Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 13, 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 | Sep. 30, 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 | 2,213,350 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash | $ 1,317,761 | $ 1,785,343 |
Accounts receivable, less allowance for doubtful accounts of $10,000 at September 30, 2017 and December 31, 2016 | 378,686 | 99,078 |
Inventory | 193,223 | 205,973 |
Incentive refunds receivable | 165,635 | |
Other current assets | 194,864 | 174,495 |
Total current assets | 2,084,534 | 2,430,524 |
PROPERTY, PLANT AND EQUIPMENT, NET | 2,648,624 | 2,886,421 |
RESTRICTED CASH FOR LETTER OF CREDIT | 195,718 | 195,499 |
INTANGIBLE ASSETS, NET | 561,719 | 478,019 |
TOTAL ASSETS | 5,490,595 | 5,990,463 |
CURRENT LIABILITIES | ||
Accounts payable and other liabilities | 667,605 | 964,757 |
Deferred revenue | 6,428 | |
Current portion of capital lease obligations | 159,628 | 268,667 |
Total current liabilities | 827,233 | 1,239,852 |
LONG TERM LIABILITIES | ||
Long term portion of capital lease obligations | 31,311 | 115,106 |
Long term debt | 3,814,703 | 1,862,120 |
Derivative liability - warrants | 249,807 | |
Total long term liabilities | 3,846,014 | 2,227,033 |
TOTAL LIABILITIES | 4,673,247 | 3,466,885 |
STOCKHOLDERS' EQUITY | ||
Common stock, no par value, 25,000,000 shares authorized, 2,155,225 and 1,885,175 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 17,562,267 | 15,647,839 |
Additional paid in capital | 7,677,319 | 6,490,230 |
Accumulated (deficit) | (46,253,612) | (41,188,851) |
Total stockholders' equity | 817,348 | 2,523,578 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 5,490,595 | 5,990,463 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, value | 21,831,374 | 21,574,360 |
Series B Preferred stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, value |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) | Sep. 30, 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 | 2,162,725 | 1,885,175 |
Common stock, outstanding | 2,162,725 | 1,885,175 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, authorized | 3,000,000 | 3,000,000 |
Preferred stock, issued | 1,850,676 | 1,829,256 |
Preferred stock, outstanding | 1,850,676 | 1,829,256 |
Preferred stock, liquidation value | $ 22,208,112 | $ 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 | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
REVENUE | ||||
Product sales | $ 446,795 | $ 88,856 | $ 863,574 | $ 230,635 |
Grants | 25,466 | 50,111 | 124,955 | 208,475 |
Licensing revenue | 25,000 | 50,000 | 75,000 | |
Total revenue | 472,261 | 163,967 | 1,038,529 | 514,110 |
COST OF GOODS SOLD | ||||
Direct costs | 266,462 | 44,344 | 476,774 | 101,397 |
Unallocated manufacturing expenses | 449,799 | 323,051 | 1,236,101 | 1,071,000 |
Total cost of goods sold | 716,261 | 367,395 | 1,712,875 | 1,172,397 |
GROSS LOSS | (244,000) | (203,428) | (674,346) | (658,287) |
OPERATING EXPENSES | ||||
Research and development | 215,949 | 231,312 | 706,575 | 866,668 |
Sales, general and administrative | 1,466,505 | 896,650 | 3,386,857 | 2,618,252 |
Total operating expenses | 1,682,454 | 1,127,962 | 4,093,432 | 3,484,920 |
OPERATING LOSS | (1,926,454) | (1,331,390) | (4,767,778) | (4,143,207) |
OTHER INCOME (EXPENSE) | ||||
Interest expense, net | (62,814) | (55,816) | (176,347) | (240,588) |
Gain (Loss) from change in fair value of derivative liability - warrants | (43,154) | 26,738 | (46,612) | 50,799 |
Government incentives | 24,000 | (74,024) | 72,000 | |
Loss on disposal of intangible assets | (18,609) | (18,609) | ||
Total other income (expense) | (105,968) | (23,687) | (296,983) | (136,398) |
NET LOSS | $ (2,032,422) | $ (1,355,077) | $ (5,064,761) | $ (4,279,605) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic and diluted | 2,110,546 | 914,648 | 2,028,373 | 959,904 |
NET LOSS PER SHARE - Basic and diluted (in dollars per share) | $ (.96) | $ (1.48) | $ (2.50) | $ (4.46) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (unaudited) - 9 months ended Sep. 30, 2017 - USD ($) | Series A Preferred stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balances at beginning at Dec. 31, 2016 | $ 21,574,360 | $ 15,647,839 | $ 6,490,230 | $ (41,188,851) | $ 2,523,578 |
Balances at beginning (in shares) at Dec. 31, 2016 | 1,829,256 | 1,885,175 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Reclassification of warrant liabilities to equity | 296,419 | 296,419 | |||
Stock issued for cash | $ 2,140,400 | $ 2,140,400 | |||
Stock issued for cash (in shares) | 267,550 | 14,280 | |||
Stock issuance fees and expenses | $ (245,972) | $ (245,972) | |||
Preferred stock issued to pay capital lease obligations | $ 257,014 | 257,014 | |||
Preferred stock issued to pay capital lease obligations (in shares) | 21,420 | ||||
Stock-based compensation expense | $ 20,000 | 744,870 | 764,870 | ||
Stock-based compensation (in shares) | 10,000 | ||||
Net loss | (5,064,761) | (5,064,761) | |||
Balances at ending at Sep. 30, 2017 | $ 21,831,374 | $ 17,562,267 | $ 7,677,319 | $ (46,253,612) | $ 817,348 |
Balances at ending (in shares) at Sep. 30, 2017 | 1,850,676 | 2,162,725 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (5,064,761) | $ (4,279,605) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 665,813 | 684,199 |
Amortization of intangible assets | 31,770 | 26,856 |
Loss on disposal of intangible assets | 18,609 | |
Stock-based compensation expense | 764,870 | 342,189 |
Non-cash interest expense | 177,188 | 213,906 |
Gain from change in fair value of derivative liability - warrants | 46,612 | (50,799) |
Changes in current assets and liabilities: | ||
Accounts receivable | (279,608) | (4,044) |
Inventory | 12,750 | 2,434 |
Other current and non-current assets | 145,047 | (101,216) |
Accounts payable and other liabilities | (303,580) | 480,164 |
NET CASH USED IN OPERATING ACTIVITIES | (3,803,899) | (2,667,307) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (428,016) | (84,187) |
Purchases of intangible assets | (115,470) | (89,264) |
NET CASH USED IN INVESTING ACTIVITIES | (543,486) | (173,451) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Advances (repayments) of capital lease obligations, net | (14,625) | 29,896 |
Repayments of short-term notes, net | (175,250) | |
Proceeds from long-term loan | 2,000,000 | |
Proceeds from issuance of common stock | 2,140,400 | 3,102,032 |
Common stock issuance fees and expenses | (245,972) | (538,640) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 3,879,803 | 2,418,038 |
NET DECREASE IN CASH | (467,582) | (422,720) |
CASH AT BEGINNING OF PERIOD | 1,785,343 | 1,060,224 |
CASH AT END OF PERIOD | 1,317,761 | 637,504 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 27,107 | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING: | ||
Value of preferred stock issued for AAOF capital lease obligations | 257,014 | 257,014 |
Property and equipment under capital leases | 38,998 | |
Reclassification of derivative liability warrants to equity ASU 2017-11 (see note 2) | 7,650,442 | |
Reclassification of derivative liability warrants to equity - Series B Amendment | 296,419 | 51,418 |
Warrants issued with long and short-term financings | $ 145,800 | $ 24,060 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 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, XG Sciences IP, LLC (collectively referred to as “we”, “us”, “our”, or the “Company”) manufactures graphene nanoplatelets made from graphite, using two proprietary manufacturing processes to split natural flakes of crystalline graphite into very small and thin particles, which we sell as xGnP ® 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 our 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 10-K 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 | 9 Months Ended |
