XG Sciences 10-Q 8 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 08, 2017
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, 2017
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		2,053,875
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,017

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
CURRENT ASSETS
Cash	$ 1,148,681	$ 1,785,343
Accounts receivable, less allowance for doubtful accounts of $10,000 at March 31, 2017 and December 31, 2016	84,398	99,078
Inventories	197,744	205,973
Incentive refunds receivable	74,000	165,635
Other current assets	162,500	174,495
Total current assets	1,667,323	2,430,524
PROPERTY, PLANT AND EQUIPMENT, NET	2,875,315	2,886,421
RESTRICTED CASH FOR LETTER OF CREDIT	195,571	195,499
INTANGIBLE ASSETS, NET	505,198	478,019
TOTAL ASSETS	5,243,407	5,990,463
CURRENT LIABILITIES
Accounts payable and other liabilities	988,760	964,757
Deferred revenue		6,428
Current portion of capital lease obligations	236,249	268,667
Total current liabilities	1,225,009	1,239,852
LONG TERM LIABILITIES
Long term portion of capital lease obligations	88,497	115,106
Long term debt	1,890,081	1,862,120
Derivative liability - warrants	7,745,597	7,900,249
Total long term liabilities	9,724,175	9,877,475
TOTAL LIABILITIES	10,949,184	11,117,327
STOCKHOLDERS' DEFICIT
Common stock, no par value, 25,000,000 shares authorized, 1,981,650 and 1,885,175 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	16,265,226	15,647,839
Additional paid in capital	6,578,600	6,490,230
Accumulated deficit	(50,269,872)	(48,899,530)
Total stockholders' deficit	(5,705,777)	(5,126,864)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	5,243,407	5,990,463
Series A Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, value	21,720,269	21,634,597
Series B Preferred stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, value

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
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	1,981,650	1,885,175
Common stock, outstanding	1,981,650	1,885,175
Series A Convertible Preferred Stock [Member]
Preferred stock, authorized	3,000,000	3,000,000
Preferred stock, issued	1,836,396	1,829,256
Preferred stock, outstanding	1,836,396	1,829,256
Preferred stock, liquidation value	$ 22,036,752	$ 21,951,072
Series B Preferred stock [Member]
Preferred stock, authorized	1,500,000	1,500,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Preferred stock, liquidation value	$ 0	$ 0

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
REVENUES
Product sales	$ 157,700	$ 59,742
Grants	99,489	21,310
Licensing revenue	25,000	25,000
Total revenues	282,189	106,052
COST OF GOODS SOLD
Direct costs	116,770	32,032
Unallocated manufacturing expenses	371,150	343,716
Total cost of goods sold	487,920	375,748
GROSS LOSS	(205,731)	(269,696)
OPERATING EXPENSES
Research and development	263,564	216,350
Selling, general and administrative	996,587	1,096,220
Total operating expenses	1,260,151	1,312,570
OPERATING LOSS	(1,465,882)	(1,582,266)
OTHER INCOME (EXPENSE)
Incentive refund and interest income	368	24,153
Interest expense	(59,480)	(83,801)
Gain from change in fair value of derivative liability - warrants	154,652	89,765
Total other expense	95,540	30,117
NET LOSS	$ (1,370,342)	$ (1,552,149)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic and diluted (in shares)	1,920,090	836,225
NET LOSS PER SHARE - Basic and diluted (in dollars per share)	$ (0.71)	$ (1.86)

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) (unaudited) - 3 months ended Mar. 31, 2017 - 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, 2016	$ 21,634,597		$ 15,647,839	$ 6,490,230	$ (48,899,530)	$ (5,126,864)
Balances at beginning (in shares) at Dec. 31, 2016	1,829,256		1,885,175
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock issued for cash			$ 771,800			771,800
Stock issued for cash (in shares)			96,475
Stock issuance fees and expenses			$ (154,413)			(154,413)
Preferred stock issued to pay capital lease obligations	$ 85,672					85,672
Preferred stock issued to pay capital lease obligations (in shares)	7,140
Employee stock option expense				88,370		88,370
Net loss					(1,370,342)	(1,370,342)
Balances at ending at Mar. 31, 2017	$ 21,720,269		$ 16,265,226	$ 6,578,600	$ (50,269,872)	$ (5,705,777)
Balances at ending (in shares) at Mar. 31, 2017	1,836,396		1,981,650

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (1,370,342)	$ (1,552,149)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	214,770	213,739
Amortization of intangible assets	10,590	7,035
Stock based compensation expense	88,370	114,063
Non-cash interest expense	59,480	83,762
Gain from change in fair value of derivative liability - warrants	(154,652)	(89,765)
(Increase) Decrease in:
Accounts receivable	14,680	32,346
Inventory	8,229	13,361
Other current and non-current assets	103,558	(29,811)
Increase (Decrease) in:
Accounts payable and other liabilities	17,576	189,804
NET CASH USED IN OPERATING ACTIVITIES	(1,007,741)	(1,017,615)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(203,664)	(13,873)
Purchases of intangible assets	(37,769)	(24,836)
NET CASH USED IN INVESTING ACTIVITIES	(241,433)	(38,709)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances on short-term notes		530,000
Repayments of capital lease obligations	(4,875)	(1,409)
Proceeds from issuance of common stock	771,800
Common stock issuance fees and expenses	(154,413)
NET CASH PROVIDED BY FINANCING ACTIVITIES	612,512	528,591
NET DECREASE IN CASH	(636,662)	(527,733)
CASH AT BEGINNING OF PERIOD	1,785,343	1,060,224
CASH AT END OF PERIOD	1,148,681	532,491
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest		40
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING:
Value of preferred stock issued for AAOF capital lease obligations	$ 85,672	$ 85,672

