bridge Financing Bridge Financing Bridge Financing Face value of notes at issuance $ 550,000 $ 530,000 $ 44,750 $ 1,124,750 Outstanding principal on June 30, 2016 $ -- $ 330,000 $ 44,750 $ 374,750 Interest rate 8.0 % 8.0 % 8.0 % 8.0 % Maturity Date June 30, 2016 December 31, 2016 December 31, 2016 Common Stock Warrant Shares 20,625 10,600 895 32,120 Warrant Exercise Price $ 8.00 $ 10.00 $ 10.00 Warrant Term 5 years 5 years 5 years 5 years |
Schedule of reconciling the bridge financing balance | The following table reconciles the Bridge Financings balance recorded on the balance sheet at June 30, 2016: 2016 Balance at January 1 $ 550,000 Proceeds from Bridge Financings received January through April 7 574,750 Subtotal 1,124,750 Proceeds allocated to warrants liability (52,676 ) Proceeds allocated to warrants equity (24,059 ) Accrued interest January through June 30 92,985 Payoff of principal ($750,000) and accrued interest (777,032 ) Balance at June 30, 2016 $ 363,968 |
DERIVATIVE LIABILITY WARRANTS (
DERIVATIVE LIABILITY WARRANTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of shares indexed to derivative liabilities | Shares indexed to derivative liabilities as of June 30, 2016 and December 31, 2015 were as follows: Type of Exercise June 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 Series A preemptive rights Series A PS $ 6.40 56,054 56,054 Warrants issued with Series B preemptive rights Common $ 16.00 2,635 2,635 Warrants issued with Series B Units Common $ 16.00 222,262 222,262 Warrants issued with Bridge Financings Common $ 8.00 20,625 Total shares indexed to derivative liabilities 1,197,617 1,218,242 |
Schedule of fair value of the derivative liabilities | The following table summarizes the fair value of the derivative liabilities as of June 30, 2016 and December 31, 2015: June 30, 2016 December 31,2015 Warrants issued with Secured Convertible Notes $ 6,565,326 $ 6,743,997 Warrants issued with equipment financing leases 656,535 674,397 Warrants issued with preemptive rights 444,984 457,265 Warrants issued with 2015 Series B Unit private placement 284,287 306,828 Warrants issued with Bridge Financings 52,676 Total derivative liabilities $ 7,951,132 $ 8,235,163 |
Schedule of warrant derivative liabilities | The Company estimated the fair value of their warrant derivative liabilities as of June 30, 2016 and December 31, 2015, using a lattice model and the following assumptions: June 30, 2016 December 31, 2015 Fair value of underlying stock $7.63 - $12.64 $7.63 - $12.64 Equivalent risk free interest rate 0.68%- 0.79% 1.06%- 1.39% Expected term (in years) 5.84- 7.55 5.01- 8.05 Equivalent stock price volatility 39.03%- 39.21% 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 June 30, 2016 2015 Warrants issued with Secured Convertible Notes $ 103,084 $ 120,833 Warrants issued with equipment financing leases 10,308 12,083 Warrants issued with preemptive rights 7,197 8,580 Warrants issued with 2015 private placement 22,259 33,219 Total Derivative Gain $ 142,848 $ 174,715 Six months ended June 30, 2016 2015 Warrants issued with Secured Convertible Notes $ 178,671 $ 203,333 Warrants issued with equipment financing leases 17,862 20,333 Warrants issued with preemptive rights 12,281 14,129 Warrants issued with 2015 private placement 22,541 33,219 Warrants issued with Bridge Financings 1,259 Total Derivative Gain $ 232,614 $ 271,014 |
OTHER COMMON STOCK WARRANTS (Ta
OTHER COMMON STOCK WARRANTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Statement of Stockholders' Equity [Abstract] | |
Schedule of exercise price | As of June 30, 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) | 6 Months Ended |
Jun. 30, 2016 | |
Capital Leases of Lessee [Abstract] | |
Schedule of capital lease obligations | As of June 30, 2016 and December 31, 2015, we have capital lease obligations as follows: June 30, 2016 December 31, 2015 Capital lease obligations $ 555,433 $ 682,564 Unamortized warrant discount (104,692 ) (149,594 ) Net obligations 450,741 532,970 Short-term portion of obligations (209,647 ) (178,487 ) Long-term portion of obligations $ 241,094 $ 354,483 |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Significant Unobservable Inputs (Level 3) [Member] - Recurring [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 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 | (232,613) | (271,013) |
Balance at ending | 7,951,132 | 5,397,998 |
Warrant [Member] | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Warrants issued | (51,418) | |
Warrant [Member] | Series B Preferred Stock [Member] | Private Placement [Member] | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Warrants issued | 660,378 | |
