10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 000-51474

Protea Biosciences Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-2903252
(State or other jurisdiction	(I.R.S Employer Identification No.)
Of incorporation)

1311 Pineview Drive, Suite 501

Morgantown, West Virginia 26505

(Address of principal executive offices, including zip code)

(304) 292-2226

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨     (Do not check if a smaller reporting company)	Smaller reporting company x
	Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes þ No

As of August 17, 2017, the number of shares of the registrant’s classes of Common Stock issued and outstanding was 397,066,287. In addition, the registrant is obligated to issue an additional 1,567,653 shares of Common Stock under anti-dilution provisions of various outstanding securities.

PROTEA BIOSCIENCES GROUP, INC.

INDEX

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements:
	Consolidated Balance Sheets – June 30, 2017 and December 31, 2016	3
	Consolidated Statements of Operations and Comprehensive Loss – Three and six months ended June 30, 2017 and June 30, 2016	4
	Consolidated Statements of Stockholders’ Deficit – June 30, 2017 and December 31, 2016	5
	Consolidated Statements of Cash Flows – Six months ended June 30, 2017 and June 30, 2016	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

2

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

PROTEA BIOSCIENCES GROUP, INC.

Consolidated Balance Sheets

	June 30, 2017			December 31, 2016
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	82,652		$	78,720
Accounts receivable, less allowance for doubtful accounts of $3,000 and $7,000 as of June 30, 2017 and December 31, 2016, respectively		202,540			436,933
Inventory		38,281			92,244
Prepaid expenses		176,975			121,027
Total current assets		500,448			728,924
Property and equipment, net		2,305,745			2,466,125
Deposits and other noncurrent assets		19,166			19,041
Total Assets	$	2,825,359		$	3,214,090
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Current maturities on short and long-term debt, net of discount	$	4,496,239		$	4,012,149
Accounts payable		1,143,007			1,796,416
Bank line of credit		3,000,000			3,000,000
Obligations to stockholders, net of discount		1,662,144			3,087,956
Derivative liabilities		1,752,222			3,097,921
Other current liabilities		801,643			556,047
Total current liabilities		12,855,255			15,550,489
Long-term debt, net of current maturities		1,776,185			1,769,355
Stockholders’ Deficit
Preferred stock ($0.0001 par value; 10,000,000 shares authorized; none issued or outstanding as of June 30, 2017 and December 31, 2016)		–			–
Common stock ($0.0001 par value; 750,000,000   shares authorized; 394,538,316 and 162,471,373 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively)		39,454			16,247
Additional paid-in capital		94,765,824			81,123,483
Accumulated deficit		(106,611,507	)		(95,245,530	)
Accumulated other comprehensive income		148			46
Total Stockholders’ Deficit		(11,806,081	)		(14,105,754	)
Total Liabilities and Stockholders’ Deficit	$	2,825,359		$	3,214,090

See accompanying Notes to Consolidated Financial Statements.

3

PROTEA BIOSCIENCES GROUP, INC.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Gross revenue	$	328,092		$	581,764		$	682,928		$	1,057,102
Cost of revenue		(389,518	)		(489,605	)		(676,914	)		(693,980	)
Gross profit		(61,426	)		92,159			6,014			363,122
Selling, general and administrative expenses		(1,110,475	)		(1,388,139	)		(2,607,781	)		(2,992,542	)
Research and development expenses		(198,551	)		(139,502	)		(327,491	)		(372,112	)
Loss from operations		(1,370,452	)		(1,435,482	)		(2,929,258	)		(3,001,532	)
Other income (expense)
Gains from sales of investment		85,355			675,000			85,355			1,312,100
Gain (loss) on disposal of assets		(58,544	)		(329	)		(73,931	)		(511	)
Gain from insurance recovery		–			45,952			–			45,952
Interest expense		(1,191,154	)		(373,345	)		(1,651,472	)		(523,674	)
Exchange conversion costs		(8,138,109	)		–			(8,143,109	)		–
Change in fair value of derivative liabilities		5,171,902			(719,349	)		1,345,699			(726,817	)
Other income (expense)		(346	)		(45	)		739			1,341
Total other income (expense)		(4,130,896	)		(372,116	)		(8,436,719	)		108,391
Loss before income taxes		(5,501,348	)		(1,807,598	)		(11,365,977	)		(2,893,141	)
Provision for income taxes		–			–			–			–
Net loss		(5,501,348	)		(1,807,598	)		(11,365,977	)		(2,893,141	)
Foreign currency translation adjustment		47			(272	)		102			(224	)
Total comprehensive loss	$	(5,501,301	)	$	(1,807,870	)	$	(11,365,875	)	$	(2,893,365	)
Weighted average number of shares of Common stock outstanding – basic and diluted		305,163,939			133,687,552			237,439,183			133,494,583
Net loss per share – basic and diluted	$	(0.02	)	$	(0.01	)	$	(0.05	)	$	(0.02	)