NATURE OF BUSINESS AND BASIS OF

NATURE OF BUSINESS AND BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2017
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, 2016, as filed with the Securities and Exchange Commission (“SEC”) on Form 10K on March 31, 2017. 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, 2017
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Liquidity We have historically incurred losses from operations and we may continue to generate negative cash flows as we implement our business plan. Our condensed consolidated financial statements are prepared using US GAAP as applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of March 31, 2017, we had cash on hand of $1,148,681 and currently available funds of $3,000,000 under the Dow Facility, which we believe is sufficient to fund our operations through December 2017. We believe that we will need an approximately, additional $1 million to sustain us for the next 12 months for which we have a commitment from a shareholder group to provide in the event we are unable to raise such funds from third parties. Our financial projections show that we may need to raise an additional $15 million or more before we are capable of achieving sustainable cash flow from operations. We intend that the primary means for raising such funds will be through our IPO, the additional $3 million of currently available funds under the Dow Facility, and up to an additional $5 million of proceeds from the Dow Facility after we have raised $10 million of additional equity capital in the period beginning on November 1, 2016. There can be no assurance that we will be able to raise additional equity capital in the IPO or in subsequent equity offerings or that the terms and conditions of any future financings will be workable or acceptable to us and our stockholders. 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 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. The following amounts were included in inventory at the end of the period: March 31, December 31, 2017 2016 Raw materials $ 48,854 $ 45,964 Finished goods 148,890 160,009 Total $ 197,744 $ 205,973 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 stock 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. See Note 5 for additional information. 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, 2017 and 2016: 2017 2016 Balance at January 1 $ 7,900,249 $ 8,235,163 Warrants issued with Bridge Financings — 21,815 Gain recognized in earnings (154,652 ) (89,765 ) Balance at March 31 $ 7,745,597 $ 8,167,213

WARRANTS AND FINANCING AGREEMEN

WARRANTS AND FINANCING AGREEMENTS	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
WARRANTS AND FINANCING AGREEMENTS	NOTE 3 — WARRANTS AND FINANCING AGREEMENTS Bridge Financings From December 31, 2015 through April 7, 2016, we entered into private placement bridge financings, executed using 15 separate short-term promissory notes totaling $1,124,750 (the “Bridge Financings”). Seven of these notes were executed by three board members. The Bridge Financings had maturity dates ranging from June 30, 2016 through December 31, 2016 and the interest rate was 8%. The investors in the Bridge Financings received common stock warrant coverage of 30% for investments made prior to December 31, 2015 with an exercise price of $8.00 per share, and 20% coverage thereafter with an exercise price of $10.00 per share. The Company issued warrants indexed to 32,120 shares of common stock with a five year term and an exercise price of $8.00 per share. 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 million, the 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 did not meet the conditions for equity classification and require classification as liabilities at fair value. The proceeds of the financing were allocated first to the derivative liabilities resulting from the Stock Warrants, at their fair value, with the residual allocated to the debt instrument as follows: 2015 2016 Total Derivative liabilities- warrants $ 52,676 $ 550,691 $ 603,367 Bridge financing notes 497,324 24,059 521,383 Total allocated proceeds $ 550,000 $ 574,750 $ 1,124,750 During June 2016, we repaid i) outstanding principal of $750,000 plus accrued interest of $27,032 to the 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 Company’s common stock for approximately $1.6 million. During December 2016, we repaid the remaining $374,750 of outstanding principal plus accrued interest of $21,253. Members of the board of directors and their affiliates provided $800,000 of the principal for such Bridge Financings, and upon repayment they re-invested all of the principal plus an additional $1,013,032 to purchase 226,629 shares of the Company’s common stock. Dow Loan In December 2016, we entered into a draw loan note and agreement (the “Dow Loan”) with The Dow Chemical Company (“Dow”) to provide up to $10 million of secured debt financing to the Company at an interest rate of 5% per year, drawable at our request under certain conditions. We received $2 million at closing, with $3 million in additional funding available on or before December 1, 2017. After December 1, 2017, an additional $5 million becomes available if we have raised $10 million of equity capital after October 31, 2016. The Dow Loan is senior to most of our other debt, and is secured by the Company’s assets (Dow is subordinate only to the capital leases with AAOF, see note 9). The loan does not mature until December 1, 2021, (subject to certain mandatory prepayments based on our equity financing activities). Interest is payable beginning January 1, 2017 although we may elect to capitalize interest through January 1, 2019. Dow will receive warrant coverage of one share of common stock for each $40 received by the Company, equating to 20% warrant coverage, with an exercise price of $8.00 per share for the warrants issued at closing with the exercise price of future warrants subject to adjustment if the Company sells shares of common stock at a lower price. As of December 31, 2016, we issued 50,000 warrants to Dow which are exercisable on or before the expiration date of December 1, 2023. The warrants meet the criteria for classification within stockholders’ equity. The fair value of the warrants was determined using a lattice model with the following inputs: Stock price $7.63, strike price $8.00, equivalent volatility 38.38%, equivalent risk free rate 1.53%. The relative fair value of the warrants totaled approximately $143,146 which was recorded as a debt discount and is being amortized to interest expense over the life of the loan. During the fiscal year ended December 31, 2016, amortization expense of $5,266 was recognized resulting in a carrying value of $1,862,120 for the Dow Loan as of December 31, 2016. As of March 31, 2017, amortization expense of $27,960 was recognized resulting in a carrying value of $1,890,081 for the Dow Loan as of March 31, 2017. The Loan entitles Dow to appoint an observer to the Company’s board of directors. They will maintain their observation right until the later of December 1, 2019 or when the amount of principal and interest outstanding under the Loan is less than $5 million.