Sep. 30, 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. In December 2016, we entered into a draw loan note and agreement (the “Dow Facility”) with The Dow Chemical Company (“Dow”) to provide up to $10 million of secured debt financing at an interest rate of 5% per year, drawable at our request under certain conditions. We received $2 million at closing, $1 million on July 18, 2017, and $1 million on September 22, 2017. We currently have $1 million of additional funding available on or before December 1, 2017 under the Dow Facility. After December 1, 2017, an additional $5 million becomes available under the Dow Facility if we have raised $10 million of equity capital after October 31, 2016. As of November 10, 2017, we had cash on hand of $1,226,776 and currently available funds of $1 million under the Dow Facility. Our financial projections show that we may need to raise an additional $6-8 million before we are capable of achieving sustainable free cash flow after capital expenditures. We intend that the primary means for raising such funds will be through our IPO, the additional $1 million of currently available funds under the Dow Facility, and up to an additional $5 million of proceeds from the Dow Facility in the event that we raise $10 million of additional equity capital after October 31, 2016. Thus far, we have raised approximately $3 million through the sale of 376,078 shares of common stock between November 1, 2016 and September 30, 2017 towards the requirement to raise $10 million of additional equity capital in order to open up the remaining $5 million of availability on the Dow Facility. 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 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, revenue 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 revenue, accounts receivable and related allowances, contingencies, useful lives and recovery of long-term assets, including intangible assets, income taxes, the fair value of stock-based compensation. 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 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: September 30, December 31, 2017 2016 Raw materials $ 48,450 $ 45,964 Finished goods 144,773 160,009 Total $ 193,223 $ 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 were classified as derivative instrument liabilities measured at fair value. The fair values of these derivative liabilities were revalued at each reporting date, with the change in fair value recognized in earnings. See Note 5 for additional information. In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities From Equity (Topic 480), Derivatives and Hedging (Topic 815) (“ASU 2017-11”) Three months ended September 30, 2016 As previously As reported Adjusted Operating loss $ (1,331,390 ) $ (1,331,390 ) Other income (expense): Interest expense, net (56,013 ) (55,816 ) Gain from change in fair value of derivative warrants 108,056 26,738 Government incentives 24,197 24,000 Loss on disposal of intangible assets (18,609 ) (18,609 ) Total other income (expense) 57,631 (23,687 ) Net loss $ (1,273,759 ) $ (1,355,077 ) Nine months ended September 30, 2016 As previously As reported Adjusted Operating loss $ (4,143,207 ) $ (4,143,207 ) Other income (expense): Interest expense, net (241,011 ) (240,588 ) Gain from change in fair value of derivative warrants 340,669 50,799 Government incentives 72,423 72,000 Loss on disposal of intangible assets (18,609 ) (18,609 ) Total other income (expense) 153,472 (136,398 ) Net loss $ (3,989,735 ) $ (4,279,605 ) The impact to the balance sheet as of December 31, 2016 is as follows: As previously As reported Adjusted Derivative liability-warrants $ 7,900,249 $ 249,807 Total long-term liabilities $ 9,877,475 $ 2,227,033 Total liabilities $ 11,117,327 $ 3,466,885 Series A convertible preferred stock $ 21,634,597 $ 21,574,360 Accumulated deficit $ (48,899,530 ) $ (41,188,851 ) Total stockholders’ (deficit) equity $ (5,126,864 ) $ 2,523,578 Total liabilities and stockholder’s deficit $ 5,990,463 $ 5,990,463 |
WARRANTS AND FINANCING AGREEMEN
WARRANTS AND FINANCING AGREEMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
WARRANTS AND FINANCING AGREEMENTS | NOTE 3 — WARRANTS AND FINANCING AGREEMENTS Dow Loan In December 2016, we entered into the Dow Facility which provides us with up to $10 million of secured debt financing at an interest rate of 5% per year, drawable at our request under certain conditions. We received $2 million at closing and an additional $1 million on July 18, 2017 and September 22, 2017, respectively. We currently have $1 million of additional funding available on or before December 1, 2017 under the Dow Facility. 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 Facility is senior to most of our other debt, and is secured by all of our 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 received warrant coverage of one share of common stock for each $40 in loans received by us, equating to 20% warrant coverage, with an exercise price of $8.00 per share for the warrants issued at closing of the initial $2 million draw. After the initial closing, the strike price of future warrants issued are subject to adjustment if we sell shares of common stock at a lower price. As of September 30, 2017, we had issued 100,000 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. Proceeds were allocated between the debt and the warrants at their relative fair value. During the nine months ended September 30, 2017, amortization expense of $98,384 was recognized resulting in a carrying value of $3,814,703 for the Dow Loan as of September 30, 2017. The Dow Facility entitles Dow to appoint an observer to our board of directors (the “Board”). Dow will maintain their observation right until the later of December 1, 2019 or when the amount of principal and interest outstanding under the Dow Facility is less than $5 million. |
PRIVATE PLACEMENT AND PREEMPTIV
PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS | 9 Months Ended |
Sep. 30, 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 Series B Units consisting of shares of Series B Preferred Stock and warrants to purchase common stock at an offering price of $16.00 per Series B Unit. During the period April 2015 through December 2016, we 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 private Series B Unit offering was terminated on February 25, 2016. As a result of our IPO and pursuant to certain exchange rights granted to participants in the Series B Unit offering, 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 we 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. Although the stock was cancelled all of the 224,897 warrants issued in connection with the Series B Units remain outstanding at September 30, 2017. Such warrants have an exercise price of $16.00 per share and expire between April 21 and June 30, 2022. These warrants were classified as derivative liabilities until September 30, 2017; at which time they were reclassified to equity (additional paid in capital). The reclassification was made on September 30, 2017 after determining that the exchange rights as defined in the Michigan “Certificate of Amendment – Corporation”, filed on August 19, 2016 no longer required liability classification (see Note 2). |
DERIVATIVE LIABILITY WARRANTS
