Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 14, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | XG SCIENCES INC | |
Entity Central Index Key | 0001435375 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 333-209131 | |
Entity Incorporation, State or Country Code | MI | |
Entity's Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 4,011,943 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash | $ 1,735,721 | $ 4,703,834 |
Accounts receivable, less allowance for doubtful accounts of $26,000 at June 30, 2019 and $85,000 at December 31, 2018 | 269,539 | 859,054 |
Inventories | 965,578 | 660,217 |
Other current assets | 110,937 | 114,453 |
Total current assets | 3,081,775 | 6,337,558 |
LONG-TERM ASSETS | ||
Property, Plant and Equipment, Net | 4,123,286 | 4,223,650 |
Restricted Cash for Letter of Credit | 190,140 | |
Lease Deposit | 59,440 | 20,156 |
Intangible Assets, Net | 733,056 | 690,646 |
Right of Use Asset | 1,767,269 | |
Total Long-Term Assets | 6,683,051 | 5,124,592 |
TOTAL ASSETS | 9,764,826 | 11,462,150 |
CURRENT LIABILITIES | ||
Accounts payable | 666,718 | 1,102,910 |
Other current liabilities | 513,034 | 429,573 |
Deferred revenue | 832 | |
Current portion of long-term debt | 196,723 | |
Current portion of lease liabilities | 461,603 | 3,613 |
Total current liabilities | 1,641,355 | 1,733,651 |
LONG-TERM LIABILITIES | ||
Long-term portion of lease liabilities | 1,411,749 | 11,914 |
Long term debt | 4,323,953 | 4,725,866 |
Total long-term liabilities | 5,735,702 | 4,737,780 |
TOTAL LIABILITIES | 7,377,057 | 6,471,431 |
STOCKHOLDERS' EQUITY | ||
Series A convertible preferred stock, 3,000,000 shares authorized, 1,890,354 shares issued and outstanding, liquidation value of $22,684,248 at June 30, 2019 and December 31, 2018 | 22,307,480 | 22,307,480 |
Common stock, no par value, 25,000,000 shares authorized, 4,011,943 and 3,760,268 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 32,301,876 | 30,268,476 |
Additional paid-in capital | 8,280,579 | 8,101,923 |
Accumulated deficit | (60,502,166) | (55,687,160) |
Total stockholders' equity | 2,387,769 | 4,990,719 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 9,764,826 | $ 11,462,150 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 26,000 | $ 85,000 |
Series A convertible preferred stock, authorized | 3,000,000 | 3,000,000 |
Series A convertible Preferred stock, issued | 1,890,354 | 1,890,354 |
Series A convertible preferred stock, outstanding | 1,890,354 | 1,890,354 |
Series A convertible preferred stock liquidation value | $ 22,684,248 | $ 22,684,248 |
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized | 25,000,000 | 25,000,000 |
Common stock, issued | 4,011,943 | 3,760,268 |
Common stock, outstanding | 4,011,943 | 3,760,268 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
REVENUE | ||||
Total revenue | $ 247,069 | $ 850,854 | $ 1,104,346 | $ 1,737,191 |
COST OF GOODS SOLD | ||||
Direct costs | 196,411 | 563,260 | 877,564 | 1,031,451 |
Unallocated manufacturing expenses | 599,745 | 542,689 | 1,093,214 | 1,289,272 |
Total cost of goods sold | 796,156 | 1,105,949 | 1,970,778 | 2,320,723 |
GROSS LOSS | (549,087) | (255,095) | (866,432) | (583,532) |
OPERATING EXPENSES | ||||
Research and development | 384,767 | 287,082 | 770,013 | 564,146 |
Sales, general and administrative | 1,486,380 | 1,147,794 | 2,907,301 | 2,334,473 |
Total operating expenses | 1,871,147 | 1,434,876 | 3,677,314 | 2,898,619 |
OPERATING LOSS | (2,420,234) | (1,689,971) | (4,543,746) | (3,482,151) |
OTHER INCOME (EXPENSE) | ||||
Interest expense, net | (78,277) | (83,805) | (154,941) | (168,974) |
Government incentives, net | 3,253 | |||
Total other expense | (78,277) | (83,805) | (154,941) | (165,721) |
NET LOSS | $ (2,498,511) | $ (1,773,776) | $ (4,698,687) | $ (3,647,872) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic and diluted (in shares) | 3,990,038 | 2,644,522 | 3,883,053 | 2,549,943 |
NET LOSS PER SHARE - Basic and diluted (in dollars per share) | $ (0.63) | $ (0.67) | $ (1.21) | $ (1.43) |
Product Sales [Member] | ||||
REVENUE | ||||
Total revenue | $ 247,069 | $ 850,854 | $ 1,104,346 | $ 1,737,191 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Preferred stock A | Common Stock | Additional Paid-In Capital | Accumulated Deficit | 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 | $ 3,945,400 | 3,945,400 | |||
Stock issued for cash (in shares) | 493,175 | ||||
Stock issuance fees and expenses | $ (66,598) | (66,598) | |||
Preferred stock issued to pay capital lease obligations | $ 171,343 | 171,343 | |||
Preferred stock issued to pay capital lease obligations (in shares) | 14,280 | ||||
Stock-based compensation | $ 40,000 | 134,231 | 174,231 | ||
Net loss | (3,647,872) | (3,647,872) | |||
Balances at ending at Jun. 30, 2018 | $ 22,088,389 | $ 23,034,814 | 7,966,189 | (51,415,416) | 1,673,976 |
Balances at ending (in shares) at Jun. 30, 2018 | 1,872,096 | 2,846,525 | |||
Balances at beginning at Mar. 31, 2018 | $ 22,002,717 | $ 20,741,574 | 7,899,722 | (49,641,639) | 1,002,374 |