PRIVATE PLACEMENT AND PREEMPTIV

PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS	3 Months Ended
	Mar. 31, 2017
Warrants and Rights Note Disclosure [Abstract]
PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS	NOTE 4 — 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 Preferred Stock and warrants to purchase common stock at an offering price of $16.00 per Series B Unit. As of February 25, 2016, we had sold 266,887 shares of Series B Convertible 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 in 7 years. 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 million, 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 were 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. The warrants issued in the private placement required derivative liability accounting and are required to be marked to fair value each reporting period. The private placement Series B Unit offering was terminated on February 25, 2016. As a result of our IPO and pursuant to the exchange rights, holders of Series B Preferred Stock received the right to exchange each share of Series B Preferred Stock they owned into two shares of common stock. As of December 31, 2016, all holders of Series B Preferred Stock had exercised their Series B Exchange Rights, and as a result the Company issued 539,974 shares of restricted common stock in exchange for the 269,987 shares of Series B Preferred Stock that had been previously outstanding. All of the previously issued Series B Preferred Stock was cancelled. However, as of March 31, 2017, all of the warrants issued in connection with the Series B Units remain outstanding.

DERIVATIVE LIABILITY WARRANTS

DERIVATIVE LIABILITY WARRANTS	3 Months Ended
	Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
DERIVATIVE LIABILITY WARRANTS	NOTE 5 – DERIVATIVE LIABILITY WARRANTS The Stock Warrants issued in conjunction with the convertible notes issued in 2013, the equipment financing leases procured in 2013 and 2014, the 2015 private placement transaction and the preemptive rights are derivative liabilities which require re-measurement at fair value each reporting period. Liability classification is required because the conversion price reset protection terms in the underlying Series A Convertible Preferred Stock, and the Exchange Rights are not consistent with the definition for financial instruments indexed only to a company’s own stock. The initial value of the Stock Warrants issued as consideration for the equipment financing leases 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 obligation (see Note 9). In 2014 when we entered into financing agreements with Samsung, AAOF and XGS II, we provided our shareholders with preemptive rights to purchase shares of Series A Convertible Preferred Stock for every two 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 Convertible Preferred Stock with the same terms as the warrants issued to AAOF and XGS II. Also, as part of our 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 resulting in the issuance of shares of Series B Preferred Stock and warrants. As of March 31, 2017, the total number of Stock Warrants issued due to the preemptive rights offerings was 58,689. The Bridge Financing Warrants issued in December 2015 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 $51,418 of derivative liabilities related to such December 2015 Bridge Financing warrants was reclassified to equity. Shares indexed to derivative liabilities as of March 31, 2017 and December 31, 2016 were as follows: Type of Exercise Indexed Warrants issued with Secured Convertible Notes Series A PS $ 6.40 833,333 Warrants issued with equipment financing leases Series A PS $ 6.40 83,333 Warrants issued with Series A preemptive rights Series A PS $ 6.40 56,054 Warrants issued with Series B preemptive rights Common $ 16.00 2,635 Warrants issued with Series B Units Common $ 16.00 222,262 Total shares indexed to derivative liabilities 1,197,617 The following table summarizes the fair value of the derivative liabilities as of March 31, 2017 and December 31, 2016: March 31, 2017 December 31,2016 Warrants issued with Secured Convertible Notes $ 6,446,660 $ 6,554,160 Warrants issued with equipment financing leases 644,668 655,418 Warrants issued with preemptive rights 436,216 443,790 Warrants issued with 2015 Series B Unit private placement 218,053 246,881 Total derivative liabilities $ 7,745,597 $ 7,900,249 The Company estimated the fair value of their warrant derivative liabilities as of March 31, 2017 and December 31, 2016, using a lattice model and the following assumptions: March 31, 2017 December 31, 2016 Fair value of underlying stock $7.63 - $12.64 $7.63 - $12.64 Equivalent risk free interest rate 1.34%- 1.51% 1.27%- 1.46% Expected term (in years) 5.08- 6.80 5.33- 7.04 Equivalent stock price volatility 36.41%- 36.57% 37.44%- 37.92% Expected dividend yield — — The 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 publicly traded on a national exchange or to our knowledge, an over-the-counter market, 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, 2017 2016 Warrants issued with Secured Convertible Notes $ 107,500 $ 75.587 Warrants issued with equipment financing leases 10,750 7,554 Warrants issued with preemptive rights 7,574 5,084 Warrants issued with 2015 private placement 28,828 282 Warrants issued with Bridge Financings — 1,258 Total Derivative Gain $ 154,652 $ 89,765