DERIVATIVE LIABILITY WARRANTS | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITY WARRANTS | NOTE 5 – DERIVATIVE LIABILITY WARRANTS At inception, the Series A Convertible Preferred Stock warrants issued in conjunction with convertible notes issued in 2013 (subsequently converted into Series A Preferred Stock), equipment financing leases procured in 2013 and 2014, and certain other pre-emptive rights and the common stock warrants issued in connection with the 2015 Series B Unit offering were derivative liabilities which require re-measurement at fair value each reporting period. As mentioned in Note 2, during the three months ended September 30, 2017, we chose to adopt ASU 2017-11 which changed the classification analysis of certain warrants with anti-dilution features. Since we chose to early adopt ASU 2017-11 in an interim period, the adjustments were reflected as of the beginning of the fiscal year as a cumulative-effect adjustment to the Company’s beginning accumulated deficit as of January 1, 2016. As a result of adopting ASU 2017-11, the Company no longer recognizes a liability related to 972,720 warrants, which were only classified as liabilities a result of having anti-dilution features. As mentioned in Note 4, 224,897 warrants related to the Series B offering were reclassified from derivative liabilities on the balance sheet to equity at September 30, 2017 because the requirement to classify them as liabilities was removed when we amended the Series B Certificate of Designation in August of 2016. The initial value of the stock warrants issued as consideration for the equipment financing leases in 2013 and 2014 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 8). 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 shares of Series A Convertible Preferred Stock purchased by a shareholder, we issued such 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 of Series B Units 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 September 30, 2017, the total number of Stock Warrants issued due to the preemptive rights offerings was 58,689. The following table summarizes the fair value of the derivative liabilities as of September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Warrants issued with Secured Convertible Notes $ — $ 6,554,160 Warrants issued with equipment financing leases — 655,418 Warrants issued with preemptive rights — 443,790 Warrants issued with April 2015 private placement of Series B Units — 246,881 Adoption of accounting standard ASU 2017-11 — (7,650,442 ) Total derivative liabilities $ — $ 249,807 The Company estimated the fair value of their warrant derivative liabilities as of September 30, 2017 and December 31, 2016, using a lattice model and the following assumptions: December 31, 2016 Fair value of underlying stock $7.63 - $12.64 Equivalent risk free interest rate 1.27%- 1.46% Expected term (in years) 5.33- 7.04 Equivalent stock price volatility 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. Comparative prior periods were prepared using the newly adopted ASU 2017-11 as follows: Three months ended September 30, 2017 2016 Warrants issued with preemptive rights $ (506 ) $ 26,423 Warrants issued with April 2015 private placement of Series B Units (42,648 ) 315 Total Derivative Gain (Loss) $ (43,154 ) $ 26,738 Nine months ended September 30, 2017 2016 Warrants issued with preemptive rights $ (545 ) $ 48,964 Warrants issued with April 2015 private placement of Series B Units (46,067 ) 577 Warrants issued with Bridge Financing 1,258 Total Derivative Gain (Loss) $ (46,612 ) $ 50,799 Subsequent to the Company’s early adoption of ASU 2017-11, which effected 972,720 warrants related to Series A Preferred stock, and the Company’s reclassification of 224,897 warrants related to Series B Preferred stock on September 30, 2017 (from derivative liabilities to equity) we are no longer required to record the change in fair values for these instruments. |
STOCK WARRANTS ACCOUNTED FOR AS
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS | NOTE 6 – STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS The following table summarizes the common stock warrants (including the warrants previously accounted for as derivatives) outstanding at September 30, 2017, which are accounted for as equity instruments, all of which are exercisable: Date Issued Expiration Date Exercise Price Number of 07/01/2009 07/01/2019 $ 8.00 6,000 10/08/2012 10/08/2027 $ 12.00 5,000 01/15/2014 - 12/31/2014 01/15/2024 $ 6.40 972,720 04/30/2015- 05/26/2015 04/30/2022 $ 16.00 218,334 06/30/2015 06/30/2022 $ 16.00 6,563 12/14/2016 12/01/2023 $ 8.00 50,000 07/18/2017 12/01/2023 $ 8.00 25,000 09/22/2017 12/01/2023 $ 8.00 25,000 1,308,617 |
EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY INCENTIVE PLAN | NOTE 7 – EQUITY INCENTIVE PLAN We previously established the 2007 Stock Option Plan (the “2007 Plan”), which was scheduled to expire on October 30, 2017 and under which we granted key employees and directors options to purchase shares of our common stock at not less than fair market value as of the grant date. On May 4, 2017, the Board approved the 2017 Equity Incentive Plan (the “2017 Plan”) to replace the 2007 Stock Option Plan, which became effective upon the approval of the stockholders holding a majority of the voting power in the Company on July 18, 2017. The 2017 Plan replaces the 2007 Plan and authorizes us to issue awards (stock options and restricted stock) with respect of a maximum of 1,200,000 shares of our common stock, which equals the number of shares authorized under the 2007 Plan, as amended. On July 24, 2017, certain stock options from the prior incentive stock option plan were cancelled and replacement stock options were awarded. The replacement stock option awards have an exercise price of $8.00 per share, a seven-year term, are vested 50% on date of grant with the remaining vesting over a 4 year period from the date issued, and are subject to certain other terms. Each option holder received options equal to 150% of the number of cancelled stock options. The cancellation and reissuance of the stock options were treated as a modification under ASC 718, Compensation-Stock Compensation. On August 10, 2017, the Company granted stock options and restricted stock to each of its board members as part of their compensation package. Each of the 4 board members received 2,500 stock options and 2,500 shares of restricted stock for their board services. The options were granted at a price of $8.00 per share and had an aggregate grant date fair value of $26,120. The options vest ratably over a four-year period beginning on the one-year anniversary. The restricted stock issued to the board members have an aggregate fair value of $80,000 and vest ratably in arrears on the last day of each fiscal quarter following the grant date. As of September 30, 2017, 2,500 shares of restricted stock had vested resulting in compensation expense of $20,000 A summary of the stock option activity for the nine months ended September 30, 2017 is as follows: Weighted Number Average Of Exercise Options Price Options outstanding at beginning of year 369,750 $ 11.89 Changes during the year: Expired (12,000 ) 12.00 Cancellation of existing options (357,750 ) 12.00 Issuance of replacement options 536,625 8.00 New Options Granted – at market price 108,000 8.00 Exercised — — Options outstanding at end of Period 644,625 8.00 Options exercisable at end of Period 322,158 8.00 The fair values of options granted are estimated on the dates of grant using the Black Scholes option-pricing model. Vesting of the options granted range from immediately to 25% per year, with most of the replacement options vesting 50% on date of grant with the remaining vesting over a 4 year period from the date issued. The options expire in seven years from date of grant. |
CAPITAL LEASES
CAPITAL LEASES | 9 Months Ended |
Sep. 30, 2017 | |
Capital Leases of Lessee [Abstract] | |
