Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 14, 2018 | |
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, 2018 | |
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 | 2,662,525 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash | $ 2,285,117 | $ 2,845,798 |
Accounts receivable, less allowance for doubtful accounts of $40,000 at March 31, 2018 and December 31, 2017 | 668,040 | 468,623 |
Inventories | 209,711 | 171,864 |
Other current assets | 91,588 | 15,781 |
Total current assets | 3,254,456 | 3,502,066 |
PROPERTY, PLANT AND EQUIPMENT, NET | 3,266,797 | 2,601,571 |
RESTRICTED CASH FOR LETTER OF CREDIT | 195,865 | 195,792 |
LEASE DEPOSIT | 20,156 | 20,156 |
INTANGIBLE ASSETS, NET | 574,579 | 571,938 |
TOTAL ASSETS | 7,311,853 | 6,891,523 |
CURRENT LIABILITIES | ||
Accounts payable and other current liabilities | 1,332,951 | 858,077 |
Deferred revenue | 189 | 7,298 |
Current portion of capital lease obligations | 91,985 | 118,553 |
Total current liabilities | 1,425,125 | 983,928 |
LONG-TERM LIABILITIES | ||
Long-term portion of capital lease obligations | 14,639 | 15,527 |
Long term debt | 4,869,714 | 4,794,596 |
Total long-term liabilities | 4,884,353 | 4,810,123 |
TOTAL LIABILITIES | 6,309,478 | 5,794,051 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, value | ||
Common stock, no par value, 25,000,000 shares authorized, 2,555,275 and 2,353,350 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 20,741,574 | 19,116,012 |
Additional paid-in capital | 7,899,722 | 7,831,958 |
Accumulated deficit | (49,641,638) | (47,767,544) |
Total stockholders' equity | 1,002,375 | 1,097,472 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 7,311,853 | 6,891,523 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, value | $ 22,002,717 | $ 21,917,046 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Allowance for doubtful accounts | $ 40,000 | $ 40,000 |
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized | 25,000,000 | 25,000,000 |
Common stock, issued | 2,555,275 | 2,353,350 |
Common stock, outstanding | 2,555,275 | 2,353,350 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, authorized | 3,000,000 | 3,000,000 |
Preferred stock, issued | 1,864,956 | 1,857,816 |
Preferred stock, outstanding | 1,864,956 | 1,857,816 |
Preferred stock, liquidation value | $ 22,379,472 | $ 22,293,792 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
REVENUE | ||
Product sales | $ 886,337 | $ 157,700 |
Grants | 99,489 | |
Licensing revenue | 25,000 | |
Total revenues | 886,337 | 282,189 |
COST OF GOODS SOLD | ||
Direct costs | 468,191 | 116,770 |
Unallocated manufacturing expenses | 746,583 | 371,150 |
Total cost of goods sold | 1,214,774 | 487,920 |
GROSS LOSS | (328,437) | (205,731) |
OPERATING EXPENSES | ||
Research and development | 277,063 | 263,564 |
Sales, general and administrative | 1,186,679 | 996,587 |
Total operating expenses | 1,463,742 | 1,260,151 |
OPERATING LOSS | (1,792,179) | (1,465,882) |
OTHER INCOME (EXPENSE) | ||
Interest expense, net | (85,169) | (59,088) |
Gain from change in fair value of derivative liability - warrants | 29,171 | |
Government incentives, net | 3,253 | (24) |
Total other expense | (81,916) | (29,941) |
NET LOSS | $ (1,874,095) | $ (1,495,823) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic and diluted (in shares) | 2,454,314 | 1,920,090 |
NET LOSS PER SHARE - Basic and diluted (in dollars per share) | $ (0.76) | $ (0.78) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (unaudited) - 3 months ended Mar. 31, 2018 - USD ($) | Preferred Stock (A) [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balances at beginning at Dec. 31, 2017 | $ 21,917,046 | $ 19,116,012 | $ 7,831,958 | $ (47,767,544) | $ 1,097,472 |
Balances at beginning (in shares) at Dec. 31, 2017 | 1,857,816 | 2,353,350 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock issued for cash | $ 1,615,400 | 1,615,400 | |||
Stock issued for cash (in shares) | 201,925 | ||||
Stock issuance fees and expenses | $ (9,838) | (9,838) | |||
Preferred stock issued to pay capital lease obligations | $ 85,671 | 85,671 | |||
Preferred stock issued to pay capital lease obligations (in shares) | 7,140 | ||||
Stock-based compensation expense | 20,000 | 67,764 | 87,764 | ||
Net loss | (1,874,095) | (1,874,095) | |||
Balances at ending at Mar. 31, 2018 | $ 22,002,717 | $ 20,741,574 | $ 7,899,722 | $ (49,641,638) | $ 1,002,375 |
Balances at ending (in shares) at Mar. 31, 2018 | 1,864,956 | 2,555,275 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (1,874,095) | $ (1,495,823) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 209,131 | 214,770 |
Amortization of intangible assets | 12,934 | 10,590 |
Stock-based compensation expense | 87,764 | 88,370 |
Non-cash interest expense | 85,973 | 59,480 |
Non-cash equipment rent expense | 53,082 | |
Gain from change in fair value of derivative liability - warrants | (29,171) | |
Changes in current assets and liabilities: | ||
Accounts receivable | (199,417) | 14,680 |
Inventory | (37,847) | 8,229 |
Other current and non-current assets | (75,881) | 103,558 |
Accounts payable and other liabilities | 467,765 | 17,576 |
NET CASH USED IN OPERATING ACTIVITIES | (1,270,591) | (1,007,741) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (874,357) | (203,664) |
Purchases of intangible assets | (15,574) | (37,769) |
NET CASH USED IN INVESTING ACTIVITIES | (889,931) | (241,433) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayments of capital lease obligations | (5,721) | (4,875) |
Proceeds from issuance of common stock | 1,615,400 | 771,800 |