CONVERTIBLE PREFERRED STOCK

CONVERTIBLE PREFERRED STOCK	3 Months Ended
	Mar. 31, 2017
Equity [Abstract]
CONVERTIBLE PREFERRED STOCK	NOTE 6 — CONVERTIBLE PREFERRED STOCK Series A Convertible Preferred Stock The Company is authorized to issue up to 3,000,000 shares of Series A Convertible Preferred Stock (“Series A Preferred”). Each share of the Series A Preferred, which has a liquidation preference of $12.00 per share, is convertible at any time, at the option of the holder, into one share of Common Stock at the lower of: (a) $12.00 per share, or (b) 80% of the price at which the Company sells any equity or equity-linked securities in the future. The Series A Preferred also contains typical anti-dilution provisions that provide for adjustment of the conversion price to reflect stock splits, stock dividends, or similar events. The Series A Preferred is subject to mandatory conversion into Common Stock upon the listing of the Company’s Common Stock on a Qualified National Exchange. When the Company issued Warrants for $8.00 per share in conjunction with the December 2015 Bridge Financing, the conversion price of the Series A Preferred reduced from $12.00 to $6.40 (80% of $8.00). Series B Convertible Preferred Stock As of March 31, 2017, 1,500,000 shares have been designated as Series B Convertible Preferred Stock (“Series B Preferred”), of which none are issued and outstanding. Each share of the Series B Preferred, which has a liquidation preference of $16 per share, is convertible at any time, at the option of the holder, into one share of Common Stock at $16 per share. The Series B Preferred also contains typical anti-dilution provisions that provide for adjustment of the conversion price to reflect stock splits, stock dividends, or similar events. Each share of Series B Preferred is subject to mandatory conversion into common stock at the then-effective Series B conversion rate upon the public listing by the Company of its Common Stock on a Qualified National Exchange. However, the Series B Preferred is not subject to the mandatory conversion until all outstanding Convertible Securities are also converted into common stock. The Series B Preferred ranks senior to all other equity or equity equivalent securities of the Company other than those securities which are explicitly senior or pari passu in rights and liquidation preference to the Series B Preferred and pari passu with the Company’s Series A Preferred. The Series A and B Preferred are not redeemable for cash and the Company concluded that they are more akin to equity-type instruments than debt-type instruments. Accordingly, the embedded conversion option in each agreement is clearly and closely related to an equity-type host and the conversion option does not require classification and measurement as a derivative financial instrument. Therefore, the securities meet the conditions for stockholders’ equity classification.

INCENTIVE STOCK OPTION PLAN

INCENTIVE STOCK OPTION PLAN	3 Months Ended
	Mar. 31, 2017
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, 2017, 369,750 option shares have been granted cumulatively. 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.

STOCK WARRANTS

STOCK WARRANTS	3 Months Ended
	Mar. 31, 2017
Stock Warrants
STOCK WARRANTS	NOTE 8 –STOCK WARRANTS In addition to the warrants described in Note 5, which are accounted for as derivative liabilities, we had 42,694 common stock warrants that were issued in 2012 and prior years which are accounted for as equity instruments. During the period from July 2014 to July 2015, 30,294 of these warrants expired unexercised and 1,400 of the warrants were exercised in May 2015. The remaining 11,000 warrants have exercise prices ranging from $8.00 to $12.00 and expire at various dates through 2027. The following table summarizes the warrants outstanding at March 31, 2017, all of which are exercisable: 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

CAPITAL LEASES	3 Months Ended
	Mar. 31, 2017
Capital Leases of Lessee [Abstract]
CAPITAL LEASES	NOTE 9 – CAPITAL LEASES As of March 31, 2017 and December 31, 2016, we have capital lease obligations as follows: March 31, 2017 December 31, 2016 Capital lease obligations $ 373,698 $ 449,368 Unamortized warrant discount (48,952 ) (65,595 ) Net obligations 324,746 383,773 Short-term portion of obligations (236,249 ) (268,667 ) Long-term portion of obligations $ 88,497 $ 115,106 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. Our AAOF capital lease obligations are four year leases starting on January 1, 2014 and January 1, 2015. The effective interest rates on the leases are 50% and 32% for the leases executed in 2015 and 2014, respectively. The present value of the lease payments are more than 90% of the fair value of the equipment and therefore the leases were capitalized. Our other capital leases expire at various dates in 2018, have average effective interest rates of 0% and contain bargain purchase options that allow us to purchase the leased property for a minimal amount upon the expiration of the lease term.

CUSTOMER, SUPPLIER, COUNTRY AND

CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS	3 Months Ended
	Mar. 31, 2017
Risks and Uncertainties [Abstract]
CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS	NOTE 10 — Customer, Supplier, country, and Product Concentrations Grants and Licensing Revenue Concentration Two grantors accounted for 94% and 6% respectively of total grant revenue in the first quarter of 2017. During the first quarter of 2016, one grantor accounted for 100% of the revenue. The company's licensing revenue in the first quarter of both 2017 and 2016 came from one licensor. Product Concentration During the first quarter of 2017, we had concentrations of product revenue from only one product that was greater than 10% of total product revenues. Revenue from one of the Company's graphene nanoplatelets materials, Grade C 500 m 2 2 Customer Concentration During the first quarter of 2017, we had two customers whose purchases accounted for 29% and 22% of total product revenues. During the first quarter of 2016 we had another customer that represented 27% of total product revenues. At March 31, 2017 there were two customers who each had an accounts receivable balance greater than 10% of our total outstanding receivable balance, at March 31, 2016 there was only one customer who had an accounts receivable balance greater than 10% of our total outstanding balance. Country Concentration We sell our products on a worldwide basis. International revenues during the first quarter of 2017 were 40% as compared with 77% during the first quarter of 2016. All of these sales are denominated in U.S. dollars. Two countries, the United Kingdom and South Korea accounted for approximately 24% and 16%, respectively, of total product revenue during the quarter ended March 31, 2017. During the first quarter of 2016, three countries, Germany, Japan and South Korea accounted for approximately 11%, 13% and 33%, respectively, of total product revenue. Suppliers We buy raw materials used in manufacturing from several sources. These materials are available from a large number of sources. A change in suppliers has no material effect on the Company’s operations. We did not have any purchases to one supplier that was more than 10% of total purchases in the quarters ended March 31, 2017 and 2016.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2017
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 11 - 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, 2017 and 2016 we incurred expenses of $12,500 and $12,500, 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 three months ended March 31, 2017 and 2016. 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, 2016 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 $162,500 and $150,000 were recorded at March 31, 2017 and December 31, 2016, respectively, to reflect an estimate of the portion of the 2017, 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 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 3 above included 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). During the quarters ended March 31, 2017 and 2016 we issued 28,560 and 28,560 shares, respectively, of Series A Preferred stock to AAOF as payment for lease financing obligations under the terms of the Master Agreement.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2017
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 11 – SUBSEQUENT EVENTS During the period from April 1 through May 8, 2017, we received common stock proceeds of $577,800 for the sale of 72,225