CAPITAL LEASES | NOTE 8 – CAPITAL LEASES As of September 30, 2017 and December 31, 2016, we have capital lease obligations as follows: September 30, 2017 December 31, 2016 Capital lease obligations $ 214,191 $ 449,368 Unamortized warrant discount (23,252 ) (65,595 ) Net obligations 190,939 383,773 Short-term portion of obligations (159,628 ) (268,667 ) Long-term portion of obligations $ 31,311 $ 115,106 Our AAOF capital lease obligations are four-year leases starting on January 1, 2014 and January 1, 2015. 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 | 9 Months Ended |
Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS | NOTE 9 — Customer, Supplier, country, and Product Concentrations Grants and Licensing Revenue Concentration For the three months ended September 30, 2017, one grantor accounted for 100% of the total grant revenue. During the nine months ended September 30, 2017, two grantors accounted for 25% and 75% of total grant revenue. During the three months ended September 30, 2016, two grantors accounted for 50% each of the total grant revenue, and for the nine months ended September 30, 2016, two grantors accounted for 12% and 88% of the total grant revenue in each period. There was no licensing revenue for the three months ended September 30, 2017. Licensing revenue for the nine months ended September 30, 2017, and for the three and nine months ended 2016, came from one licensor. Product Concentration Concentrations of product sales greater than 10% of total product sales are shown in the table below. We attempt to minimize the risk associated with product concentrations by continuing to develop new products to add to our portfolio of products offered. For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Grade C-300 HP * * 14% * Grade C-500 66% * 41% * Grade R-10 * 16% * 12% Grade M-15 * 16% * 14% * Denotes less than 10% of product sales. Customer Concentration During the three months ended September 30, 2017 we had two customers whose purchases accounted for 19% and 65% of product sales. During the three months ended September 30, 2016 we had three customers who accounted for 10%, 12% and 21% of product sales. For the nine months ended September 30, 2017 we had two customers whose purchases accounted for 17%, and 36% of product sales. During the nine months ended September 30, 2016 we had two customers whose purchases accounted for 11% each of product sales. At September 30, 2017, there were two customers who had an accounts receivable balance greater than 10% of our total outstanding receivable balance. At September 30, 2016, there were two customers who had an accounts receivable balance greater than 10% of our total outstanding receivable balance. Country Concentration We sell our products on a worldwide basis. All of these sales are denominated in U.S. dollars. International sales for the three months ended September 30, 2017 were 33% of product sales as compared with 54% for the three months ended September 30, 2016. One country, China, accounted for 19% of product sales for the three months ended September 30, 2017 and three countries, China, the United Kingdom and South Korea, accounted for 10%, 14%, and 20%, respectively, of product sales for the three months ended September 30, 2016. International sales for the nine months ended September 30, 2017 were 34% of product sales as compared with 66% for the nine months ended September 30, 2016. One country, China, accounted for approximately 17% of product sales for the nine months ended September 30, 2017 and two countries, the United Kingdom and South Korea, accounted for 10% and 30%, respectively, of product sales for the nine months ended September 30, 2016. Suppliers We buy raw materials used in manufacturing from several sources. These materials are available from a large number of sources. Thus, we believe a change in suppliers would have no material effect on our operations. We did not have any purchases from one supplier that were more than 10% of total purchases for the three months and nine months ended September 30, 2017 and 2016. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 10 - 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 September 30, 2017 and 2016 we recorded licensing expense of $12,500 per quarter. During the nine months ended September 30, 2017 and 2016 we recorded licensing expense of $37,500 in each period. We have also entered into product licensing agreements with, POSCO, a shareholder. See below for POSCO. Other than MSU and POSCO, there were no other royalty expenses or revenue recognized during the three or nine months ended September 30, 2017 and 2016. The Company and POSCO, a shareholder of the Company, entered into a license agreement dated June 8, 2011, pursuant to which POSCO agreed to pay a minimum annual royalty of $100,000 per year if certain circumstances existed, among other things. The Company believed that this minimum annual royalty became due annually beginning on February 28, 2015, and up until June 30, 2017, recorded this royalty revenue at a rate of $25,000 per quarter. POSCO disputed its obligation to pay this minimum annual royalty, and did not pay the royalty in any prior year. We filed a demand for arbitration in the International Court of Arbitration on March 9, 2016, in an effort to resolve the dispute. Pursuant to a confidential settlement, on November 3, 2017, the Company and POSCO agreed to settle the dispute and to dismiss the arbitration. Based on terms of the settlement, no allowance is considered necessary. At September 30, 2017 we have a balance of $175,000 reflected in other current assets on the condensed consolidated balance sheet. This represents an accrual of licensing revenue of $100,000 for three and a half years less 50% to reflect an estimate of the portion of 2017, 2016, 2015, and 2014 licensing fees we believed to be not collectible. At December 31, 2016 the accrued licensing fees and allowance netted together was $150,000. On March 18, 2013, we entered into a series of agreements with two private investment funds: Aspen Advanced Opportunity Fund, LP (“AAOF”) and XGS II, LLC (“XGS II”), and pursuant to a Shareholders’ Agreement dated March 18, 2013 (as amended on February 26, 2016), a principal of each private fund serves as a member of our Board of Directors. These financing agreements were amended and restated on July 12, 2013 to provide for expanded financing commitments from AAOF and XGS II. Pursuant to these agreements, AAOF and XGS II agreed to provide $10 million of financing to the Company in the form of Secured Convertible Notes and AAOF agreed to provide an additional $1.0 million of lease financing arrangements. All of the principal and accrued interest on the Secured Convertible Notes issued to AAOF and XGS II were converted into Series A Preferred Stock in December 2016. During the three months ended September 30, 2017 and 2016 we issued 7,140 shares per period of Series A Preferred Stock to AAOF as payment for lease financing obligations under the terms of the Master Lease Agreement, dated March 18, 2013. For the nine months ended September 30, 2017 and 2016 we issued a total of 21,420 shares per period as payment for lease obligations. On August 10, 2017 restricted common stock in the amount of 2,500 shares, vesting at 25% or 625 shares on September 30, 2017, December 31, 2017, March 31, 2017, and June 30, 2017 was granted to each of four Board members: Steven C. Jones, Arnold Allemang, Dave Pendell, and Peifeng (Molly) Zhang. These awards were pursuant to the 2017 Equity Incentive Plan. In addition to the restricted stock, these Board members also received 2,500 stock options granted on August 10, 2017. These options vest equally over four years starting on the 1 st |