Balances at beginning (in shares) at Mar. 31, 2018 | 1,864,956 | 2,555,275 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock issued for cash | $ 2,330,000 | 2,330,000 | |||
Stock issued for cash (in shares) | 291,250 | ||||
Stock issuance fees and expenses | $ (56,760) | (56,760) | |||
Preferred stock issued to pay capital lease obligations | $ 85,672 | 85,672 | |||
Preferred stock issued to pay capital lease obligations (in shares) | 7,140 | ||||
Stock-based compensation | $ 20,000 | 66,467 | 86,467 | ||
Net loss | (1,773,776) | (1,773,776) | |||
Balances at ending at Jun. 30, 2018 | $ 22,088,389 | $ 23,034,814 | 7,966,189 | (51,415,416) | 1,673,976 |
Balances at ending (in shares) at Jun. 30, 2018 | 1,872,096 | 2,846,525 | |||
Balances at beginning at Dec. 31, 2018 | $ 22,307,480 | $ 30,268,476 | 8,101,923 | (55,687,160) | 4,990,719 |
Balances at beginning (in shares) at Dec. 31, 2018 | 1,890,354 | 3,760,268 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock issued for cash | $ 2,013,400 | 2,013,400 | |||
Stock issued for cash (in shares) | 251,675 | ||||
Stock issuance fees and expenses | $ (20,000) | (20,000) | |||
Transition adjustment for adoption of new lease standard | (116,319) | (116,319) | |||
Stock-based compensation | 40,000 | 178,656 | 218,656 | ||
Net loss | (4,698,687) | (4,698,687) | |||
Balances at ending at Jun. 30, 2019 | $ 22,307,480 | $ 32,301,876 | 8,280,579 | (60,502,166) | 2,387,769 |
Balances at ending (in shares) at Jun. 30, 2019 | 1,890,354 | 4,011,943 | |||
Balances at beginning at Mar. 31, 2019 | $ 22,307,480 | $ 30,682,476 | 8,190,211 | (58,003,655) | 3,176,512 |
Balances at beginning (in shares) at Mar. 31, 2019 | 1,890,354 | 3,811,518 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock issued for cash | $ 1,603,400 | 1,603,400 | |||
Stock issued for cash (in shares) | 200,425 | ||||
Stock issuance fees and expenses | $ (4,000) | (4,000) | |||
Stock-based compensation | 20,000 | 90,368 | 110,368 | ||
Net loss | (2,498,511) | (2,498,511) | |||
Balances at ending at Jun. 30, 2019 | $ 22,307,480 | $ 32,301,876 | $ 8,280,579 | $ (60,502,166) | $ 2,387,769 |
Balances at ending (in shares) at Jun. 30, 2019 | 1,890,354 | 4,011,943 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (4,698,687) | $ (3,647,872) |
Depreciation | 388,110 | 442,231 |
Amortization of intangible assets | 31,716 | 26,434 |
Provision for bad debts | 26,000 | 5,000 |
Stock-based compensation expense | 218,656 | 174,231 |
Non-cash interest expense | 39,584 | 170,311 |
Non-cash equipment rent expense | 106,164 | |
Changes in current assets and liabilities: | ||
Accounts receivable | 563,515 | (207,620) |
Inventory | (305,361) | (72,173) |
Other current and non-current assets | (46,002) | (101,249) |
Accounts payable and other liabilities | (353,563) | 755,506 |
NET CASH USED IN OPERATING ACTIVITIES | (4,136,032) | (2,349,037) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (287,746) | (1,707,364) |
Purchases of intangible assets | (74,127) | (72,731) |
NET CASH USED IN INVESTING ACTIVITIES | (361,873) | (1,780,095) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayments of capital lease obligations | (15,528) | (10,661) |
Repayments of long-term loan debt | (638,220) | |
Proceeds from issuance of common stock | 2,013,400 | 3,945,400 |
Common stock issuance fees and expenses | (20,000) | (66,598) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,339,652 | 3,868,141 |
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (3,158,253) | (260,991) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | 4,893,974 | 3,041,590 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | 1,735,721 | 2,780,599 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 64,626 | 430 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Value of preferred stock issued for AAOF capital lease obligations | $ 171,343 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2019 | |
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, 2018, as filed with the Securities and Exchange Commission (“SEC”) on Form 10-K/A on April 3, 2019. 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. 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, inventory valuations, 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. |
UPDATES TO SIGNIFICANT ACCOUNTI
UPDATES TO SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