See accompanying Notes to Consolidated Financial Statements.

4

PROTEA BIOSCIENCES GROUP, INC. 

Consolidated Statements of Stockholders’ Deficit

(Unaudited)

															Accumulated
	Preferred stock				Common stock										other		Total
	par value $0.0001				par value $0.0001				Additional			Accumulated			comprehensive		Stockholders’
	Shares		Amount		Shares		Amount		paid-in capital			deficit			income (loss)		Deficit
December 31, 2016		–	$	–		162,471,373	$	16,247	$	81,123,483		$	(95,245,530	)	$	46	$	(14,105,754	)
Issuance of common stock, net issuance costs of $133,742		–		–		9,173,330		917		553,341			–			–		554,258
Issuance of stock per exchange offers, net of issuance costs of $4,150		–		–		103,508,126		10,351		7,748,609			–			–		7,758,960
Issuance of stock for services		–		–		5,416,667		542		355,808			–			–		356,350
Issuance of stock for short-term convertible note		–		–		5,000,000		500		374,500			–			–		375,000
Issuance of stock upon conversion of related party debt		–		–		36,520,495		3,652		2,735,385			–			–		2,739,037
Issuance of stock under anti-dilution provision		–		–		72,448,325		7,245		(7,245	)		–			–		–
Stock warrants issued for services and debt		–		–		–		–		1,757,067			–			–		1,757,067
Stock-based compensation expense		–		–		–		–		124,876			–			–		124,876
Net loss		–		–		–		–		–			(11,365,977	)				(11,365,977	)
Foreign currency translation adjustment		–		–		–		–		–			–			102		102
June 30, 2017						394,538,316		39,454		94,765,824			(106,611,507	)		148		(11,806,081	)

See accompanying Notes to Consolidated Financial Statements.

5

PROTEA BIOSCIENCES GROUP, INC.

Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net loss	$	(11,365,977	)	$	(2,893,141	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		306,359			319,128
Stock-based compensation		124,876			122,223
Issuance of common stock and warrants for services		2,113,417			75,000
Issuance of preferred and common stock for accrued interest		–			–
Accretion of original issue discount on short-term convertible notes		42,563			145,681
Accretion of warrants and debt issue costs on short-term convertible notes		(578,947	)		105,255
Exchange conversion costs		8,143,109			–
(Gains) losses from disposal of assets		101,477			511
Gains from sales of investment		(85,355	)		(1,312,100	)
Gain from insurance recovery		–			(45,952	)
Bad debt expense		–			–
Expense from the change in fair value of derivative liabilities		(1,345,699	)		726,817
Net changes in certain assets and liabilities:
Accounts receivable		234,393			(179,258	)
Prepaid expenses		(55,948	)		(23,816	)
Inventory		900			521
Other noncurrent assets		(125	)		–
Accounts payable		(349,120	)		(39,164	)
Other current liabilities		443,528			157,604
Net cash used in operating activities		(2,270,549	)		(2,840,691	)
Cash flows from investing activities:
Purchase of and deposits on equipment		(69,890	)		(7,817	)
Proceeds from sale of equipment		–			75
Proceeds from sale of investment		85,355			1,312,100
Proceeds from insurance recovery		–			45,952
Net cash provided by investing activities		15,465			1,350,310
Cash flows from financing activities:
Proceeds from advances from stockholders		1,424,148			176,375
Payments on advances from stockholders		(6,200	)		(74,376	)
Proceeds from issuances of debt		1,000,000			2,060,000
Payments of debt issuance costs		–			(302,707	)
Payments on debt		(501,577	)		(7,783	)
Payments on capital leases		(206,715	)		(193,349	)
Payment on loan modification fee		(5,000	)		–
Proceeds from sale of common stock, net		554,258			–
Net cash provided by financing activities		2,258,914			1,658,160
Effect of exchange rate changes on cash		102			(224	)
Net increase (decrease) in cash		3,932			167,555
Cash, beginning of period		78,720			6,450
Cash, end of period	$	82,652		$	174,005