OTHER SUBSEQUENT EVENTS
OTHER SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
Other Subsequent Events | |
OTHER SUBSEQUENT EVENTS | NOTE 11 – OTHER SUBSEQUENT EVENTS During the period from October 1 through November 13, 2017, we received common stock proceeds of $405,000 for the sale of 50,625 shares. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 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. In December 2016, we entered into a draw loan note and agreement (the “Dow Facility”) with The Dow Chemical Company (“Dow”) to provide up to $10 million of secured debt financing at an interest rate of 5% per year, drawable at our request under certain conditions. We received $2 million at closing, $1 million on July 18, 2017, and $1 million on September 22, 2017. We currently have $1 million of additional funding available on or before December 1, 2017 under the Dow Facility. After December 1, 2017, an additional $5 million becomes available under the Dow Facility if we have raised $10 million of equity capital after October 31, 2016. As of November 10, 2017, we had cash on hand of $1,226,776 and currently available funds of $1 million under the Dow Facility. Our financial projections show that we may need to raise an additional $6-8 million before we are capable of achieving sustainable free cash flow after capital expenditures. We intend that the primary means for raising such funds will be through our IPO, the additional $1 million of currently available funds under the Dow Facility, and up to an additional $5 million of proceeds from the Dow Facility in the event that we raise $10 million of additional equity capital after October 31, 2016. Thus far, we have raised approximately $3 million through the sale of 376,078 shares of common stock between November 1, 2016 and September 30, 2017 towards the requirement to raise $10 million of additional equity capital in order to open up the remaining $5 million of availability on the Dow Facility. 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 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, revenue 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 revenue, accounts receivable and related allowances, contingencies, useful lives and recovery of long-term assets, including intangible assets, income taxes, the fair value of stock-based compensation. 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 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: September 30, December 31, 2017 2016 Raw materials $ 48,450 $ 45,964 Finished goods 144,773 160,009 Total $ 193,223 $ 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 were classified as derivative instrument liabilities measured at fair value. The fair values of these derivative liabilities were revalued at each reporting date, with the change in fair value recognized in earnings. See Note 5 for additional information. In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities From Equity (Topic 480), Derivatives and Hedging (Topic 815) (“ASU 2017-11”) Three months ended September 30, 2016 As previously As reported Adjusted Operating loss $ (1,331,390 ) $ (1,331,390 ) Other income (expense): Interest expense, net (56,013 ) (55,816 ) Gain from change in fair value of derivative warrants 108,056 26,738 Government incentives 24,197 24,000 Loss on disposal of intangible assets (18,609 ) (18,609 ) Total other income (expense) 57,631 (23,687 ) Net loss $ (1,273,759 ) $ (1,355,077 ) Nine months ended September 30, 2016 As previously As reported Adjusted Operating loss $ (4,143,207 ) $ (4,143,207 ) Other income (expense): Interest expense, net (241,011 ) (240,588 ) Gain from change in fair value of derivative warrants 340,669 50,799 Government incentives 72,423 72,000 Loss on disposal of intangible assets (18,609 ) (18,609 ) Total other income (expense) 153,472 (136,398 ) Net loss $ (3,989,735 ) $ (4,279,605 ) The impact to the balance sheet as of December 31, 2016 is as follows: As previously As reported Adjusted Derivative liability-warrants $ 7,900,249 $ 249,807 Total long-term liabilities $ 9,877,475 $ 2,227,033 Total liabilities $ 11,117,327 $ 3,466,885 Series A convertible preferred stock $ 21,634,597 $ 21,574,360 Accumulated deficit $ (48,899,530 ) $ (41,188,851 ) Total stockholders’ (deficit) equity $ (5,126,864 ) $ 2,523,578 Total liabilities and stockholder’s deficit $ 5,990,463 $ 5,990,463 |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of inventory | Inventory consists of raw materials 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: September 30, December 31, 2017 2016 Raw materials $ 48,450 $ 45,964 Finished goods 144,773 160,009 Total $ 193,223 $ 205,973 |
Schedule of financial statements | The impact to the financial statements as of the three and nine-months ended September 30, 2016 is as follows: Three months ended September 30, 2016 As previously As reported Adjusted Operating loss $ (1,331,390 ) $ (1,331,390 ) Other income (expense): Interest expense, net (56,013 ) (55,816 ) Gain from change in fair value of derivative warrants 108,056 26,738 Government incentives 24,197 24,000 Loss on disposal of intangible assets (18,609 ) (18,609 ) Total other income (expense) 57,631 (23,687 ) Net loss $ (1,273,759 ) $ (1,355,077 ) Nine months ended September 30, 2016 As previously As reported Adjusted Operating loss $ (4,143,207 ) $ (4,143,207 ) Other income (expense): Interest expense, net (241,011 ) (240,588 ) Gain from change in fair value of derivative warrants 340,669 50,799 Government incentives 72,423 72,000 Loss on disposal of intangible assets (18,609 ) (18,609 ) Total other income (expense) 153,472 (136,398 ) Net loss $ (3,989,735 ) $ (4,279,605 ) The impact to the balance sheet as of December 31, 2016 is as follows: As previously As reported Adjusted Derivative liability-warrants $ 7,900,249 $ 249,807 Total long-term liabilities $ 9,877,475 $ 2,227,033 Total liabilities $ 11,117,327 $ 3,466,885 Series A convertible preferred stock $ 21,634,597 $ 21,574,360 Accumulated deficit $ (48,899,530 ) $ (41,188,851 ) Total stockholders’ (deficit) equity $ (5,126,864 ) $ 2,523,578 Total liabilities and stockholder’s deficit $ 5,990,463 $ 5,990,463 |
DERIVATIVE LIABILITY WARRANTS (
DERIVATIVE LIABILITY WARRANTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of derivative liabilities | The following table summarizes the fair value of the derivative liabilities as of September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Warrants issued with Secured Convertible Notes $ — $ 6,554,160 Warrants issued with equipment financing leases — 655,418 Warrants issued with preemptive rights — 443,790 Warrants issued with April 2015 private placement of Series B Units — 246,881 Adoption of accounting standard ASU 2017-11 — (7,650,442 ) Total derivative liabilities $ — $ 249,807 |
Schedule of warrant derivative liabilities | The Company estimated the fair value of their warrant derivative liabilities as of September 30, 2017 and December 31, 2016, using a lattice model and the following assumptions: December 31, 2016 Fair value of underlying stock $7.63 - $12.64 Equivalent risk free interest rate 1.27%- 1.46% Expected term (in years) 5.33- 7.04 Equivalent stock price volatility 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. Comparative prior periods were prepared using the newly adopted ASU 2017-11 as follows: Three months ended September 30, 2017 2016 Warrants issued with preemptive rights $ (506 ) $ 26,423 Warrants issued with April 2015 private placement of Series B Units (42,648 ) 315 Total Derivative Gain (Loss) $ (43,154 ) $ 26,738 Nine months ended September 30, 2017 2016 Warrants issued with preemptive rights $ (545 ) $ 48,964 Warrants issued with April 2015 private placement of Series B Units (46,067 ) 577 Warrants issued with Bridge Financing 1,258 Total Derivative Gain (Loss) $ (46,612 ) $ 50,799 |