SUMMARY OF SIGNIFICANT ACCOUN19

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Liquidity	Liquidity We have historically incurred losses from operations and we may continue to generate negative cash flows as we implement our business plan. Our condensed consolidated financial statements are prepared using US GAAP as applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of March 31, 2017, we had cash on hand of $1,148,681 and currently available funds of $3,000,000 under the Dow Facility, which we believe is sufficient to fund our operations through December 2017. We believe that we will need an approximately, additional $1 million to sustain us for the next 12 months for which we have a commitment from a shareholder group to provide in the event we are unable to raise such funds from third parties. Our financial projections show that we may need to raise an additional $15 million or more before we are capable of achieving sustainable cash flow from operations. We intend that the primary means for raising such funds will be through our IPO, the additional $3 million of currently available funds under the Dow Facility, and up to an additional $5 million of proceeds from the Dow Facility after we have raised $10 million of additional equity capital in the period beginning on November 1, 2016. There can be no assurance that we will be able to raise additional equity capital in the IPO or in subsequent equity offerings or that the terms and conditions of any future financings will be workable or acceptable to us and our stockholders. 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 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. The following amounts were included in inventory at the end of the period: March 31, December 31, 2017 2016 Raw materials $ 48,854 $ 45,964 Finished goods 148,890 160,009 Total $ 197,744 $ 205,973
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 stock 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. See Note 5 for additional information.
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, 2017 and 2016: 2017 2016 Balance at January 1 $ 7,900,249 $ 8,235,163 Warrants issued with Bridge Financings — 21,815 Gain recognized in earnings (154,652 ) (89,765 ) Balance at March 31 $ 7,745,597 $ 8,167,213

SUMMARY OF SIGNIFICANT ACCOUN20

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Schedule of inventory	The following amounts were included in inventory at the end of the period: March 31, December 31, 2017 2016 Raw materials $ 48,854 $ 45,964 Finished goods 148,890 160,009 Total $ 197,744 $ 205,973
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, 2017 and 2016: 2017 2016 Balance at January 1 $ 7,900,249 $ 8,235,163 Warrants issued with Bridge Financings — 21,815 Gain recognized in earnings (154,652 ) (89,765 ) Balance at March 31 $ 7,745,597 $ 8,167,213

WARRANTS AND FINANCING AGREEM21

WARRANTS AND FINANCING AGREEMENTS (Tables)	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Schedule of liabilities at fair value	The proceeds of the financing were allocated first to the derivative liabilities resulting from the Stock Warrants, at their fair value, with the residual allocated to the debt instrument as follows: 2015 2016 Total Derivative liabilities- warrants $ 52,676 $ 550,691 $ 603,367 Bridge financing notes 497,324 24,059 521,383 Total allocated proceeds $ 550,000 $ 574,750 $ 1,124,750

DERIVATIVE LIABILITY WARRANTS (

DERIVATIVE LIABILITY WARRANTS (Tables)	3 Months Ended
	Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of shares indexed to derivative liabilities	Shares indexed to derivative liabilities as of March 31, 2017 and December 31, 2016 were as follows: Type of Exercise Indexed Warrants issued with Secured Convertible Notes Series A PS $ 6.40 833,333 Warrants issued with equipment financing leases Series A PS $ 6.40 83,333 Warrants issued with Series A preemptive rights Series A PS $ 6.40 56,054 Warrants issued with Series B preemptive rights Common $ 16.00 2,635 Warrants issued with Series B Units Common $ 16.00 222,262 Total shares indexed to derivative liabilities 1,197,617
Schedule of fair value of derivative liabilities	The following table summarizes the fair value of the derivative liabilities as of March 31, 2017 and December 31, 2016: March 31, 2017 December 31,2016 Warrants issued with Secured Convertible Notes $ 6,446,660 $ 6,554,160 Warrants issued with equipment financing leases 644,668 655,418 Warrants issued with preemptive rights 436,216 443,790 Warrants issued with 2015 Series B Unit private placement 218,053 246,881 Total derivative liabilities $ 7,745,597 $ 7,900,249
Schedule of warrant derivative liabilities	The Company estimated the fair value of their warrant derivative liabilities as of March 31, 2017 and December 31, 2016, using a lattice model and the following assumptions: March 31, 2017 December 31, 2016 Fair value of underlying stock $7.63 - $12.64 $7.63 - $12.64 Equivalent risk free interest rate 1.34%- 1.51% 1.27%- 1.46% Expected term (in years) 5.08- 6.80 5.33- 7.04 Equivalent stock price volatility 36.41%- 36.57% 37.44%- 37.92% Expected dividend yield — —
Schedule of changes 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, 2017 2016 Warrants issued with Secured Convertible Notes $ 107,500 $ 75.587 Warrants issued with equipment financing leases 10,750 7,554 Warrants issued with preemptive rights 7,574 5,084 Warrants issued with 2015 private placement 28,828 282 Warrants issued with Bridge Financings — 1,258 Total Derivative Gain $ 154,652 $ 89,765