UPDATES TO SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – UPDATES TO SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition Revenues are recognized at a point in time, typically when control of the promised goods is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. The Company does not recognize revenue in cases where collectability is not probable, and defers the recognition until collection is probable or payment is received. The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Revenue related to licensing agreements is recorded upon substantial performance of the terms of the licensing contract. In the case of licensing arrangements that involve up-front payments, revenue is recorded when management determines that the appropriate terms of the contract have been fulfilled. For example, this may occur when technology has been transferred via written documents or, if training is involved, whenever all contracted training has occurred. In the case of licenses where product delivery is also embedded in the deliverable, a portion of revenue would be recognized when products are delivered. We have also out-licensed certain intellectual property to licensees under terms and conditions of license agreements that specify the intellectual property licensed, the territory, and the type of license. In exchange for these licenses, we have recorded revenues associated with the initial granting of the license and expect to receive royalties based on sales of products produced under these licenses. License revenues are recorded to reflect our performance of requirements under these license agreements. In addition, we record royalty revenues from licensees at the time they are earned. Grant contract revenue is recognized over the life of the contracts as the services are performed or as milestones are met. Amounts received in excess of revenues earned are recorded as deferred revenue. Liquidity We have historically incurred recurring losses from operations and we may continue to generate negative cash flows as we implement our business plan. Our consolidated financial statements are prepared using GAAP as applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of August 12, 2019, we had cash on hand of $2,680,604. We believe our cash is sufficient to fund our operations through August 31, 2020 after taking into account various sources of funding and cash received from continued commercial sales transactions. Our primary means for raising funds since 2016 has been through our offering of 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”) and under a draw loan note and agreement with The Dow Chemical Company (the “Dow Facility”). On April 12, 2019, we completed the Offering, after selling 2,615,425 shares under the Registration Statement at a price of $8.00 per share for total proceeds of $20,923,400. On July 8, 2019 we borrowed $2 million under the draw loan note and agreement with The Dow Chemical Company (the “Dow Facility”). We have $3 million of proceeds from the Dow Facility available to us, which we intend to be our primary source of liquidity at this time (See Note 3). There has been no public market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not currently quoted on or traded on any exchange or on any over-the-counter market. In the event we are unable to fund our operations from existing cash on hand, operating cash flows, additional borrowings or raising equity capital, we may be forced to reduce our expenses, slow down our growth rate, or discontinue operations. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Inventory The following amounts were included in inventory at the end of the period: June 30, December 31, 2019 2018 Raw materials $ 66,395 $ 48,371 Consumables 160,630 188,764 Finished goods 738,553 423,082 Total $ 965,578 $ 660,217 Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases We adopted ASU 2016-02 as of January 1, 2019. Adoption of Lease Accounting Policy We applied ASU 2016-02 and all related amendments (“ASC 842”) using the modified retrospective method by recognizing the cumulative effect of adoption as an adjustment to the opening balance of retained earnings at January 1, 2019. Therefore, the comparative information has not been adjusted and continues to be reported under prior leasing guidance. As a result, in the first quarter of 2019 we recorded ROU assets of $1,871,366. We also recorded lease liabilities of $1,981,795. The decrease to retained earnings was $116,319, reflecting the cumulative impact of the accounting change. The standard did not have a material effect on consolidated net income or cash flows. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. As our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We do not record a ROU asset or lease liability for leases with an expected term of 12 months or less. The comparative information has not been adjusted and continues to be reported under prior leasing guidance. |
FINANCING AGREEMENTS
FINANCING AGREEMENTS | 6 Months Ended |
Jun. 30, 2019 | |
Warrants And Financing Agreements | |