STOCK WARRANTS ACCOUNTED FOR 21
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stock Warrants Accounted For As Equity Instruments Tables | |
Schedule of common stock warrants (including the warrants previously accounted for as derivatives) outstanding | The following table summarizes the common stock warrants (including the warrants previously accounted for as derivatives) outstanding at September 30, 2017, which are accounted for as equity instruments, all of which are exercisable: Date Issued Expiration Date Exercise Price Number of 07/01/2009 07/01/2019 $ 8.00 6,000 10/08/2012 10/08/2027 $ 12.00 5,000 01/15/2014 - 12/31/2014 01/15/2024 $ 6.40 972,720 04/30/2015- 05/26/2015 04/30/2022 $ 16.00 218,334 06/30/2015 06/30/2022 $ 16.00 6,563 12/14/2016 12/01/2023 $ 8.00 50,000 07/18/2017 12/01/2023 $ 8.00 25,000 09/22/2017 12/01/2023 $ 8.00 25,000 1,308,617 |
EQUITY INCENTIVE PLAN (Tables)
EQUITY INCENTIVE PLAN (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity Incentive Plan Tables | |
Schedule of summary of the stock option activity | A summary of the stock option activity for the nine months ended September 30, 2017 is as follows: Weighted Number Average Of Exercise Options Price Options outstanding at beginning of year 369,750 $ 11.89 Changes during the year: Expired (12,000 ) 12.00 Cancellation of existing options (357,750 ) 12.00 Issuance of replacement options 536,625 8.00 New Options Granted – at market price 108,000 8.00 Exercised — — Options outstanding at end of Period 644,625 8.00 Options exercisable at end of Period 322,158 8.00 |
CAPITAL LEASES (Tables)
CAPITAL LEASES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Capital Leases of Lessee [Abstract] | |
Schedule of capital lease obligations | As of September 30, 2017 and December 31, 2016, we have capital lease obligations as follows: September 30, 2017 December 31, 2016 Capital lease obligations $ 214,191 $ 449,368 Unamortized warrant discount (23,252 ) (65,595 ) Net obligations 190,939 383,773 Short-term portion of obligations (159,628 ) (268,667 ) Long-term portion of obligations $ 31,311 $ 115,106 |
CUSTOMER, SUPPLIER, COUNTRY A24
CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Customer Supplier Country And Product Concentrations Tables | |
Concentrations of product sales | Concentrations of product sales greater than 10% of total product sales are shown in the table below. We attempt to minimize the risk associated with product concentrations by continuing to develop new products to add to our portfolio of products offered. For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Grade C-300 HP * * 14% * Grade C-500 66% * 41% * Grade R-10 * 16% * 12% Grade M-15 * 16% * 14% * Denotes less than 10% of product sales. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||
Raw materials | $ 48,450 | $ 45,964 |
Finished goods | 144,773 | 160,009 |
Total | $ 193,223 | $ 205,973 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Operating loss | $ (1,926,454) | $ (1,331,390) | $ (4,767,778) | $ (4,143,207) | |
Other income (expense): | |||||
Interest expense, net | 62,814 | 55,816 | 176,347 | 240,588 | |
Gain from change in fair value of derivative warrants | (43,154) | 26,738 | (46,612) | 50,799 | |
Government incentives | 24,000 | (74,024) | 72,000 | ||
Loss on disposal of intangible assets | (18,609) | (18,609) | |||
Total other income (expense) | (105,968) | (23,687) | (296,983) | (136,398) | |
Net loss | (2,032,422) | (1,355,077) | (5,064,761) | (4,279,605) | |
Derivative liability-warrants | $ 249,807 | ||||
Total long-term liabilities | 3,846,014 | 3,846,014 | 2,227,033 | ||
Total liabilities | 4,673,247 | 4,673,247 | 3,466,885 | ||
Accumulated deficit | (46,253,612) | (46,253,612) | (41,188,851) | ||
Total stockholders' (deficit) equity | 817,348 | 817,348 | 2,523,578 | ||
Total liabilities and stockholder's deficit | $ 5,490,595 | $ 5,490,595 | 5,990,463 | ||
Scenario, Previously Reported [Member] | |||||
Operating loss | (1,331,390) | (4,143,207) | |||
Other income (expense): | |||||
Interest expense, net | (56,013) | (241,011) | |||
Gain from change in fair value of derivative warrants | 108,056 | 340,669 | |||
Government incentives | 24,197 | 72,423 | |||
Loss on disposal of intangible assets | (18,609) | (18,609) | |||
Total other income (expense) | 57,631 | 153,472 | |||
Net loss | (1,273,759) | (3,989,735) | |||
Derivative liability-warrants | 7,900,249 | ||||
Total long-term liabilities | 9,877,475 | ||||
Total liabilities | 11,117,327 | ||||
Series A convertible preferred stock | 21,634,597 | ||||
Accumulated deficit | (48,899,530) | ||||
Total stockholders' (deficit) equity | (5,126,864) | ||||
Total liabilities and stockholder's deficit | 5,990,463 | ||||
As Adjusted [Member] | |||||
Operating loss | (1,331,390) | (4,143,207) | |||
Other income (expense): | |||||
Interest expense, net | (55,816) | (240,588) | |||
Gain from change in fair value of derivative warrants | 26,738 | 50,799 | |||
Government incentives | 24,000 | 72,000 | |||
Loss on disposal of intangible assets | (18,609) | (18,609) | |||
Total other income (expense) | (23,687) | (136,398) | |||
Net loss | $ (1,355,077) | $ (4,279,605) | |||
Derivative liability-warrants | 249,807 | ||||
Total long-term liabilities | 2,227,033 | ||||
Total liabilities | 3,466,885 | ||||
Series A convertible preferred stock | 21,574,360 | ||||
Accumulated deficit | (41,188,851) | ||||
Total stockholders' (deficit) equity | 2,523,578 | ||||
Total liabilities and stockholder's deficit | $ 5,990,463 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Nov. 10, 2017 | Sep. 22, 2017 | Jul. 18, 2017 | Nov. 13, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2015 |
Cash in hand | $ 1,785,343 | $ 1,317,761 | $ 1,317,761 | $ 637,504 | $ 1,060,224 | ||||
Funds available from operations | 5,000,000 | ||||||||
Additional fund required for next 12 months | $ 10,000,000 | ||||||||
Description of raising fund | Additional $1 million of currently available funds under the Dow Facility, and up to an additional $5 million of proceeds from the Dow Facility in the event that we raise $10 million of additional equity capital after October 31, 2016. | ||||||||
Number of common shares sold | 14,280 | 376,078 | |||||||
Value of common shares sold | $ 2,140,400 | $ 3,000,000 | |||||||
Minimum [Member] | |||||||||
Additional fund required for sustainable cash flow | 6,000,000 | ||||||||
Maximum [Member] | |||||||||
Additional fund required for sustainable cash flow | $ 8,000,000 | ||||||||
Warrant [Member] | |||||||||
Anti-dilution features shares | 972,720 | ||||||||
Decrease in accumulated deficit | $ 7,582,158 | $ 7,582,158 | |||||||
Subsequent Event [Member] | |||||||||
Cash in hand | $ 1,226,776 | ||||||||
Funds available from operations | $ 1,000,000 | ||||||||
Number of common shares sold | 50,625 | ||||||||
The Dow Chemical Company [Member] | |||||||||
Description of raising fund | Additional $5 million becomes available under the Dow Facility if we have raised $10 million of equity capital after October 31, 2016. | ||||||||
The Dow Chemical Company [Member] | Draw Loan Note And Agreement [Member] | Senior Secured Debt Financing [Member] | |||||||||
Face amount | 10,000,000 | ||||||||
Proceeds from secured debt | $ 1,000,000 | $ 1,000,000 | $ 2,000,000 | ||||||
Interest rate | 5.00% |
WARRANTS AND FINANCING AGREEM28
WARRANTS AND FINANCING AGREEMENTS (Details Narrative) - USD ($) | Sep. 22, 2017 | Jul. 18, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Dec. 31, 2016 |