See Accompanying Notes to Consolidated Financial Statements.

6

PROTEA BIOSCIENCE GROUP, INC.

Notes to Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2017 and 2016

(Unaudited)

1. Description of Business and Basis of Presentation

The Company

Protea Biosciences Group, Inc. (referred to herein as “Protea,” “the Company,” “we,” “us” and “our”) is an emerging growth, molecular information company that has developed a revolutionary platform technology that enables the direct analysis, mapping and display of biologically active molecules in living cells and tissue samples. The technology platform offers new, unprecedented capabilities useful to the pharmaceutical, diagnostic, clinical research, agricultural and life science industries. “Molecular information” refers to the generation and bioinformatic processing of very large data sets, known as “big data,” obtained by applying the Company’s technology to identify and characterize the proteins, metabolites, lipids and other molecules which are the biologically active molecular products of all living cells and life forms.

Our technology is used to improve pharmaceutical development and life science research productivity and outcomes, and to extend and add value to other technologies that are used in research and development, such as three-dimensional tissue models, biomarker discovery, synthetic biologicals and mass spectrometry. In particular, the Company believes that its ability to rapidly provide comprehensive molecular image-based datasets addresses a universal need of the pharmaceutical, diagnostic and clinical research and life science industries.

The Company’s commercial development is centered on three lines of business:

· Molecular information services – We believe that we are the commercial leader in providing multi-modal Mass Spectrometry Imaging (“MSI”), combining Laser Ablation Electrospray Ionization (“LAESI®”), Matrix Assisted Laser Desorption Ionization (“MALDI”) and optical microscopy. Our proprietary services enable the identification and quantitation of both small molecules (e.g., lipids and metabolites) and large molecules (e.g., proteins) and our services portfolio, inclusive of MSI, proteomics, metabolomics, lipidomics and bioinformatics is unique in the industry. Our clients include major pharmaceutical, chemical and biotechnology companies;

· LAESI® instrument platform – We offer our proprietary LAESI® DP-1000 instrument, software and bioanalytical consumables to corporate and academic research laboratories; and

· Molecular diagnostics and clinical research – We apply our multi-modal MSI technologies and workflows in partnership with top-tier medical research institutions to co-develop new molecular diagnostic tests that the company believes can be used to improve the diagnosis and prognosis of cancer and provide requisite information useful in predicting the outcome of cancer treatment. Our current test development programs target the differential diagnosis and prognosis of malignant melanoma and the molecular profiling of subpopulations of cells in lung adenocarcinoma.

Basis of Presentation

The unaudited consolidated financial statements (the “Consolidated Financial Statements”) include the accounts of Protea Biosciences Group, Inc. and its wholly-owned subsidiary, Protea Biosciences, Inc. In the opinion of management, these statements have been prepared on a basis consistent with the December 31, 2016 audited Consolidated Financial Statements and include all material adjustments, consisting of normal recurring adjustments and the elimination of material intercompany transactions and balances, necessary for a fair presentation of the Company’s consolidated financial position and results of operations for the interim periods presented. These unaudited, interim, Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include certain information and footnotes normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements.

The consolidated results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results of operations for the full fiscal year. These Consolidated Financial Statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on April 14, 2017 (the “2016 Form 10-K”).

7

Emerging Growth Company

The Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections 14A(a) and (b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to hold a nonbinding advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved.