FINANCING AGREEMENTS | NOTE 3 –FINANCING AGREEMENT 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. The Dow Facility is senior to our other debt and is secured by all of our assets. It matures on December 1, 2021 (subject to certain mandatory prepayments based on our equity financing activities). When we raise a cumulative amount of equity capital exceeding $15 million, we are required to prepay an amount equal to 30% of the amount raised over $15 million, but less than $25 million. We began these prepayments on equity raised as of September 10, 2018. Interest was payable beginning January 1, 2017, although we had elected, per the Dow facility, to capitalize the interest as part of the outstanding debt through January 1, 2019. Beginning April 1, 2019, current interest is payable in cash on the first day of each quarter, and accordingly, has been paid on April 1, 2019 and July 1, 2019 in the amounts of $64,626 and $59,709, respectively. 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 June 30, 2019, 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. The total debt discount on the Dow Facility was approximately $372,372. The debt discount is being amortized to interest expense using the effective interest method over the term of the loans using an average effective interest rate of 7.67%. During the six months ended June 30, 2019, we recognized $163,919 of amortization expense consisting of $124,335 interest expense and $39,584 of amortization from debt discount accretion related to the Dow Facility. We have repaid $816,710 of outstanding principal on the debt, resulting in a carrying value of $4,323,953 for the Dow Facility as of June 30, 2019. The Dow Facility entitles Dow to appoint an observer to our Board. Dow will maintain this 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. |
STOCK WARRANTS ACCOUNTED FOR AS
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS | 6 Months Ended |
Jun. 30, 2019 | |
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 June 30, 2019, which are accounted for as equity instruments, all of which are exercisable: Date Issued Expiration Date Indexed Stock Exercise Price Number of Warrants 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 Each warrant indexed to Series A Convertible Preferred Stock is currently exercisable and exchangeable into 1.875 shares of common stock. |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders Equity Deficit | |
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 4,011,943 and 3,760,268 shares were issued and outstanding as of June 30, 2019 and December 31, 2018, respectively. During the six months ended June 30, 2019 the Company issued 251,675 shares of common stock pursuant to the Offering. During the six months ended June 30, 2018 the Company issued 493,175 shares of common stock pursuant to the Offering. Upon its completion on April 12, 2019, the Company had sold 2,615,425 shares of common stock in its IPO at a price of $8.00 per share for gross proceeds of $20,923,400. Potentially dilutive securities consist of shares potentially issuable pursuant to stock options and warrants as well as shares that would result from full conversion of all outstanding convertible securities. These potentially dilutive securities were 3,013,987 and 2,903,987 as of June 30, 2019 and 2018, respectively, and are excluded from diluted net loss per share calculations because they are anti-dilutive. 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. During the period from May 17, 2016 through December 31, 2018 the Company issued shares of Series A Preferred Stock to Aspen Advanced Opportunity Fund, LP (“AAOF”) as payment for lease financing obligations under the terms of a Master Leasing Agreement. As of June 30, 2019, and December 31, 2018, the Company had 1,890,354 shares of Series A Preferred Stock issued and outstanding which is currently convertible into 3,544,414 shares of our common stock. |
EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [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 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. 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, 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 September 30, 2018 and August 10, 2017, the Company granted each Board member 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 vest ratably over a four-year period beginning on the one-year anniversary. The options had an aggregate grant date fair value of $29,580 and $26,120 on September 30, 2018 and August 10, 2017, respectively. The restricted stock issued to the Board members has an aggregate fair value of $160,000 and vest ratably in arrears over four quarters on the last day of each fiscal quarter following the grant date. As of June 30, 2019, 20,000 of the 20,000 shares of restricted stock issued had vested, resulting in compensation expense of $20,000 for the period ended June 30, 2019. During the three months ended June 30, 2019, the Company granted 20,000 employee stock options. The options were granted at a price of $8.00 per share and had an aggregate grant date fair value of $61,644. The options vest ratably over a four-year period beginning on the one-year anniversary. 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 years, Volatility: 42.71%, Risk free rate: 1.76%, Dividend rate: 0%. 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 25% per year, with most options vesting 25% per year beginning on the one-year anniversary of the grant date. The options expire seven years from the date of grant. Stock-based compensation expense was $110,368 for the three months ended June 30, 2019. As of June 30, 2019, there was approximately $632,744 in unrecognized compensation cost related to the options granted under the 2017 plan. We expect to recognize these costs over the remaining vesting terms, ranging from 3 to 4 years. A summary of the stock options available as of June 30, 2019 is as follows: Weighted Number Average Of Exercise Options Price Options outstanding at March 31, 2019 805,375 $ 8.00 Changes during the period: Expired — 8.00 New Options Granted – at market price 20,000 8.00 Options outstanding at June 30, 2019 825,375 $ 8.00 Options exercisable at June 30, 2019 384,025 $ 8.00 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2019 | |