Number of common stock warrants issued | 1,308,617 | ||||
Warrant [Member] | |||||
Exercise price (in dollars per share) | $ 12 | ||||
Number of common stock warrants issued | 5,000 | ||||
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 | $ 1,000,000 | $ 1,000,000 | $ 2,000,000 | ||
Description of funding | Additional $1 million on July 18, 2017. We currently have $2 million of additional funding available on or before December 1, 2017 under the Dow Facility. 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 all of our assets. | ||||
Description of interest payable terms | Payable beginning January 1, 2017 although we may elect to capitalize interest through January 1, 2019. | ||||
Amount of principal and interest outstanding | $ 5,000,000 | ||||
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 | 100,000 | ||||
Description of warrant coverage | One share of common stock for each $40 in loans received by us, equating to 20% warrant coverage, with an exercise price of $8.00 per share for the warrants issued at closing with the initial $2 million draw. | ||||
Warrant expiration date | Dec. 1, 2023 | ||||
Amortization expense | 98,384 | ||||
Secured debt carrying amount | $ 3,814,703 |
PRIVATE PLACEMENT AND PREEMPT29
PRIVATE PLACEMENT AND PREEMPTIVE RIGHTS (Details Narrative) - USD ($) | Feb. 25, 2016 | Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2016 | Apr. 30, 2015 |
Number of shares issued | 14,280 | 376,078 | ||||
Warrant [Member] | ||||||
Number of shares issued | ||||||
Exercise price (in dollars per share) | $ 8 | $ 8 | ||||
Number of warrants cancelled | 224,897 | |||||
Private Placement [Member] | Warrant [Member] | ||||||
Proceeds from private placement | $ 4,270,192 | |||||
Number of shares issued | 222,262 | |||||
Exercise price (in dollars per share) | $ 16 | $ 16 | ||||
Number of warrants cancelled | 224,897 | |||||
Private Placement [Member] | Warrant [Member] | ||||||
Share price (in dollars per unit) | $ 16 | |||||
Private Placement [Member] | Series B Preferred stock [Member] | ||||||
Number of shares issued | 266,887 | |||||
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 WARRANTS30
DERIVATIVE LIABILITY WARRANTS (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Total derivative liabilities | $ 249,807 | |
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 | 443,790 | |
Warrant [Member] | Adoption of accounting standard ASU 2017-11 [Member] | ||
Total derivative liabilities | (7,650,442) | |
Warrant [Member] | Private Placement [Member] | ||
Total derivative liabilities | 246,881 | |
Secured Convertible Notes [Member] | Warrant [Member] | ||
Total derivative liabilities | 6,554,160 | |
Equipment Financing Leases [Member] | Warrant [Member] | ||
Total derivative liabilities | $ 655,418 |
DERIVATIVE LIABILITY WARRANTS31
DERIVATIVE LIABILITY WARRANTS (Details 1) | 12 Months Ended |
Dec. 31, 2016$ / shares | |
Expected dividend yield | |
Minimum [Member] | |
Fair value of underlying stock | $ 7.63 |
Equivalent risk free interest rate | 1.27% |
Expected term (in years) | 5 years 3 months 29 days |
Equivalent stock price volatility | 37.44% |
Maximum [Member] | |
Fair value of underlying stock | $ 12.64 |
Equivalent risk free interest rate | 1.46% |
Expected term (in years) | 7 years 14 days |
Equivalent stock price volatility | 37.92% |
DERIVATIVE LIABILITY WARRANTS32
DERIVATIVE LIABILITY WARRANTS (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Total Derivative Gain | $ (43,154) | $ 26,738 | $ (46,612) | $ 50,799 |
Warrant [Member] | Bridge Financing [Member] | ||||
Total Derivative Gain | 1,258 | |||
Private Placement [Member] | Warrant [Member] | ||||
Total Derivative Gain | (42,648) | 315 | (46,067) | 577 |
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] | Warrant [Member] | ||||
Total Derivative Gain | $ (506) | $ 26,423 | $ (545) | $ 48,964 |
DERIVATIVE LIABILITY WARRANTS33
DERIVATIVE LIABILITY WARRANTS (Details Narrative) - shares | 9 Months Ended | 11 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Number of shares issued | 14,280 | 376,078 |
Warrant [Member] | ||
Number of shares issued | ||
Number of warrants cancelled | 224,897 | |
Anti-dilution features shares | 972,720 | |
Warrant [Member] | Preemptive Rights Offering [Member] | ||
Number of shares issued | 58,689 |
STOCK WARRANTS ACCOUNTED FOR 34
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number of Warrants | 1,308,617 |
Warrant [Member] | |
Date Issued | Jul. 1, 2009 |
Expiration Date | Jul. 1, 2019 |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 6,000 |
Warrant 1 [Member] | |
Date Issued | Oct. 8, 2012 |
Expiration Date | Oct. 8, 2027 |
Exercise Price | $ / shares | $ 12 |
Number of Warrants | 5,000 |
Warrant 2 [Member] | |
Expiration Date | Jan. 15, 2024 |
Exercise Price | $ / shares | $ 6.40 |
Number of Warrants | 972,720 |
Warrant 2 [Member] | Minimum [Member] | |
Date Issued | Jan. 15, 2014 |
Warrant 2 [Member] | Maximum [Member] | |
Date Issued | Dec. 31, 2014 |
Warrant 3 [Member] | |
Expiration Date | Apr. 30, 2022 |
Exercise Price | $ / shares | $ 16 |
Number of Warrants | 218,334 |
Warrant 3 [Member] | Minimum [Member] | |
Date Issued | Apr. 30, 2015 |
Warrant 3 [Member] | Maximum [Member] | |
Date Issued | May 26, 2015 |
Warrant 4 [Member] | |
Date Issued | Jun. 30, 2015 |
Expiration Date | Jun. 30, 2022 |
Exercise Price | $ / shares | $ 16 |
Number of Warrants | 6,563 |
Warrant 5 [Member] | |
Date Issued | Dec. 14, 2016 |
Expiration Date | Dec. 1, 2023 |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 50,000 |
Warrant 6 [Member] | |
Date Issued | Jul. 18, 2017 |
Expiration Date | Dec. 1, 2023 |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 25,000 |
Warrant 7 [Member] | |
Date Issued | Sep. 22, 2017 |
Expiration Date | Dec. 1, 2023 |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 25,000 |
EQUITY INCENTIVE PLAN (Details)
EQUITY INCENTIVE PLAN (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options outstanding at beginning of year | shares | 369,750 |
Changes during the year: | |
Expired | shares | (12,000) |
Cancellation of existing options | shares | (357,750) |
Issuance of replacement options | shares | 536,625 |
New Options Granted - at market price | shares | 108,000 |
Exercised | shares | |
Options outstanding at end of Period | shares | 644,625 |
Options exercisable at end of Period | shares | 322,158 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [RollForward] | |
Options outstanding at beginning of year | $ / shares | $ 11.89 |
Changes during the year: | |
Expired | $ / shares | 12 |
Cancellation of existing options | $ / shares | 12 |
Issuance of replacement options | $ / shares | 8 |
New Options Granted - at market price | $ / shares | 8 |
Exercised | $ / shares | |
Options outstanding at end of Period | $ / shares | 8 |
Options exercisable at end of Period | $ / shares | $ 8 |
EQUITY INCENTIVE PLAN (Details
EQUITY INCENTIVE PLAN (Details Narrative) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Number of option granted | shares | 108,000 |
Exercise price (in dollars per share) | $ / shares | $ 8 |
Incentive Stock Option Plan [Member] | |
Vesting percent, per year | 25.00% |
Description of vesting terms | Vesting of the options granted range from immediately to 25% per year, with most of the replacement options vesting 50% on date of grant with the remaining vesting over a 4 year period from the date issued. |
Description of vesting terms of replacement options | Vesting of the options granted range from immediately to 25% per year, with most of the replacement options vesting 50% on date of grant with the remaining vesting over a 4 year period from the date issued. |