Warrant [Member] | Preemptive Rights [Member] | Preferred Stock [Member] | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Warrants issued | $ 7,881 |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Accounting Policies [Abstract] | ||||
Cash in hand | $ 959,787 | $ 1,060,224 | $ 2,983,432 | $ 2,088,866 |
PRIVATE PLACEMENT AND PREEMPT25
PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS (Details Narrative) - USD ($) | Jan. 15, 2014 | Apr. 30, 2015 | Oct. 31, 2013 | Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2012 |
Number of shares issued | 1,197,617 | 1,218,242 | ||||
Warrant [Member] | ||||||
Number of shares issued | 1,197,617 | 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 Preferred Stock [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 | 266,987 | ||||
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 | 4 Months Ended | 6 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Apr. 30, 2016 | Jun. 30, 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 | $ 44,750 | $ 1,124,750 | $ 550,000 |
Outstanding principal | $ 330,000 | $ 44,750 | $ 374,750 | |
Interest rate | 8.00% | 8.00% | 8.00% | 8.00% |
Maturity Date | Dec. 31, 2016 | Dec. 31, 2016 | Jun. 30, 2016 | |
Common Stock Warrant Shares | 32,120 | |||
Warrant Term | 5 years | |||
Bridge Financings [Member] | 14 Investors [Member] | Warrant [Member] | ||||
Common Stock Warrant Shares | 10,600 | 895 | 20,625 | |
Warrant Exercise Price | $ 10 | $ 10 | $ 8 | |
Warrant Term | 5 years | 5 years | 5 years |
BRIDGE FINANCINGS (Details 1)
BRIDGE FINANCINGS (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Apr. 07, 2016 | Mar. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Balance at beginning | $ 497,324 | $ 497,324 | $ 497,324 | ||
Proceeds from Bridge Notes received January through April 7 | 574,750 | ||||
Balance at end | 363,968 | $ 497,324 | |||
Bridge Financings [Member] | |||||
Balance at beginning | 550,000 | 550,000 | 550,000 | ||
Proceeds from Bridge Notes received January through April 7 | 574,750 | ||||
Accrued interest January through June 30 | 92,985 | ||||
Payoff of principal ($750,000) and accrued interest | (777,032) | ||||
Payoff of principal amount | 750,000 | ||||
Balance at end | $ 1,124,750 | 363,968 | 550,000 | ||
Bridge Financings [Member] | Warrant [Member] | |||||
Proceeds allocated to warrants | (24,059) | ||||
Bridge Financings [Member] | 14 Investors [Member] | |||||
Proceeds allocated to warrants | 52,676 | ||||
Accrued interest January through June 30 | 5,032 | 22,000 | |||
Payoff of principal amount | $ 200,000 | $ 550,000 | |||
Bridge Financings [Member] | 14 Investors [Member] | Warrant [Member] | |||||
Proceeds allocated to warrants | $ (52,676) |
BRIDGE FINANCINGS (Details Narr
BRIDGE FINANCINGS (Details Narrative) - Bridge Financings [Member] - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | |
Outstanding principal | $ 750,000 | ||
Accrued interest | $ 92,985 | ||
14 Investors [Member] | |||
Percentage of common stock warrant coverage | 20.00% | 30.00% | |
Proceeds from private placement | $ 18,000,000 | ||
Outstanding principal | $ 200,000 | $ 550,000 | |
Accrued interest | $ 5,032 | $ 22,000 | |
Number of additional shares purchased | 199,879 | ||
Number of additional shares purchased, value | $ 1,600,000 | ||
Proceeds allocated to warrants | $ 52,676 |
DERIVATIVE LIABILITY WARRANTS29
DERIVATIVE LIABILITY WARRANTS (Details) - $ / shares | Jan. 15, 2014 | Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2012 | Apr. 30, 2016 | Mar. 31, 2016 |
Number of shares issued | 1,197,617 | 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] | ||||||
Number of shares issued | 1 | |||||
Warrant [Member] | ||||||
Number of shares issued | 1,197,617 | 42,694 | ||||
Exercise Price | $ 8 | |||||
Warrant [Member] | Private Placement [Member] | ||||||
Number of shares issued | 222,262 | 222,262 | ||||
Exercise Price | $ 16 | |||||
Type Of Shares Indexed | Common | |||||
Warrant [Member] | Private Placement [Member] | Existing Stockholders [Member] | ||||||
Number of shares issued | 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] | ||||||
Number of shares issued | 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] | ||||||
Number of shares issued | 56,054 | 56,054 | ||||
Exercise Price | $ 6.40 | |||||
Type Of Shares Indexed | Series A PS | |||||
Warrant [Member] | ||||||
Exercise Price | $ 12 | |||||
Secured Convertible Notes [Member] | Warrant [Member] | ||||||
Number of shares issued | 833,333 | 833,333 | ||||
Exercise Price | $ 6.40 | |||||
Type Of Shares Indexed | Series A PS | |||||
Equipment Financing Leases [Member] | Warrant [Member] | ||||||
Number of shares issued | 83,333 | 83,333 | ||||
Exercise Price | $ 6.40 | |||||
Type Of Shares Indexed | Series A PS | |||||
Bridge Financings [Member] | Warrant [Member] | 14 Investors [Member] | ||||||