Capital Leases of Lessee [Abstract] | |
LEASES | NOTE 7 – LEASES Right of Use Asset and Leased Liability: Estimated Lease Life – Lease term through December 2022 Right-of-use lease assets- operating as of March 31, 2019 $ 1,871,366 Less: Accumulated amortization (104,097 ) Right-of-use lease assets- operating as of June 30, 2019 $ 1,767,269 Lease liability-operating as of March 31, 2019 $ 1,981,795 Less: Accumulated Amortization (108,443 ) Lease liability operating-as of June 30, 2019 $ 1,873,352 Operating lease expense for the three months ended June 30, 2019 $ 150,557 Actual remaining lease payments $ 2,214,410 Present value of remaining payments $ 1, 873,352 Supplemental cash flow information related to leases: Leases Three months ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 154,903 Weighted average remaining lease term- operating leases (in months) 40 Weighted average discount rate- operating leases (annual) 9.98 % Maturities of leases liabilities were as follows: Year ending December 31, 2019 (excluding the three months ended June 30, 2019) $ 309,806 Year ending December 31, 2020 622,878 Year ending December 31, 2021 638,178 Year ending December 31, 2022 643,547 Total Lease payments 2,214,409 Less imputed interest (341,057 ) Total $ 1,873,352 With the exception of the standards discussed above, we believe there have been no new accounting pronouncements issued that would have a material impact, to our Consolidated Financial Statements. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8 – 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 June 30, 2019 and 2018 we recorded licensing expense of $12,500 per quarter. 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 and six months ended June 30, 2019 or the three and six months ended June 30, 2018. During the three months ended June 30, 2019 we did not issue any Series A Preferred stock. For the six months ended June 30, 2018, 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. |
UPDATES TO SIGNIFICANT ACCOUN_2
UPDATES TO SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition Revenues are recognized at a point in time, typically when control of the promised goods is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. The Company does not recognize revenue in cases where collectability is not probable, and defers the recognition until collection is probable or payment is received. The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Revenue related to licensing agreements is recorded upon substantial performance of the terms of the licensing contract. In the case of licensing arrangements that involve up-front payments, revenue is recorded when management determines that the appropriate terms of the contract have been fulfilled. For example, this may occur when technology has been transferred via written documents or, if training is involved, whenever all contracted training has occurred. In the case of licenses where product delivery is also embedded in the deliverable, a portion of revenue would be recognized when products are delivered. We have also out-licensed certain intellectual property to licensees under terms and conditions of license agreements that specify the intellectual property licensed, the territory, and the type of license. In exchange for these licenses, we have recorded revenues associated with the initial granting of the license and expect to receive royalties based on sales of products produced under these licenses. License revenues are recorded to reflect our performance of requirements under these license agreements. In addition, we record royalty revenues from licensees at the time they are earned. Grant contract revenue is recognized over the life of the contracts as the services are performed or as milestones are met. Amounts received in excess of revenues earned are recorded as deferred revenue. |