Options expiration year | 7 years |
2007 Stock Option Plan [Member] | |
Exercise price (in dollars per share) | $ / shares | $ 8 |
Vesting period | 7 years |
Compensation cost | $ 1,015,758 |
Description of cancellation terms | Each option holder received options equal to 150% of the number of cancelled stock options. |
Compensation cost for cancelled stock options | $ 501,071 |
2007 Stock Option Plan [Member] | Stock Option [Member] | Four Diretors [Member] | |
Number of option granted | shares | 2,500 |
Description of vesting terms | The options vest ratably over a four-year period beginning on the one-year anniversary. |
Options expiration year | 7 years |
Exercise price (in dollars per share) | $ / shares | $ 8 |
Aggregate grant date fair value | $ 26,120 |
2007 Stock Option Plan [Member] | Restricted Stock [Member] | Four Diretors [Member] | |
Number of option granted | shares | 2,500 |
Description of vesting terms | Vesting at 25% or 625 shares on September 30, 2017, December 31, 2017, March 31, 2017, and June 30, 2017 was granted to each of four Board members: Steven C. Jones, Arnold Allemang, Dave Pendell, and Peifeng (Molly) Zhang. |
Compensation cost | $ 20,000 |
Aggregate grant date fair value | $ 80,000 |
2007 Stock Option Plan [Member] | Maximum [Member] | |
Maximum number of options authorized | shares | 1,200,000 |
Unvested awards, compensation cost | $ 514,687 |
Stock price | $ / shares | $ 8 |
Exercise Price | $ / shares | $ 8 |
Expected Term | 4 years 9 months 10 days |
Volatility | 36.87% |
Risk free rate | 1.83% |
2007 Stock Option Plan [Member] | Minimum [Member] | |
Expected Term | 3 years 6 months 3 days |
Volatility | 34.78% |
Risk free rate | 1.53% |
CAPITAL LEASES (Details)
CAPITAL LEASES (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Short-term portion of obligations | $ (159,628) | $ (268,667) |
Long-term portion of obligations | 31,311 | 115,106 |
Aspen Advance Opportunity Fund, LP [Member] | ||
Capital lease obligations | 214,191 | 449,368 |
Unamortized warrant discount | (23,252) | (65,595) |
Net obligations | 190,939 | 383,773 |
Short-term portion of obligations | (159,628) | (268,667) |
Long-term portion of obligations | $ 31,311 | $ 115,106 |
CUSTOMER, SUPPLIER, COUNTRY A38
CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS (Details) - Product Concentration Risk [Member] - Total Product Revenues [Member] | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |||||
Grade C-300 HP [Member] | ||||||||
Concentration of risk | [1] | [1] | 14.00% | [1] | ||||
Grade C-500 [Member] | ||||||||
Concentration of risk | 66.00% | [1] | 41.00% | [1] | ||||
Grade R-10 [Member] | ||||||||
Concentration of risk | [1] | 16.00% | [1] | 12.00% | ||||
Grade M-15 [Member] | ||||||||
Concentration of risk | [1] | 16.00% | [1] | 14.00% | ||||
[1] | Denotes less than 10% of product sales. |
CUSTOMER, SUPPLIER, COUNTRY A39
CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS (Details Narrative) - Customer | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Grants and Licensing Revenue Concentration [Member] | Total Grant Revenue [Member] | Grantor One [Member] | ||||
Concentration of risk | 100.00% | |||
Grants and Licensing Revenue Concentration [Member] | Total Grant Revenue [Member] | Grantor Two [Member] | ||||
Concentration of risk | 50.00% | |||
Grants and Licensing Revenue Concentration [Member] | Total Grant Revenue [Member] | Grantor Two [Member] | Minimum [Member] | ||||
Concentration of risk | 25.00% | 12.00% | ||
Grants and Licensing Revenue Concentration [Member] | Total Grant Revenue [Member] | Grantor Two [Member] | Maximum [Member] | ||||
Concentration of risk | 75.00% | 88.00% | ||
Customer Concentration Risk [Member] | Total Product Revenues [Member] | Customer One [Member] | ||||
Concentration of risk | 19.00% | 10.00% | 17.00% | 11.00% |
Customer Concentration Risk [Member] | Total Product Revenues [Member] | Customer Two [Member] | ||||
Concentration of risk | 65.00% | 12.00% | 36.00% | 11.00% |
Customer Concentration Risk [Member] | Total Product Revenues [Member] | Customer Three [Member] | ||||
Concentration of risk | 21.00% | |||
Customer Concentration Risk [Member] | Accounts Receivable Greater Than 10% [Member] | Customer [Member] | ||||
Number of customers | 2 | 3 | 2 | 2 |
Country Concentration Risk [Member] | Total Product Revenues [Member] | China | ||||
Concentration of risk | 19.00% | 10.00% | 17.00% | |
Country Concentration Risk [Member] | Total Product Revenues [Member] | Korea (South) | ||||
Concentration of risk | 20.00% | 30.00% | ||
Country Concentration Risk [Member] | Total Product Revenues [Member] | United Kingdom | ||||
Concentration of risk | 14.00% | 10.00% | ||
Country Concentration Risk [Member] | Total Product Revenues [Member] | Foreign [Member] | ||||
Concentration of risk | 33.00% | 54.00% | 34.00% | 66.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 11 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Mar. 18, 2013 | |
Number of shares issued | 14,280 | 376,078 | |||||
Number of option granted | 108,000 | ||||||
Exercise price (in dollars per share) | $ 8 | ||||||
Licensing Agreement [Member] | Aspen Advance Opportunity Fund, LP (AAOF) [Member] | |||||||
Lease financing | $ 1,000,000 | ||||||
Licensing Agreement [Member] | Aspen Advanced Opportunity Fund, LP ("AAOF") and XGS II, LLC ("XGS II") [Member] | Secured Convertible Notes [Member] | |||||||
Lease financing | $ 10,000,000 | ||||||
Master Leasing Agreement [Member] | Aspen Advance Opportunity Fund, LP (AAOF) [Member] | Series A Preferred stock [Member] | |||||||
Number of shares issued | 7,140 | 7,140 | 21,420 | 21,420 | |||
POSCO [Member] | Licensing Agreement [Member] | |||||||
Minimum yearly contractual obligation | $ 100,000 | $ 100,000 | $ 100,000 | ||||
Quarterly license revenue | 25,000 | 25,000 | 25,000 | ||||
Allowance contractual obligation | 175,000 | $ 175,000 | $ 175,000 | $ 150,000 | |||
Description of accrual of royalty revenue | This represents an accrual of licensing revenue of $100,000 for three and a half years less 50% to reflect an estimate of the portion of 2017, 2016, 2015, and 2014 licensing fees we believed to be not collectible. | ||||||
Michigan State University (Patents and Pending Patents) [Member] | Licensing Agreement [Member] | |||||||
Licensing expenses | $ 12,500 | $ 12,500 | $ 37,500 | $ 37,500 | |||
2007 Stock Option Plan [Member] | |||||||
Exercise price (in dollars per share) | $ 8 | ||||||
2007 Stock Option Plan [Member] | Stock Option [Member] | Four Diretors [Member] | |||||||
Number of option granted | 2,500 | ||||||
Description of vesting terms | The options vest ratably over a four-year period beginning on the one-year anniversary. | ||||||
Exercise price (in dollars per share) | $ 8 | ||||||
Options expiration year | 7 years | ||||||
2007 Stock Option Plan [Member] | Restricted Stock [Member] | Four Diretors [Member] | |||||||
Number of option granted | 2,500 | ||||||
Description of vesting terms | Vesting at 25% or 625 shares on September 30, 2017, December 31, 2017, March 31, 2017, and June 30, 2017 was granted to each of four Board members: Steven C. Jones, Arnold Allemang, Dave Pendell, and Peifeng (Molly) Zhang. |
OTHER SUBSEQUENT EVENTS (Detail
OTHER SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | 11 Months Ended | |
Nov. 13, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | |
Number of shares issued | 14,280 | 376,078 | ||
Proceeds from issuance of common stock | $ 2,140,400 | $ 3,102,032 | ||
Subsequent Event [Member] | ||||
Number of shares issued | 50,625 | |||
Proceeds from issuance of common stock | $ 405,000 |