Common stock issuance fees and expenses | (9,838) | (154,413) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,599,841 | 612,512 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (560,681) | (636,662) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2,845,798 | 1,785,343 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 2,285,117 | 1,148,681 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 220 | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING: | ||
Value of preferred stock issued for AAOF capital lease obligations | 85,671 | 85,672 |
Reclassification of derivative liability warrants to equity - ASU 2017-11 (see note 2) | $ 125,481 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2018 | |
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, 2017, as filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on April 2, 2018. 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, 2018 | |
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. We filed a Registration Statement on Form S-1 (File No. 333-209131) with the SEC on April 11, 2016 which was declared effective by the SEC on April 13, 2016 (as amended, the “Registration Statement”). The Registration Statement registered up to 3,000,000 shares of common stock at a fixed price of $8.00 per share to the general public in a self-underwritten offering (the “Offering” or our “IPO”). Post-Effective Amendment No. 1 to the Registration Statement was declared effective August 26, 2016, Post-Effective Amendment No. 2 was declared effective August 31, 2016, Post-Effective Amendment No. 3 was declared effective January 17, 2017, and Post-Effective Amendments No. 4 and No. 5 were dated April 12, 2017. Post-Effective Amendment No. 5 was 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. As of May 14, 2018, we had drawn $5.0 million under the Dow Facility. The remaining $5 million will become available to us once we have raised $10 million of equity capital after October 31, 2016. As of May 14, 2018, we have sold 1,276,007 shares of common stock pursuant to our IPO at a price of $8.00 per share for gross proceeds of $10,208,056. However, only $7,007,024 of this amount has been raised during the measurement period beginning November 1, 2016. Thus, we still need to raise $2,992,976 of additional equity capital prior to the remaining $5.0 million under the Dow Facility becoming available to us. As of May 14, 2018, we had cash on hand of $1,660,600. We believe our cash from increasing commercial sales activity and various financing sources will fund our operations for at least the next 12 months. We intend that the primary means for raising funds will be through our IPO and the additional $5 million of proceeds from the Dow Facility that becomes available to us after we have raised another $3 million of equity capital as noted above; however, we can make no assurances that we will raise such equity capital and be able to access the additional $5 million under the Dow Facility. Taking into account our current cash position as noted above, an additional $3 million in proceeds from our IPO, which would allow us to draw up to $5 million from the Dow Facility, we believe that we can fund our operations including planned capital expenditures for at least the next 12 months. In addition, two of our shareholders have committed to provide up to $4.5 million in funding for the twelve-month period ended March 31, 2019 to the extent the Company is unable to raise such funds from other third parties. 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, and 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, work-in-process and finished goods, all of which are stated at the lower of cost or market. Cost is determined on a first in, first out basis. The following amounts were included in inventory at the end of the period: March 31, December 31, 2018 2017 Raw materials $ 79,581 $ 39,841 Finished goods 130,130 132,023 Total $ 209,711 $ 171,864 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 issued did not meet the conditions for equity classification at inception and were classified as derivative instrument liabilities measured at fair value. 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”). This update changes the classification analysis of certain equity-linked financial instruments with down-round features. We elected to early adopt ASU 2017-11 at September 30, 2017 by applying the standard retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the Company’s beginning accumulated deficit as of January 1, 2017. There were 972,720, warrants indexed to Series A Preferred Stock which were originally recorded as derivative liabilities because of their anti-dilution features. We chose to early adopt ASU 2017-11 because it permitted these warrants to be recorded as equity rather than derivative liabilities. The impact to the financial statements for the three months ended March 31, 2017 is as follows: For three months ended March 31, 2017 As previously As reported Adjusted Operating loss $ (1,465,882 ) $ (1,465,882 ) Other income (expense): Incentive refund and interest income 368 368 Interest expense, net (59,480 ) (59,480 ) Gain from change in fair value of derivative warrants 154,652 29,171 Total other income (expense) 95,540 (29,941 ) Net loss $ (1,370,342 ) $ (1,495,823 ) Fair Value Measurements The Company utilizes a valuation hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques related to its financial assets and financial liabilities in accordance to Accounting Standards Codification (“ASC”) Topic 820 Fair Value Measurements and Disclosures. For financial instruments such as cash, accounts payable and other current liabilities, the Company considers the recorded value of such financial instruments approximate to the current fair value because of their short-term nature. Recent Accounting Pronouncements ASU No. 2014-09 (ASC 606), Revenue from Contracts with Customers became effective for us beginning with the first quarter of 2018, and we adopted the new accounting standard using the modified retrospective transition approach. The modified retrospective transition approach recognized any changes from the beginning of the year of initial application through retained earnings with no restatement of comparative periods. We will record revenue under ASC 606 at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current business processes, policies, systems and controls to support recognition and disclosure under the new standard. Based on the results of the evaluation, we have determined that the adoption of the new standard presents no material impact on our consolidated financial statements. Application of the transition requirements of the new standard did not have a material impact on opening retained earnings. |
WARRANTS AND FINANCING AGREEMEN
WARRANTS AND FINANCING AGREEMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
WARRANTS AND FINANCING AGREEMENTS | Dow Facility 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, September 22, 2017 and December 4, 2017, respectively. An additional $5 million becomes available once we have raised $10 million of equity capital after October 31, 2016; however, we can make no assurances that we will raise such equity capital and be able to access the additional $5 million under the Dow Facility. As of May 14, 2018, we have sold 1,276,007 shares of common stock pursuant to our IPO at a price of $8.00 per share for gross proceeds of $10,208,056. However, only $7,007,024 of this amount has been raised during the measurement period beginning November 1, 2016. Thus, we still need to raise $2,992,976 of equity capital prior to the remaining $5.0 million under the Dow Facility becoming available to us. 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 Aspen Advanced Opportunity Fund, LP (“AAOF”). The loan matures on 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 is subject to adjustment if we sell shares of common stock at a lower price. As of March 31, 2018, we had issued 125,000 warrants to Dow, which are exercisable on or before the expiration date of December 1, 2023. The aforementioned 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 fiscal year ended December 31, 2017, we recognized amortization expense of $161,702, and the resulting carrying value of the Dow Facility on our balance sheet as of December 31, 2017 was $4,794,596. During the three months ended March 31, 2018, we recognized amortization expense of $75,118, and the resulting carrying value of the Dow Facility on our balance sheet as of March 31, 2018 was $4,869,714. |
STOCK WARRANTS ACCOUNTED FOR AS
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS | NOTE 4 – STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS The following table summarizes the warrants (including the warrants previously accounted for as derivatives) outstanding at March 31, 2018, which are accounted for as equity instruments, all of which are exercisable: Date Issued Expiration Date Indexed Exercise Price Number of 07/01/2009 07/01/2019 Common $ 8.00 6,000 10/08/2012 10/08/2027 Common $ 12.00 5,000 01/15/2014 – 12/31/2014 01/15/2024 Series A Convertible Preferred $ 6.40 972,720 04/30/2015- 05/26/2015 04/30/2022 Common $ 16.00 218,334 06/30/2015 06/30/2022 Common $ 16.00 6,563 12/31/2015 12/31/2020 Common $ 8.00 20,625 03/31/2016 03/31/2021 Common $ 10.00 10,600 04/30/2016 04/30/2021 Common $ 10.00 895 12/14/2016 12/01/2023 Common $ 8.00 50,000 07/18/2017 12/01/2023 Common $ 8.00 25,000 09/22/2017 12/01/2023 Common $ 8.00 25,000 12/04/2017 12/01/2023 Common $ 8.00 25,000 1,365,737 The warrants indexed to Series A Convertible Preferred Stock are currently exercisable and are exchangeable into 1.875 shares of common stock. |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY (DEFICIT) | NOTE 5 — STOCKHOLDERS’ EQUITY (DEFICIT) Common Stock The Company is authorized to issue 25,000,000 shares of common stock, no par value per share of which 2,555,275 and 2,353,350 shares were issued and outstanding as of March 31, 2018 and December 31, 2017, respectively. During the three months ended March 31, 2018, the Company issued 201,925 shares of common stock pursuant to the Offering. As of May 14, 2018, the Company has sold 1,276,007 shares of common stock in its IPO at a price of $8.00 per share for gross proceeds of $10,208,056. Series A Convertible Preferred Stock The Company is authorized to issue up to 3,000,000 shares of Series A Convertible Preferred Stock (the “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. However, the Series A Preferred is not subject to the mandatory conversion until all outstanding convertible securities are also converted into common stock. The Series A 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 A Preferred and pari passu with the Company’s Series B Preferred Stock. The Company issued 1,456,126 shares of Series A Preferred in connection with the conversion of certain convertible notes on December 31, 2015. In December 2015, the conversion price of the Series A Preferred was reduced from $12.00 to $6.40 (80% of $8.00), and thus, each share of Series A Preferred Stock is convertible into 1.875 shares of common stock. As of March 31, 2018, and December 31, 2017, the Company had 1,864,956 and 1,857,816 shares of Series A Preferred Stock issued and outstanding, respectively. Series B Convertible Preferred Stock As of March 31, 2018, and December 31, 2017, 1,500,000 shares have been designated as Series B Convertible Preferred Stock (“Series B Preferred”), of which no shares were issued and outstanding. Each share of the Series B Preferred, which has a liquidation preference of $16.00 per share, is convertible at any time, at the option of the holder, into one share of common stock at $16.00 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. |
EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY INCENTIVE PLAN | NOTE 6 – 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 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 replaced the 2007 Plan and authorizes us to grant awards (stock options and restricted stock) up to a maximum of 1,200,000 shares of our common stock. On July 24, 2017, certain stock options from the 2007 Plan were cancelled and replacement stock options were awarded. The replacement stock option awards have an exercise price of $8.00 per share and a seven-year term. Fifty percent of such awards vested on the date of grant with the remaining vesting over a 4-year period, subject to certain other terms. Each option holder received options equal to 150% of the number of cancelled stock options. On August 10, 2017, the Company granted stock options and restricted stock to each of its Board members as part of its Board compensation package. Each of the 4 independent Board members received 2,500 stock options and 2,500 shares of restricted stock for 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 has an aggregate fair value of $80,000 and vest ratably in arrears over four quarters on the last day of each fiscal quarter following the grant date. As of March 31, 2018, 7,500 shares of restricted stock had vested, resulting in total compensation expense of $60,000. A summary of the stock option activity for the three months ended March 31, 2018 is as follows: Weighted Number Average Of Exercise Options Price Options outstanding at December 31, 2017 677,125 $ 8.00 Changes during the period: Expired — — New Options Granted – at market price 10,000 8.00 Exercised — — Options outstanding at March 31, 2018 687,125 $ 8.00 Options exercisable at March 31, 2018 337,158 $ 8.00 All options granted thus far under the 2017 Plan have an exercise price of $8.00 per share and vesting of the options ranges from immediate to 20% per year, with most options vesting on a straight-line basis over a four-year period from the date of grant. The options expire in seven years from the date of grant. During the three months ended March 31, 2018, the Company granted 10,000 employee stock options with an aggregate grant date fair value of $28,755. The fair value of the options granted was estimated on the date of grant using the Black Scholes option-pricing model using the following assumptions: Stock price: $8.00, Exercise Price: $8.00, Expected Term: 4.75, Volatility: 37.34%, Risk free rate: 2.65%, Dividend rate: 0%. As of March 31, 2018, 687,125 stock options and 10,000 shares of restricted stock awards were outstanding under our 2017 Plan. Stock-based compensation expense was $87,764 and $88,370 for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018 there was approximately $895,00 in unrecognized compensation cost related to the options granted under the 2017 plan. |
CAPITAL LEASES
CAPITAL LEASES | 3 Months Ended |
Mar. 31, 2018 | |
Capital Leases of Lessee [Abstract] | |
CAPITAL LEASES | NOTE 7 – CAPITAL LEASES As of March 31, 2018, and December 31, 2017, we have capital lease obligations as follows: March 31, 2018 December 31, 2017 Capital lease obligations $ 114,970 $ 149,120 Unamortized warrant discount (8,346 ) (15,040 ) Net obligations 106,624 134,080 Short-term portion of obligations (91,985 ) (118,553 ) Long-term portion of obligations $ 14,639 $ 15,527 |
CUSTOMER, SUPPLIER, COUNTRY AND
CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS | 3 Months Ended |
Mar. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS | NOTE 8 — Customer, Supplier, country, and Product Concentrations Grants and Licensing Revenue Concentration There was no licensing or grant revenue to report during the first quarter of 2018. Two grantors accounted for 94% and 6% respectively of total grant revenue reported during the first quarter of 2017. The company’s licensing revenue in the first quarter of 2017 came from one licensor. Product Concentration During the first quarter of 2018 and 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 Customer Concentration During the first quarter of 2018, we had one customer whose purchases accounted for 83% of total product revenues. During the first quarter of 2017 we had two customers that represented 29% and 22 % of total product revenues. At March 31, 2018 and 2017, there were two customers who each had an accounts receivable balance greater than 10% of our total outstanding receivable balance. Country Concentration We sell our products on a worldwide basis. Revenue derived from customers outside of the U.S. during the first quarter of 2018 was 3% as compared with 40% during the first quarter of 2017. All of these sales are denominated in U.S. dollars. As of March 31, 2018, there were no foreign countries with greater than 10% of product revenue. During the quarter ended March 31, 2017, two countries, the United Kingdom and South Korea accounted for approximately 24% and 16%, 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 purchases from any suppliers that were greater than 10% of total purchases during the quarters ended March 31, 2018 and 2017. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 - RELATED PARTY TRANSACTIONS We have a licensing agreement for exclusive use of patents and pending patents with Michigan State University (“MSU”), a shareholder of the Company via the MSU Foundation. We incurred $12,500 of licensing expense in each of the three month periods ended March 31, 2018 and 2017. 