Liquidity | Liquidity We have historically incurred recurring losses from operations and we may continue to generate negative cash flows as we implement our business plan. Our consolidated financial statements are prepared using GAAP as applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of August 12, 2019, we had cash on hand of $2,680,604. We believe our cash is sufficient to fund our operations through August 31, 2020 after taking into account various sources of funding and cash received from continued commercial sales transactions. Our primary means for raising funds since 2016 has been through our offering of 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”) and under a draw loan note and agreement with The Dow Chemical Company (the “Dow Facility”). On April 12, 2019, we completed the Offering, after selling 2,615,425 shares under the Registration Statement at a price of $8.00 per share for total proceeds of $20,923,400. On July 8, 2019 we borrowed $2 million under the draw loan note and agreement with The Dow Chemical Company (the “Dow Facility”). We have $3 million of proceeds from the Dow Facility available to us, which we intend to be our primary source of liquidity at this time (See Note 3). There has been no public market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not currently quoted on or traded on any exchange or on any over-the-counter market. In the event we are unable to fund our operations from existing cash on hand, operating cash flows, additional borrowings or raising equity capital, we may be forced to reduce our expenses, slow down our growth rate, or discontinue operations. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. |
Inventory | Inventory The following amounts were included in inventory at the end of the period: June 30, December 31, 2019 2018 Raw materials $ 66,395 $ 48,371 Consumables 160,630 188,764 Finished goods 738,553 423,082 Total $ 965,578 $ 660,217 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases We adopted ASU 2016-02 as of January 1, 2019. |
Adoption of Lease Accounting Policy | Adoption of Lease Accounting Policy We applied ASU 2016-02 and all related amendments (“ASC 842”) using the modified retrospective method by recognizing the cumulative effect of adoption as an adjustment to the opening balance of retained earnings at January 1, 2019. Therefore, the comparative information has not been adjusted and continues to be reported under prior leasing guidance. As a result, in the first quarter of 2019 we recorded ROU assets of $1,871,366. We also recorded lease liabilities of $1,981,795. The decrease to retained earnings was $116,319, reflecting the cumulative impact of the accounting change. The standard did not have a material effect on consolidated net income or cash flows. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. As our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We do not record a ROU asset or lease liability for leases with an expected term of 12 months or less. The comparative information has not been adjusted and continues to be reported under prior leasing guidance. |
UPDATES TO SIGNIFICANT ACCOUN_3
UPDATES TO SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of inventory | The following amounts were included in inventory at the end of the period: June 30, December 31, 2019 2018 Raw materials $ 66,395 $ 48,371 Consumables 160,630 188,764 Finished goods 738,553 423,082 Total $ 965,578 $ 660,217 |
STOCK WARRANTS ACCOUNTED FOR _2
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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 warrants (including the warrants previously accounted for as derivatives) outstanding at June 30, 2019, which are accounted for as equity instruments, all of which are exercisable: Date Issued Expiration Date Indexed Stock Exercise Price Number of Warrants 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) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of summary of the stock option activity | A summary of the stock options available as of June 30, 2019 is as follows: Weighted Number Average Of Exercise Options Price Options outstanding at March 31, 2019 805,375 $ 8.00 Changes during the period: Expired — 8.00 New Options Granted – at market price 20,000 8.00 Options outstanding at June 30, 2019 825,375 $ 8.00 Options exercisable at June 30, 2019 384,025 $ 8.00 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Capital Leases of Lessee [Abstract] | |
Right of Use Asset and Leased Liability | Right of Use Asset and Leased Liability: Estimated Lease Life – Lease term through December 2022 Right-of-use lease assets- operating as of March 31, 2019 $ 1,871,366 Less: Accumulated amortization (104,097 ) Right-of-use lease assets- operating as of June 30, 2019 $ 1,767,269 Lease liability-operating as of March 31, 2019 $ 1,981,795 Less: Accumulated Amortization (108,443 ) Lease liability operating-as of June 30, 2019 $ 1,873,352 Operating lease expense for the three months ended June 30, 2019 $ 150,557 Actual remaining lease payments $ 2,214,410 Present value of remaining payments $ 1, 873,352 |
Schedule of Future Minimum Rental Payments | Supplemental cash flow information related to leases: Leases Three months ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 154,903 Weighted average remaining lease term- operating leases (in months) 40 Weighted average discount rate- operating leases (annual) 9.98 % Maturities of leases liabilities were as follows: Year ending December 31, 2019 (excluding the three months ended June 30, 2019) $ 309,806 Year ending December 31, 2020 622,878 Year ending December 31, 2021 638,178 Year ending December 31, 2022 643,547 Total Lease payments 2,214,409 Less imputed interest (341,057 ) Total $ 1,873,352 |
UPDATES TO SIGNIFICANT ACCOUN_4