STOCK WARRANTS (Tables)

STOCK WARRANTS (Tables)	3 Months Ended
	Mar. 31, 2017
Stock Warrants Tables
Schedule of warrants outstanding	The following table summarizes the warrants outstanding at March 31, 2017, all of which are exercisable: 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, 2017
Capital Leases of Lessee [Abstract]
Schedule of capital lease obligations	As of March 31, 2017 and December 31, 2016, we have capital lease obligations as follows: March 31, 2017 December 31, 2016 Capital lease obligations $ 373,698 $ 449,368 Unamortized warrant discount (48,952 ) (65,595 ) Net obligations 324,746 383,773 Short-term portion of obligations (236,249 ) (268,667 ) Long-term portion of obligations $ 88,497 $ 115,106

SUMMARY OF SIGNIFICANT ACCOUN25

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Raw materials	$ 48,854	$ 45,964
Finished goods	148,890	160,009
Total	$ 197,744	$ 205,973

SUMMARY OF SIGNIFICANT ACCOUN26

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - Significant Unobservable Inputs (Level 3) [Member] - Recurring [Member] - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning	$ 7,900,249	$ 8,235,163
Gain recognized in earnings	(154,652)	(89,765)
Balance at ending	7,745,597	8,167,213
Warrant [Member] | Bridge Financings [Member]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Warrants issued with Bridge Financings		$ 21,815

SUMMARY OF SIGNIFICANT ACCOUN27

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Cash in hand	$ 1,148,681	$ 1,785,343	$ 532,491	$ 1,060,224
Funds available from operations	3,000,000
Additional fund required for next 12 months	1,000,000
Additional fund required for sustainable cash flow	$ 15,000,000
Description of raising fund	Additional $3 million of currently available funds under the Dow Facility, and up to an additional $5 million of proceeds from the Dow Facility after we have raised $10 million of additional equity capital in the period beginning on November 1, 2016.

WARRANTS AND FINANCING AGREEM28

WARRANTS AND FINANCING AGREEMENTS (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2015
Derivative liabilities- warrants			$ 603,367
Bridge financing notes			521,383
Total allocated proceeds		$ 530,000	1,124,750
Bridge Financings [Member]
Bridge financing notes			24,059	$ 497,324
Bridge Financings & Warrant [Member]
Total allocated proceeds			574,750	550,000
Warrant [Member]
Derivative liabilities- warrants			$ 550,691	$ 52,676

WARRANTS AND FINANCING AGREEM29

WARRANTS AND FINANCING AGREEMENTS (Details Narrative) - USD ($)	1 Months Ended			3 Months Ended	12 Months Ended
	Dec. 31, 2016	Jun. 30, 2016	May 31, 2015	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Apr. 07, 2016
Number of common stock warrants issued				11,000
Warrant [Member]
Exercise price (in dollars per share)				$ 8
Number of common stock warrants issued			1,400	6,000
Warrant [Member]
Exercise price (in dollars per share)				$ 12
Number of common stock warrants issued				5,000
Bridge Financings [Member] | 15 Investors [Member]
Short-term loan							$ 1,124,750
Interest rate	8.00%				8.00%
Proceeds from private placement				$ 18,000,000
Number of additional shares purchased	226,629	199,879
Number of additional shares purchased, value	$ 1,013,032	$ 1,600,000
Payoff accrued interest	21,253	27,032
Payoff of principal amount	374,750	$ 750,000
Loan from affiliates	$ 800,000				$ 800,000
Bridge Financings [Member] | 15 Investors [Member] | Warrant [Member]
Percentage of common stock warrant coverage				20.00%		30.00%
Exercise price (in dollars per share)				$ 10		$ 8
Bridge Financings [Member] | 15 Investors [Member] | Warrant [Member]
Exercise price (in dollars per share)				$ 8
Number of common stock warrants issued				32,120
Warrant term				5 years
Senior Secured Debt Financing [Member] | Draw Loan Note And Agreement [Member] | The Dow Chemical Company [Member]
Maturity date	Dec. 1, 2021
Interest rate	5.00%				5.00%
Face amount	$ 10,000,000				$ 10,000,000
Proceeds from secured debt	$ 2,000,000
Description of funding	$3 million in additional funding available on or before December 1, 2017. After December 1, 2017, an additional $5 million becomes available if we have raised $10 million of equity capital after October 31, 2016.
Description of collateral	Secured by the Company’s assets.
Description of interest payable terms	Payable beginning January 1, 2017 although we may elect to capitalize interest through January 1, 2019.
Senior Secured Debt Financing [Member] | Warrant [Member] | Draw Loan Note And Agreement [Member] | The Dow Chemical Company [Member]
Percentage of common stock warrant coverage	20.00%
Exercise price (in dollars per share)	$ 8				$ 8
Number of common stock warrants issued					50,000
Description of warrant coverage	One share of common stock for each $40 received by the Company.
Warrant expiration date					Dec. 1, 2023
Stock price (in dollars per share)	$ 7.63				$ 7.63
Strike price (in dollars per share)	$ 8				$ 8
Volatility	38.38%
Risk free rate	1.53%
Debt discount	$ 143,146
Amortization expense				$ 27,960	$ 5,266
Secured debt carrying amount	$ 1,862,120			$ 1,890,081	$ 1,862,120