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, 2018. For the three months ended March 31, 2017, $25,000 of royalty revenue was recorded from POSCO, a shareholder. During each of the three months ended March 31, 2018 and 2017 we issued 7,140 shares 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS During the period from April 1 through May 14, 2018, we received common stock proceeds of $858,000 for the sale of 107,250 shares of common stock in our IPO. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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. We filed a Registration Statement on Form S-1 (File No. 333-209131) with the SEC on April 11, 2016 which was declared effective by the SEC on April 13, 2016 (as amended, the “Registration Statement”). The Registration Statement registered up to 3,000,000 shares of common stock at a fixed price of $8.00 per share to the general public in a self-underwritten offering (the “Offering” or our “IPO”). Post-Effective Amendment No. 1 to the Registration Statement was declared effective August 26, 2016, Post-Effective Amendment No. 2 was declared effective August 31, 2016, Post-Effective Amendment No. 3 was declared effective January 17, 2017, and Post-Effective Amendments No. 4 and No. 5 were dated April 12, 2017. Post-Effective Amendment No. 5 was 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. As of May 14, 2018, we had drawn $5.0 million under the Dow Facility. The remaining $5 million will become available to us once we have raised $10 million of equity capital after October 31, 2016. As of May 14, 2018, we have sold 1,276,007 shares of common stock pursuant to our IPO at a price of $8.00 per share for gross proceeds of $10,208,056. However, only $7,007,024 of this amount has been raised during the measurement period beginning November 1, 2016. Thus, we still need to raise $2,992,976 of additional equity capital prior to the remaining $5.0 million under the Dow Facility becoming available to us. As of May 14, 2018, we had cash on hand of $1,660,600. We believe our cash from increasing commercial sales activity and various financing sources will fund our operations for at least the next 12 months. We intend that the primary means for raising funds will be through our IPO and the additional $5 million of proceeds from the Dow Facility that becomes available to us after we have raised another $3 million of equity capital as noted above; however, we can make no assurances that we will raise such equity capital and be able to access the additional $5 million under the Dow Facility. Taking into account our current cash position as noted above, an additional $3 million in proceeds from our IPO, which would allow us to draw up to $5 million from the Dow Facility, we believe that we can fund our operations including planned capital expenditures for at least the next 12 months. In addition, two of our shareholders have committed to provide up to $4.5 million in funding for the twelve-month period ended March 31, 2019 to the extent the Company is unable to raise such funds from other third parties. 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, and 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, work-in-process and finished goods, all of which are stated at the lower of cost or market. Cost is determined on a first in, first out basis. The following amounts were included in inventory at the end of the period: March 31, December 31, 2018 2017 Raw materials $ 79,581 $ 39,841 Finished goods 130,130 132,023 Total $ 209,711 $ 171,864 |
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 issued did not meet the conditions for equity classification at inception and were classified as derivative instrument liabilities measured at fair value. 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”). This update changes the classification analysis of certain equity-linked financial instruments with down-round features. We elected to early adopt ASU 2017-11 at September 30, 2017 by applying the standard retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the Company’s beginning accumulated deficit as of January 1, 2017. There were 972,720, warrants indexed to Series A Preferred Stock which were originally recorded as derivative liabilities because of their anti-dilution features. We chose to early adopt ASU 2017-11 because it permitted these warrants to be recorded as equity rather than derivative liabilities. The impact to the financial statements for the three months ended March 31, 2017 is as follows: For three months ended March 31, 2017 As previously As reported Adjusted Operating loss $ (1,465,882 ) $ (1,465,882 ) Other income (expense): Incentive refund and interest income 368 368 Interest expense, net (59,480 ) (59,480 ) Gain from change in fair value of derivative warrants 154,652 29,171 Total other income (expense) 95,540 (29,941 ) Net loss $ (1,370,342 ) $ (1,495,823 ) |