UPDATES TO SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Raw materials | $ 66,395 | $ 48,371 |
Consumables | 160,630 | 188,764 |
Finished goods | 738,553 | 423,082 |
Total | $ 965,578 | $ 660,217 |
UPDATES TO SIGNIFICANT ACCOUN_5
UPDATES TO SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Jul. 08, 2019 | Apr. 12, 2019 | Jun. 30, 2019 | Aug. 12, 2019 | Dec. 31, 2018 |
Cash on hand | $ 1,735,721 | $ 4,703,834 | |||
Sale of common stock | 2,615,425 | ||||
Share price per share | $ 8 | $ 8 | |||
Proceeds from sale of stock | $ 20,923,400 | ||||
ROU assets | $ 1,871,366 | ||||
Lease liabilities | 1,873,352 | $ 1,981,795 | |||
Decrease in retained earnings | 116,319 | ||||
Draw Loan Note And Agreement [Member] | Senior Secured Debt Financing [Member] | |||||
Proceeds from secured debt | $ 3,000,000 | ||||
Subsequent Event [Member] | |||||
Cash on hand | $ 2,680,604 | ||||
Subsequent Event [Member] | Draw Loan Note And Agreement [Member] | |||||
Amount borrowed | $ 2,000,000 |
FINANCING AGREEMENTS (Details N
FINANCING AGREEMENTS (Details Narrative) - Senior Secured Debt Financing [Member] - Draw Loan Note And Agreement [Member] - USD ($) | Sep. 22, 2017 | Jul. 18, 2017 | Dec. 04, 2016 | Dec. 31, 2016 | Jun. 30, 2019 | Jul. 01, 2019 | Apr. 02, 2019 |
Proceeds from secured debt | $ 3,000,000 | ||||||
The Dow Chemical Company [Member] | |||||||
Face amount | $ 10,000,000 | 4,323,953 | |||||
Proceeds from secured debt | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 2,000,000 | |||
Amortization expense of debt | $ 163,919 | ||||||
Number of shares purchased (in shares) | 125,000 | ||||||
Exercise price (in dollars per share) | $ 8 | ||||||
Description of conversion terms | 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. | ||||||
Unamortized discount | $ 372,372 | ||||||
Interest rate (in percent) | 5.00% | ||||||
Maturity date | Dec. 1, 2021 | ||||||
Effective intrest rate | 7.67% | ||||||
Non-cash interest expense | $ 124,335 | ||||||
Amortization from debt discount | 39,584 | ||||||
Repayment of debt | $ 816,710 | ||||||
Equity capital description | Equity capital exceeding $15 million, we are required to prepay an amount equal to 30% of the amount raised over $15 million, but less than $25 million. | ||||||
Interest payable | $ 59,709 | $ 64,626 |
STOCK WARRANTS ACCOUNTED FOR _3
STOCK WARRANTS ACCOUNTED FOR AS EQUITY INSTRUMENTS (Details) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Number of Warrants | 1,365,737 |
Warrant [Member] | |
Date Issued | Jul. 1, 2009 |
Expiration Date | Jul. 1, 2019 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 6,000 |
Warrant 1 [Member] | |
Date Issued | Oct. 8, 2012 |
Expiration Date | Oct. 8, 2027 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 12 |
Number of Warrants | 5,000 |
Warrant 2 [Member] | |
Expiration Date | Jan. 15, 2024 |
Indexed stock | Series A Convertible Preferred |
Exercise Price | $ / shares | $ 6.40 |
Number of Warrants | 972,720 |
Warrant 3 [Member] | |
Expiration Date | Apr. 30, 2022 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 16 |
Number of Warrants | 218,334 |
Warrant 4 [Member] | |
Date Issued | Jun. 30, 2015 |
Expiration Date | Jun. 30, 2022 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 16 |
Number of Warrants | 6,563 |
Warrant 5 [Member] | |
Date Issued | Dec. 31, 2015 |
Expiration Date | Dec. 31, 2020 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 20,625 |
Warrant 6 [Member] | |
Date Issued | Mar. 31, 2016 |
Expiration Date | Mar. 31, 2021 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 10 |
Number of Warrants | 10,600 |
Warrant 7 [Member] | |
Date Issued | Apr. 30, 2016 |
Expiration Date | Apr. 30, 2021 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 10 |
Number of Warrants | 895 |
Warrant 8 [Member] | |
Date Issued | Dec. 14, 2016 |
Expiration Date | Dec. 1, 2023 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 50,000 |
Warrant 9 [Member] | |
Date Issued | Jul. 18, 2017 |
Expiration Date | Dec. 1, 2023 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 25,000 |
Warrant 10 [Member] | |
Date Issued | Sep. 22, 2017 |
Expiration Date | Dec. 1, 2023 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 25,000 |
Warrant 11 [Member] | |
Date Issued | Dec. 4, 2017 |
Expiration Date | Dec. 1, 2023 |
Indexed stock | Common |
Exercise Price | $ / shares | $ 8 |
Number of Warrants | 25,000 |
Minimum [Member] | Warrant 2 [Member] | |
Date Issued | Jan. 15, 2014 |
Minimum [Member] | Warrant 3 [Member] | |
Date Issued | Apr. 30, 2015 |
Maximum [Member] | Warrant 2 [Member] | |
Date Issued | Dec. 31, 2014 |
Maximum [Member] | Warrant 3 [Member] | |
Date Issued | May 26, 2015 |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) (Details Narrative) - USD ($) | Apr. 12, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2015 | Dec. 31, 2018 |
Common stock, authorized | 25,000,000 | 25,000,000 | |||
Common stock, issued | 4,011,943 | 3,760,268 | |||
Common stock, outstanding | 4,011,943 | 3,760,268 | |||
Number of shares issued in offering | 2,615,425 | ||||