PRIVATE PLACEMENT AND PREEMPT30

PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS (Details Narrative) - USD ($)	Feb. 25, 2016	Apr. 30, 2015	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2012
Warrant [Member]
Number of shares issued			1,197,617	1,197,617	42,694
Private Placement [Member]
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 million, 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 were sold to the third party.
Private Placement [Member] | Warrant [Member]
Proceeds from private placement			$ 4,270,192
Number of shares issued	222,262		222,262	222,262
Expiration period	7 years
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
Number of shares issued	266,887	1,125,000
Number of shares converted				269,987
Private Placement [Member] | Series B Preferred stock [Member] | Restricted Common Stock [Member]
Number of shares issued				539,974

DERIVATIVE LIABILITY WARRANTS31

DERIVATIVE LIABILITY WARRANTS (Details) - Warrant [Member] - $ / shares	Feb. 25, 2016	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2012
Number of shares issued		1,197,617	1,197,617	42,694
Exercise Price		$ 8
Preemptive Rights Offering [Member]
Number of shares issued		58,689
Private Placement [Member]
Number of shares issued	222,262	222,262	222,262
Exercise Price		$ 16	$ 16
Type of shares indexed		Common	Common
Private Placement [Member] | Existing Stockholders [Member]
Number of shares issued		2,635	2,635
Exercise Price		$ 16	$ 16
Type of shares indexed		Common	Common
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	$ 6.40
Type of shares indexed		Series A PS	Series A PS
Secured Convertible Notes [Member]
Number of shares issued		833,333	833,333
Exercise Price		$ 6.40	$ 6.40
Type of shares indexed		Series A PS	Series A PS
Equipment Financing Leases [Member]
Number of shares issued		83,333	83,333
Exercise Price		$ 6.40	$ 6.40
Type of shares indexed		Series A PS	Series A PS

DERIVATIVE LIABILITY WARRANTS32

DERIVATIVE LIABILITY WARRANTS (Details 1) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Total derivative liabilities	$ 7,745,597	$ 7,900,249
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	436,216	443,790
Warrant [Member] | Private Placement [Member]
Total derivative liabilities	218,053	246,881
Secured Convertible Notes [Member] | Warrant [Member]
Total derivative liabilities	6,446,660	6,554,160
Equipment Financing Leases [Member] | Warrant [Member]
Total derivative liabilities	$ 644,668	$ 655,418

DERIVATIVE LIABILITY WARRANTS33

DERIVATIVE LIABILITY WARRANTS (Details 2) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Expected dividend yield
Minimum [Member]
Fair value of underlying stock	$ 7.63	$ 7.63
Equivalent risk free interest rate	1.34%	1.27%
Expected term (in years)	5 years 29 days	5 years 3 months 29 days
Equivalent stock price volatility	36.41%	37.44%
Maximum [Member]
Fair value of underlying stock	$ 12.64	$ 12.64
Equivalent risk free interest rate	1.51%	1.46%
Expected term (in years)	6 years 9 months 18 days	7 years 14 days
Equivalent stock price volatility	36.57%	37.92%

DERIVATIVE LIABILITY WARRANTS34

DERIVATIVE LIABILITY WARRANTS (Details 3) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Total Derivative Gain	$ 154,652	$ 89,765
Warrant [Member] | Private Placement [Member]
Total Derivative Gain	28,828	282
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	7,574	5,084
Secured Convertible Notes [Member] | Warrant [Member]
Total Derivative Gain	107,500	75,587
Equipment Financing Leases [Member] | Warrant [Member]
Total Derivative Gain	10,750	7,554
Bridge Financings [Member] | Warrant [Member] | 15 Investors [Member]
Total Derivative Gain		$ 1,258

DERIVATIVE LIABILITY WARRANTS35

DERIVATIVE LIABILITY WARRANTS (Details Narrative) - Warrant [Member] - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2012
Number of shares issued	1,197,617	1,197,617		42,694
Bridge Financings [Member] | 15 Investors [Member]
Proceeds from issuance of warrants			$ 18,000,000
Derivative liability			$ 51,418
Preemptive Rights Offering [Member]
Number of shares issued	58,689

CONVERTIBLE PREFERRED STOCK (De

CONVERTIBLE PREFERRED STOCK (Details Narrative) - $ / shares	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Warrant [Member]
Exercise price (in dollars per share)	$ 8
Series A Convertible Preferred Stock [Member]
Preferred stock, authorized	3,000,000	3,000,000
Liquidation (in dollars per share)	$ 12
Description of conversion of stock	one share of Common Stock at the lower of: (a) $12.00 per share, or (b) 80% of the price at which the Company sells any equity or equity-linked securities in the future.
Conversion price (in dollars per share)	$ 12
Series A Convertible Preferred Stock [Member] | Warrant [Member] | Bridge Financings [Member]
Reduction in share price (in dollars per share)			$ 6.40
Exercise price (in dollars per share)			$ 8
Series B Preferred stock [Member]
Preferred stock, authorized	1,500,000	1,500,000
Liquidation (in dollars per share)	$ 16
Conversion price (in dollars per share)	$ 16