Fair Value Measurements | Fair Value Measurements The Company utilizes a valuation hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques related to its financial assets and financial liabilities in accordance to Accounting Standards Codification (“ASC”) Topic 820 Fair Value Measurements and Disclosures. For financial instruments such as cash, accounts payable and other current liabilities, the Company considers the recorded value of such financial instruments approximate to the current fair value because of their short-term nature. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements ASU No. 2014-09 (ASC 606), Revenue from Contracts with Customers became effective for us beginning with the first quarter of 2018, and we adopted the new accounting standard using the modified retrospective transition approach. The modified retrospective transition approach recognized any changes from the beginning of the year of initial application through retained earnings with no restatement of comparative periods. We will record revenue under ASC 606 at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current business processes, policies, systems and controls to support recognition and disclosure under the new standard. Based on the results of the evaluation, we have determined that the adoption of the new standard presents no material impact on our consolidated financial statements. Application of the transition requirements of the new standard did not have a material impact on opening retained earnings. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of inventory | The following amounts were included in inventory at the end of the period: March 31, December 31, 2018 2017 Raw materials $ 79,581 $ 39,841 Finished goods 130,130 132,023 Total $ 209,711 $ 171,864 |
Schedule of financial statements | The impact to the financial statements for the three months ended March 31, 2017 is as follows: For three months ended March 31, 2017 As previously As reported Adjusted Operating loss $ (1,465,882 ) $ (1,465,882 ) Other income (expense): Incentive refund and interest income 368 368 Interest expense, net (59,480 ) (59,480 ) Gain from change in fair value of derivative warrants 154,652 29,171 Total other income (expense) 95,540 (29,941 ) Net loss $ (1,370,342 ) $ (1,495,823 ) |
STOCK WARRANTS ACCOUNTED FOR 19
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of common stock warrants (including the warrants previously accounted for as derivatives) outstanding | The following table summarizes the warrants (including the warrants previously accounted for as derivatives) outstanding at March 31, 2018, which are accounted for as equity instruments, all of which are exercisable: Date Issued Expiration Date Indexed Exercise Price Number of 07/01/2009 07/01/2019 Common $ 8.00 6,000 10/08/2012 10/08/2027 Common $ 12.00 5,000 01/15/2014 – 12/31/2014 01/15/2024 Series A Convertible Preferred $ 6.40 972,720 04/30/2015- 05/26/2015 04/30/2022 Common $ 16.00 218,334 06/30/2015 06/30/2022 Common $ 16.00 6,563 12/31/2015 12/31/2020 Common $ 8.00 20,625 03/31/2016 03/31/2021 Common $ 10.00 10,600 04/30/2016 04/30/2021 Common $ 10.00 895 12/14/2016 12/01/2023 Common $ 8.00 50,000 07/18/2017 12/01/2023 Common $ 8.00 25,000 09/22/2017 12/01/2023 Common $ 8.00 25,000 12/04/2017 12/01/2023 Common $ 8.00 25,000 1,365,737 |
EQUITY INCENTIVE PLAN (Tables)
EQUITY INCENTIVE PLAN (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of summary of the stock option activity | A summary of the stock option activity for the three months ended March 31, 2018 is as follows: Weighted Number Average Of Exercise Options Price Options outstanding at December 31, 2017 677,125 $ 8.00 Changes during the period: Expired — — New Options Granted – at market price 10,000 8.00 Exercised — — Options outstanding at March 31, 2018 687,125 $ 8.00 Options exercisable at March 31, 2018 337,158 $ 8.00 |
CAPITAL LEASES (Tables)
CAPITAL LEASES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Capital Leases of Lessee [Abstract] | |
Schedule of capital lease obligations | As of March 31, 2018, and December 31, 2017, we have capital lease obligations as follows: March 31, 2018 December 31, 2017 Capital lease obligations $ 114,970 $ 149,120 Unamortized warrant discount (8,346 ) (15,040 ) Net obligations 106,624 134,080 Short-term portion of obligations (91,985 ) (118,553 ) Long-term portion of obligations $ 14,639 $ 15,527 |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Raw materials | $ 79,581 | $ 39,841 |
Finished goods | 130,130 | 132,023 |
Total | $ 209,711 | $ 171,864 |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating loss | $ (1,792,179) | $ (1,465,882) |
Other income (expense): | ||
Incentive refund and interest income | 3,253 | (24) |
Interest expense, net | (85,169) | (59,088) |
Gain from change in fair value of derivative warrants | 29,171 | |
Total other income (expense) | (81,916) | (29,941) |
Net loss | $ (1,874,095) | (1,495,823) |
Scenario, Previously Reported [Member] | ||
Operating loss | (1,465,882) | |
Other income (expense): | ||
Incentive refund and interest income | 368 | |
Interest expense, net | (59,480) | |
Gain from change in fair value of derivative warrants | 154,652 | |
Total other income (expense) | 95,540 | |
Net loss | (1,370,342) | |
As Adjusted [Member] | ||
Operating loss | (1,465,882) | |
Other income (expense): | ||
Incentive refund and interest income | 368 | |
Interest expense, net | (59,480) | |
Gain from change in fair value of derivative warrants | 29,171 | |
Total other income (expense) | (29,941) | |
Net loss | $ (1,495,823) |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | May 14, 2018 | Apr. 13, 2016 | Dec. 31, 2016 | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 |
Cash on hand | $ 1,785,343 | $ 2,285,117 | $ 2,845,798 | $ 1,148,681 | ||
Proceeds from capital contribution | 4,500,000 | |||||
Series A Preferred stock [Member] | ||||||
Derivative liability | 972,720 | |||||
Subsequent Event [Member] | ||||||
Cash on hand | $ 1,660,600 | |||||
The Dow Chemical Company [Member] | ||||||
Equity capital raise amount | $ 5,000,000 | |||||
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. | |||||
Draw Loan Note And Agreement [Member] | Senior Secured Debt Financing [Member] | The Dow Chemical Company [Member] | ||||||
Face amount | $ 10,000,000 | $ 4,869,714 | $ 4,794,596 | |||
Interest rate (in percent) | 5.00% | |||||
Equity capital raise amount | $ 7,007,024 | $ 2,992,976 | ||||
Description of raising fund | The remaining $5 million will become available to us once we have raised $10 million of equity capital after October 31, 2016. | |||||