Price per share (in dollars per share) | $ 8 | $ 8 | |||
Preferred stock, authorized | 3,000,000 | 3,000,000 | |||
Preferred stock, issued | 1,890,354 | 1,890,354 | |||
Preferred stock, outstanding | 1,890,354 | 1,890,354 | |||
Number of shares issued | 3,544,414 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,013,987 | 2,903,987 | |||
IPO [Member] | |||||
Number of shares issued in offering | 2,615,425 | 251,675 | 493,175 | ||
Price per share (in dollars per share) | $ 8 | ||||
Proceeds from issuance initial public offering | $ 20,923,400 | ||||
Series A Convertible Preferred Stock [Member] | |||||
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 | ||||
Number of shares issued | 1,456,126 |
EQUITY INCENTIVE PLAN (Details)
EQUITY INCENTIVE PLAN (Details) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options outstanding at beginning of year | shares | 805,375 |
Changes during the year: | |
Expired | shares | |
New Options Granted - at market price | shares | 20,000 |
Options outstanding at end of Period | shares | 825,375 |
Options exercisable at end of Period | shares | 384,025 |
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 | 8 |
New Options Granted - at market price | $ / shares | 8 |
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 | Sep. 30, 2018 | Jun. 24, 2017 | Jun. 30, 2019 | Jun. 30, 2019 |
Number of options granted (in shares) | 20,000 | ||||
Stock based compensation | $ 110,368 | ||||
Exercise price (in dollars per share) | $ 8 | ||||
Exercise Price (in dollars per share) | $ 8 | 8 | |||
Stock Price | $ 8 | $ 8 | |||
Expected Term | 4 years 9 months | ||||
Volatility | 42.71% | ||||
Risk free interest rate | 1.76% | ||||
Dividend rate | 0.00% | ||||
Minimum [Member] | |||||
Unrecognized compensation expense period | 3 years | ||||
Maximum [Member] | |||||
Unrecognized compensation expense period | 4 years | ||||
Stock Option [Member] | |||||
Number of options granted (in shares) | 20,000 | ||||
Exercise price (in dollars per share) | $ 8 | ||||
Description of vesting terms | The options vest ratably over a four-year period beginning on the one-year anniversary. | ||||
Aggregate grant date fair value | $ 61,644 | ||||
2007 Stock Option Plan [Member] | |||||
Stock based compensation | $ 1,015,758 | ||||
Unrecognized compensation cost | $ 632,744 | $ 632,744 | |||
Exercise price (in dollars per share) | $ 8 | ||||
Vesting period | 4 years | ||||
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 | ||||
Weighted average fair value of options granted during the year | $ 8 | ||||
Weighted average remaining contractual term (in months) | 7 years | ||||
2007 Stock Option Plan [Member] | Maximum [Member] | |||||
Number of shares awarded (in shares) | 1,200,000 | 1,200,000 | |||
Unvested awards, compensation cost | $ 514,687 | $ 514,687 | |||
2007 Stock Option Plan [Member] | Stock Option [Member] | Directors [Member] | |||||
Number of options granted (in shares) | 2,500 | ||||
Exercise price (in dollars per share) | $ 8 | ||||
Description of vesting terms | The options vest ratably over a four-year period beginning on the one-year anniversary. | ||||
Aggregate grant date fair value | $ 29,580 | ||||
2007 Stock Option Plan [Member] | Restricted Common Stock [Member] | Directors [Member] | |||||
Number of options granted (in shares) | 2,500 | ||||
Stock based compensation | $ 20,000 | ||||
Exercise price (in dollars per share) | $ 8 | ||||
Number of shares vested (in shares) | 20,000 | ||||
Description of vesting terms | The options vest ratably over a four-year period beginning on the one-year anniversary. | ||||
Aggregate grant date fair value | $ 26,120 | $ 160,000 |
LEASES (Details)
LEASES (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Capital Leases of Lessee [Abstract] | |
Right-of-use lease assets- operating at beginning | $ 1,871,366 |
Less: Accumulated amortization | (104,097) |
Right-of-use lease assets- operating at end | 1,767,269 |
Lease liability-operating at beginning | 1,981,795 |
Less: Accumulated Amortization | (108,443) |
Lease liability operating at end | 1,873,352 |
Operating lease expense | 150,557 |
Actual remaining lease payments | 2,214,410 |
Present value of remaining payments | $ 1,873,352 |
LEASES (Details 1)
LEASES (Details 1) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 154,903 |
Weighted average remaining lease term- operating leases ( in months) | 40 months |
Weighted average discount rate- operating leases (annual) | 9.98% |
Maturities of leases liabilities | |
Year ending December 31, 2019 (excluding the three months ended March 31, 2019) | $ 309,806 |
Year ending December 31, 2020 | 622,878 |
Year ending December 31, 2021 | 638,178 |
Year ending December 31, 2022 | 643,547 |
Total Lease payments | 2,214,409 |
Less imputed interest | (341,057) |
Total | $ 1,873,352 |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND COMMITMENTS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2018 | |
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 [Member] | Preferred stock (A) [Member] | |||
Number of shares issued | 0 | 7,140 |