INCENTIVE STOCK OPTION PLAN (De

INCENTIVE STOCK OPTION PLAN (Details Narrative) - Incentive Stock Option Plan [Member]	3 Months Ended
	Mar. 31, 2017shares
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	369,750
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

STOCK WARRANTS (Details)

STOCK WARRANTS (Details) - $ / shares	1 Months Ended	3 Months Ended
	May 31, 2015	Mar. 31, 2017
Number of Warrants		11,000
Warrant [Member]
Date Issued		Jan. 7, 2009
Expiration Date		Jan. 7, 2019
Exercise Price		$ 8
Number of Warrants	1,400	6,000
Warrant [Member]
Date Issued		Aug. 10, 2012
Expiration Date		Aug. 10, 2027
Exercise Price		$ 12
Number of Warrants		5,000

STOCK WARRANTS (Details Narrati

STOCK WARRANTS (Details Narrative) - $ / shares	1 Months Ended	3 Months Ended	12 Months Ended		13 Months Ended
	May 31, 2015	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2012	Jul. 31, 2015
Number of Warrants		11,000
Warrant [Member]
Number of shares issued		1,197,617	1,197,617	42,694
Exercise price (in dollars per share)		$ 8
Number of warrants expired unexercised					30,294
Number of Warrants	1,400	6,000
Warrant [Member] | Maximum [Member]
Exercise price (in dollars per share)		$ 12
Warrant [Member] | Minimum [Member]
Exercise price (in dollars per share)		$ 8

CAPITAL LEASES (Details)

CAPITAL LEASES (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Short-term portion of obligations	$ 236,249	$ 268,667
Long-term portion of obligations	88,497	115,106
Aspen Advance Opportunity Fund, LP [Member]
Capital lease obligations	373,698	449,368
Unamortized warrant discount	(48,952)	(65,595)
Net obligations	324,746	383,773
Short-term portion of obligations	(236,249)	(268,667)
Long-term portion of obligations	$ 88,497	$ 115,106

CAPITAL LEASES (Details Narrati

CAPITAL LEASES (Details Narrative) - Warrant [Member] - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2012	Dec. 31, 2015	Dec. 31, 2014
Interest rate				50.00%	32.00%
Number of shares issued	1,197,617	1,197,617	42,694
Equipment Financing Leases [Member]
Number of shares issued	83,333	83,333

CUSTOMER, SUPPLIER, COUNTRY A42

CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS (Details Narrative) - Number	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Grants and Licensing Revenue Concentration [Member] | Total Grant Revenue [Member] | Grantor One [Member]
Concentration of risk	94.00%	100.00%
Grants and Licensing Revenue Concentration [Member] | Total Grant Revenue [Member] | Grantor Two [Member]
Concentration of risk	6.00%
Product Concentration Risk [Member] | Total Product Revenues [Member] | Product One [Member]
Concentration of risk	29.00%	26.00%
Description of product	Graphene nanoplatelets materials , Grade C 500 m²/g	Grade M 15um
Product Concentration Risk [Member] | Total Product Revenues [Member] | Product Two [Member]
Concentration of risk		11.00%
Description of product		Grade C 750 m²/g
Product Concentration Risk [Member] | Total Product Revenues [Member] | Product Three [Member]
Concentration of risk		10.00%
Description of product		GradeR 10um
Customer Concentration Risk [Member] | Total Product Revenues [Member] | Customer One [Member]
Concentration of risk	29.00%
Customer Concentration Risk [Member] | Total Product Revenues [Member] | Customer Two [Member]
Concentration of risk	22.00%
Customer Concentration Risk [Member] | Total Product Revenues [Member] | Customer [Member]
Concentration of risk		27.00%
Number of customers	1	1
Customer Concentration Risk [Member] | Accounts Receivable Greater Than 10% [Member] | Customer [Member]
Number of customers	2	1
Country Concentration Risk [Member] | Total Product Revenues [Member] | United Kingdom
Concentration of risk	24.00%
Country Concentration Risk [Member] | Total Product Revenues [Member] | Korea (South)
Concentration of risk	16.00%	33.00%
Country Concentration Risk [Member] | Total Product Revenues [Member] | Germany
Concentration of risk		11.00%
Country Concentration Risk [Member] | Total Product Revenues [Member] | Japan
Concentration of risk		13.00%
Country Concentration Risk [Member] | Total Product Revenues [Member] | Foreign [Member]
Concentration of risk	40.00%	77.00%

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Licensing Agreement [Member] | Michigan State University (Patents and Pending Patents) [Member]
Licensing expenses	$ 12,500	$ 12,500
Licensing Agreement [Member] | POSCO [Member]
Minimum yearly contractual obligation	100,000
Quarterly license revenue	25,000
Allowance contractual obligation	$ 162,500		$ 150,000
Master Leasing Agreement [Member] | Aspen Advance Opportunity Fund, LP (AAOF) [Member] | Series A Preferred stock [Member]
Number of shares issued	28,560	28,560

SUBSEQUENT EVENTS (Details Narr

SUBSEQUENT EVENTS (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended
	May 08, 2017	Mar. 31, 2017	Mar. 31, 2016
Proceeds from sale of common stock		$ 771,800
Subsequent Event [Member]
Number of shares issued	72,225
Proceeds from sale of common stock	$ 577,800