Number of shares issued | 20,625 | |||||
Exercise Price | $ 8 | $ 10 | $ 10 | |||
Type Of Shares Indexed | Common | |||||
Bridge Financings [Member] | Warrant [Member] | 14 Investors [Member] | ||||||
Number of shares issued | 222,262 | 222,262 | ||||
Exercise Price | $ 16 | |||||
Type Of Shares Indexed | Common |
DERIVATIVE LIABILITY WARRANTS30
DERIVATIVE LIABILITY WARRANTS (Details 1) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Total derivative liabilities | $ 7,951,132 | $ 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 | 444,984 | 457,265 |
Warrant [Member] | Private Placement [Member] | ||
Total derivative liabilities | 284,287 | 306,828 |
Secured Convertible Notes [Member] | Warrant [Member] | ||
Total derivative liabilities | 6,565,326 | 6,743,997 |
Equipment Financing Leases [Member] | Warrant [Member] | ||
Total derivative liabilities | 656,535 | 674,397 |
Bridge Financings [Member] | Warrant [Member] | 14 Investors [Member] | ||
Total derivative liabilities | $ 52,676 |
DERIVATIVE LIABILITY WARRANTS31
DERIVATIVE LIABILITY WARRANTS (Details 2) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Minimum [Member] | ||
Fair value of underlying stock | $ 7.63 | $ 7.63 |
Equivalent risk free interest rate | 0.68% | 1.06% |
Expected term (in years) | 5 years 10 months 2 days | 5 years 4 days |
Equivalent stock price volatility | 39.03% | 38.00% |
Expected dividend yield | ||
Maximum [Member] | ||
Fair value of underlying stock | $ 12.64 | $ 12.64 |
Equivalent risk free interest rate | 0.79% | 1.39% |
Expected term (in years) | 7 years 6 months 18 days | 8 years 18 days |
Equivalent stock price volatility | 39.21% | 38.61% |
Expected dividend yield |
DERIVATIVE LIABILITY WARRANTS32
DERIVATIVE LIABILITY WARRANTS (Details 3) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Total Derivative Gain | $ 142,848 | $ 174,715 | $ 232,614 | $ 271,014 |
Warrant [Member] | Private Placement [Member] | ||||
Total Derivative Gain | 22,259 | 33,219 | 22,541 | 33,219 |
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 Derivative Gain | 7,197 | 8,580 | 12,281 | 14,129 |
Secured Convertible Notes [Member] | Warrant [Member] | ||||
Total Derivative Gain | 103,084 | 120,833 | 178,671 | 203,333 |
Equipment Financing Leases [Member] | Warrant [Member] | ||||
Total Derivative Gain | $ 10,308 | $ 12,083 | 17,862 | 20,333 |
Bridge Financings [Member] | Warrant [Member] | 14 Investors [Member] | ||||
Total Derivative Gain | $ 1,259 |
DERIVATIVE LIABILITY WARRANTS33
DERIVATIVE LIABILITY WARRANTS (Details Narrative) - shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2012 | |
Number of shares issued | 1,197,617 | 1,218,242 | |
Warrant [Member] | |||
Number of shares issued | 1,197,617 | 42,694 |
OTHER COMMON STOCK WARRANTS (De
OTHER COMMON STOCK WARRANTS (Details) | 6 Months Ended |
Jun. 30, 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 | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2012 | |
Number of shares issued | 1,197,617 | 1,218,242 | |
Warrant [Member] | |||
Number of shares issued | 1,197,617 | 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] | 6 Months Ended |
Jun. 30, 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 ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Capital Leases of Lessee [Abstract] | ||
Capital lease obligations | $ 555,433 | $ 682,564 |
Unamortized warrant discount | (104,692) | (149,594) |
Net obligations | 450,741 | 532,970 |
Short-term portion of obligations | (209,647) | (178,487) |
Long-term portion of obligations | $ 241,094 | $ 354,483 |
CAPITAL LEASES (Details Narrati
CAPITAL LEASES (Details Narrative) - shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2012 | |
Number of shares issued | 1,197,617 | 1,218,242 | |
Warrant [Member] | |||
Number of shares issued | 1,197,617 | 42,694 | |
Equipment Financing Leases [Member] | Warrant [Member] | |||
Number of shares issued | 83,333 | 83,333 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - Licensing Agreement [Member] - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Michigan State University (Patents and Pending Patents) [Member] | ||||||
Licensing expenses | $ 12,500 | $ 12,500 | $ 25,000 | $ 25,000 | ||
POSCO [Member] | ||||||
Minimum yearly contractual obligation | $ 100,000 | |||||
Quarterly license revenue | $ 25,000 | |||||
Allowance contractual obligation | $ 125,000 | $ 125,000 | $ 100,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |
Aug. 09, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Number of shares issued | 1,197,617 | 1,218,242 | ||
Proceeds from sale of common stock | $ 2,285,032 | $ 14,000 | ||
Subsequent Event [Member] | ||||
Number of shares issued | 33,375 | |||
Proceeds from sale of common stock | $ 267,000 |