Draw Loan Note And Agreement [Member] | Senior Secured Debt Financing [Member] | The Dow Chemical Company [Member] | Subsequent Event [Member] | ||||||
Equity capital raise amount | $ 5,000,000 | |||||
IPO [Member] | ||||||
Number of shares issued in offering | 3,000,000 | 201,925 | ||||
Price per share (in dollars per share) | $ 8 | |||||
IPO [Member] | Subsequent Event [Member] | ||||||
Number of shares issued in offering | 1,276,007 | |||||
Price per share (in dollars per share) | $ 8 | |||||
Gross proceeds from issued in offering | $ 10,208,056 |
WARRANTS AND FINANCING AGREEM25
WARRANTS AND FINANCING AGREEMENTS (Details Narrative) - USD ($) | May 14, 2018 | Dec. 04, 2017 | Sep. 22, 2017 | Jul. 18, 2017 | Apr. 13, 2016 | Dec. 31, 2016 | Mar. 31, 2018 | Dec. 31, 2017 |
IPO [Member] | ||||||||
Number of shares issued in offering | 3,000,000 | 201,925 | ||||||
Price per share (in dollars per share) | $ 8 | |||||||
Subsequent Event [Member] | IPO [Member] | ||||||||
Number of shares issued in offering | 1,276,007 | |||||||
Price per share (in dollars per share) | $ 8 | |||||||
Proceeds from issuance initial public offering | $ 10,208,056 | |||||||
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. | |||||||
Equity capital raise amount | $ 5,000,000 | |||||||
Draw Loan Note And Agreement [Member] | Senior Secured Debt Financing [Member] | The Dow Chemical Company [Member] | ||||||||
Face amount | $ 10,000,000 | 4,869,714 | $ 4,794,596 | |||||
Proceeds from secured debt | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 2,000,000 | ||||
Amortization expense of debt | $ 75,118 | $ 161,702 | ||||||
Description of raising fund | The remaining $5 million will become available to us once we have raised $10 million of equity capital after October 31, 2016. | |||||||
Number of shares purchased (in shares) | 125,000 | |||||||
Description of conversion terms | 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. | |||||||
Interest rate (in percent) | 5.00% | |||||||
Maturity date | Dec. 1, 2021 | |||||||
Equity capital raise amount | $ 7,007,024 | $ 2,992,976 | ||||||
Draw Loan Note And Agreement [Member] | Senior Secured Debt Financing [Member] | The Dow Chemical Company [Member] | Subsequent Event [Member] | ||||||||
Equity capital raise amount | $ 5,000,000 |
STOCK WARRANTS ACCOUNTED FOR 26
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS (Details) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Number of Warrants | 1,365,737 |
Warrant [Member] | |
Date Issued | Jul. 1, 2009 |
Expiration Date | Jul. 1, 2019 |
Exercise Price | $ / shares | $ 8 |
Indexed stock | Common |
Number of Warrants | 6,000 |
Warrant 1 [Member] | |
Date Issued | Oct. 8, 2012 |
Expiration Date | Oct. 8, 2027 |
Exercise Price | $ / shares | $ 12 |
Indexed stock | Common |
Number of Warrants | 5,000 |
Warrant 2 [Member] | |
Expiration Date | Jan. 15, 2024 |
Exercise Price | $ / shares | $ 6.40 |
Indexed stock | Series A Convertible Preferred |
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 |
Indexed stock | Common |
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 |
Indexed stock | Common |
Number of Warrants | 6,563 |
Warrant 5 [Member] | |
Date Issued | Dec. 31, 2015 |
Expiration Date | Dec. 31, 2020 |
Exercise Price | $ / shares | $ 8 |
Indexed stock | Common |
Number of Warrants | 20,625 |
Warrant 6 [Member] | |
Date Issued | Mar. 31, 2016 |
Expiration Date | Mar. 31, 2021 |
Exercise Price | $ / shares | $ 10 |
Indexed stock | Common |
Number of Warrants | 10,600 |
Warrant 7 [Member] | |
Date Issued | Apr. 30, 2016 |
Expiration Date | Apr. 30, 2021 |
Exercise Price | $ / shares | $ 10 |
Indexed stock | Common |
Number of Warrants | 895 |
Warrant 8 [Member] | |
Date Issued | Dec. 14, 2016 |
Expiration Date | Dec. 1, 2023 |
Exercise Price | $ / shares | $ 8 |
Indexed stock | Common |
Number of Warrants | 50,000 |
Warrant 9 [Member] | |
Date Issued | Jul. 18, 2017 |
Expiration Date | Dec. 1, 2023 |
Exercise Price | $ / shares | $ 8 |
Indexed stock | Common |
Number of Warrants | 25,000 |
Warrant 10 [Member] | |
Date Issued | Sep. 22, 2017 |
Expiration Date | Dec. 1, 2023 |
Exercise Price | $ / shares | $ 8 |
Indexed stock | Common |
Number of Warrants | 25,000 |
Warrant 11 [Member] | |
Date Issued | Dec. 4, 2017 |
Expiration Date | Dec. 1, 2023 |
Exercise Price | $ / shares | $ 8 |
Indexed stock | Common |
Number of Warrants | 25,000 |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) (Details Narrative) - USD ($) | May 14, 2018 | Apr. 13, 2016 | Mar. 31, 2018 | Dec. 31, 2015 | Dec. 31, 2017 |
Common stock, authorized | 25,000,000 | 25,000,000 | |||
Common stock, issued | 2,555,275 | 2,353,350 | |||
Common stock, outstanding | 2,555,275 | 2,353,350 | |||
IPO [Member] | |||||
Number of shares issued in offering | 3,000,000 | 201,925 | |||
Price per share (in dollars per share) | $ 8 | ||||
IPO [Member] | Subsequent Event [Member] | |||||
Number of shares issued in offering | 1,276,007 | ||||
Price per share (in dollars per share) | $ 8 | ||||
Proceeds from issuance initial public offering | $ 10,208,056 | ||||
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. | Series A Preferred was reduced from $12.00 to $6.40 (80% of $8.00), and thus, each share of Series A Preferred Stock is convertible into 1.875 shares of common stock. | |||
Conversion price (in dollars per share) | $ 12 | ||||
Reduction in share price (in dollars per share) | $ 6.40 | ||||
Exercise price (in dollars per share) | $ 8 | ||||
Preferred stock, issued | 1,864,956 | 1,857,816 | |||
Preferred stock, outstanding | 1,864,956 | 1,857,816 | |||
Number of shares issued | 1,456,126 | ||||
Series A Convertible Preferred Stock [Member] | Aspen Advance Opportunity Fund, LP [Member] | Master Leasing Agreement [Member] | |||||
Number of shares issued | 7,140 | ||||
Preferred stock (B) [Member] | |||||
Preferred stock, authorized | 1,500,000 | 1,500,000 | |||
Liquidation (in dollars per share) | $ 16 | ||||
Conversion price (in dollars per share) | $ 16 | ||||
Preferred stock, issued | 0 | 0 | |||
Preferred stock, outstanding | 0 | 0 |
EQUITY INCENTIVE PLAN (Details)
EQUITY INCENTIVE PLAN (Details) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options outstanding at beginning of year | shares | 677,125 |
Changes during the year: | |
Expired | shares | |
New Options Granted - at market price | shares | 10,000 |
Exercised | shares | |
Options outstanding at end of Period | shares | 687,125 |
Options exercisable at end of Period | shares | 337,158 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [RollForward] | |
Options outstanding at beginning of year | $ / shares | $ 8 |
Changes during the year: | |
Expired | $ / shares | |
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) - USD ($) | Aug. 10, 2017 | Jul. 24, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Number of option granted | 10,000 | ||||
Exercise price (in dollars per share) | $ 8 | ||||
Stock-based compensation expense | $ 87,764 | $ 88,370 | |||
Proceeds from option granted | $ 28,755 | ||||
Number of option outstanding | 687,125 | 677,125 | |||
Incentive Stock Option Plan [Member] | |||||
Vesting percent, per year | 20.00% | ||||
Description of vesting terms | V esting of the options ranges from immediate to 20% per year, with most options vesting on a straight-line basis over a four-year period from the date of grant. | ||||
Description of vesting terms of replacement options | V esting of the options ranges from immediate to 20% per year, with most options vesting on a straight-line basis over a four-year period from the date of grant. | ||||
Options expiration year | 7 years | ||||
2007 Stock Option Plan [Member] | |||||
Unrecognized compensation cost | $ 89,500 | ||||
Description of vesting terms | Fifty percent of such awards vested on the date of grant with the remaining vesting over a 4-year period | ||||
Exercise price (in dollars per share) | $ 8 | ||||
Vesting period | 7 years | ||||
Description of cancellation terms | Each option holder received options equal to 150% of the number of cancelled stock options. | ||||
Stock price | $ 8 | ||||
Exercise Price | $ 8 | ||||
Expected Term | 4 years 9 months | ||||
Dividend rate | 0.00% | ||||
Volatility | 37.34% | ||||
Risk free rate | 2.65% | ||||
2007 Stock Option Plan [Member] | Restricted Stock [Member] | |||||
Number of option outstanding | 10,000 | ||||
2007 Stock Option Plan [Member] | Restricted Stock [Member] | Four Diretors [Member] | |||||
Number of option granted | 2,500 | ||||
Compensation cost | $ 60,000 | ||||
Aggregate grant date fair value | $ 80,000 | ||||
Number of shares vested (in shares) | 7,500 | ||||
2007 Stock Option Plan [Member] | Stock Option [Member] | |||||
Number of option outstanding | 687,125 | ||||
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 | ||||
Aggregate grant date fair value | $ 26,120 | ||||
2007 Stock Option Plan [Member] | Maximum [Member] | |||||
Maximum number of options authorized | 1,200,000 |
CAPITAL LEASES (Details)
CAPITAL LEASES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Capital Leases of Lessee [Abstract] | ||
Capital lease obligations | $ 114,970 | $ 149,120 |
Unamortized warrant discount | (8,346) | (15,040) |
Net obligations | 106,624 | 134,080 |
Short-term portion of obligations | (91,985) | (118,553) |
Long-term portion of obligations | $ 14,639 | $ 15,527 |
CUSTOMER, SUPPLIER, COUNTRY A31
CUSTOMER, SUPPLIER, COUNTRY AND PRODUCT CONCENTRATIONS (Details Narrative) - Customer | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Customer Concentration Risk [Member] | Accounts Receivable Greater Than 10% [Member] | Customer [Member] | ||
Number of customers | 2 | |
Customer Concentration Risk [Member] | Total Product Revenues [Member] | Customer One [Member] | ||
Concentration of risk | 83.00% | 29.00% |
Customer Concentration Risk [Member] | Total Product Revenues [Member] | Customer Two [Member] | ||
Concentration of risk | 22.00% | |
Product Concentration Risk [Member] | Total Product Revenues [Member] | Product One [Member] | ||
Concentration of risk | 83.00% | 29.00% |
Description of product | Graphene nanoplatelets materials, Grade C 500 m2/g | |
Grants and Licensing Revenue Concentration [Member] | Total Grant Revenue [Member] | Grantor One [Member] | ||
Concentration of risk | 94.00% | |
Grants and Licensing Revenue Concentration [Member] | Total Grant Revenue [Member] | Grantor Two [Member] | ||
Concentration of risk | 6.00% | |
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), Won | ||
Concentration of risk | 16.00% | |
Country Concentration Risk [Member] | Total Product Revenues [Member] | Foreign [Member] | ||
Concentration of risk | 3.00% | 40.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
POSCO [Member] | ||
Royalty revenue | $ 25,000 | |
Licensing Agreement [Member] | Michigan State University (Patents and Pending Patents) [Member] | ||
Licensing expenses | $ 12,500 | $ 12,500 |
Master Leasing Agreement [Member] | Aspen Advance Opportunity Fund, LP (AAOF) [Member] | Series A Preferred stock [Member] | ||
Number of shares issued | 7,140 | 7,140 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
May 14, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | |
Proceeds from issuance of common stock | $ 1,615,400 | $ 771,800 | |
Subsequent Event [Member] | |||
Number of shares issued | 107,250 | ||
Proceeds from issuance of common stock | $ 858,000 |