The Company has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our consolidated financial statements may not be comparable to companies that are required to comply with revised dates.

We will remain an “emerging growth company” for up to five years following our initial public offering, that is, until February 2019, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our common stock held by non-affiliates exceeds $700 million as of any period ending June 30.

To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange Act, even after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosure requirements, and; (3) the requirement to provide only two years of audited financial statements instead of three years of audited financial statements in our annual report.

Critical Accounting Policies

Information with respect to the Company’s critical accounting policies which management believes are the most important to the portrayal of the Company’s reported results of operations and financial condition and that require management’s most difficult, subjective or complex judgements, often as the result of the need to make estimates about the effects of matters that are inherently uncertain, is contained in Part II, Item 7, of our 2016 Form 10-K.

Recently Issued Accounting Pronouncements

There were no changes, except as described below to the recently issued accounting pronouncements as described in the consolidated financial statements included in our 2016 Form 10-K.

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815). Part I of this Update addresses the complexity of accounting for certain financial instruments with down-round features. The amendments sin Part I of this update change the classification analysis of certain equity-lined financial instruments (or embedded features) with down-round features. When determining whether certain financial instruments should be classified as liability or equity instruments, a down-round feature no longer precludes equity classification when assessing wither the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. For public business entities, the amendments in Part I for this update are effective for fiscal years and interim periods with those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes the interim period. The Company is evaluating the impact of the revised guidance and believes that this will have a significant impact on its consolidated financial statements.

Going Concern

The Company’s Consolidated Financial Statements included in this report have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has funded its activities to date almost exclusively from debt and equity financings as well as sales of certain assets. Substantially all of the Company’s property and equipment are security for outstanding indebtedness. We will continue to require substantial funds to support our molecular information services business and advance global commercialization of our LAESI® instrument platform and service outstanding debt obligations, including scheduled interest and principal payments, and fulfilling payment obligations related to debt that has reached maturity.

The Company has experienced negative cash flows from operations since inception. Since inception, our operations have been funded primarily through proceeds received from the issuance of debt, the sale of equity securities in private placement offerings and from time-to-time, sales of certain assets. Management intends to continue to meet the Company’s operating cash flow requirements by raising additional funds from the sale of equity or debt securities, the sale of certain assets, and possibly through developing corporate development partnerships to advance our molecular information technology development activities by sharing the costs of development and commercialization. For example, we could also enter into a transaction such as a merger with a business that is complimentary to ours.

8

We have also worked closely with various parties that financed our short- and long-term debt to obtain extensions and modifications that deferred or reduced amounts due under these obligations. Such extensions and modifications have included, in certain cases, the issuance of warrants. In addition, two members of the Company’s Board of Directors and the estate of two former board members guarantee payment of the Company’s outstanding bank line of credit. Such extensions, modifications and guarantees have been an important part of the Company’s ability to manage its liquidity and short-term capital resources. In addition, as part of these efforts, the Company has delayed payments to certain vendors and suppliers. As of June 30, 2017, the Company’s accounts payable balance of $1,143,007 included $1,112,900 that was overdue by its terms, $988,985 of which that was more than 90 days past due. Included in the $988,985 balance are amounts the Company owes for lab supplies, temporary employees, legal fees, interest payments and consulting. In April 2017, we received $500,000 in working capital from the loan of $1,750,000 from Summit Resources, Inc. (the “Summit Resources Loan”), one of our principal stockholders and an affiliate of Steve Antoline, one of our directors that was executed on April 7, 2017, see Note 12 Debt for more information. In June 2017, we received a original issue discount note (or OID Note) of $1,000,000 with a face value of $1,200,000, see Note 12 Debt for more information. The Company is in arrears on scheduled interest and principal payments on certain other debt obligations, as discussed in more detail Note 12 Debt. There can be no assurances that the Company will be able to continue to obtain such extensions and modifications to outstanding debt, delay certain payments or use other methods such as guarantees by or advances from stockholders, when and if necessary, to ensure the Company has the liquidity and capital resources necessary to fund future operations and to continue as a going concern.

The bank line of credit has been presented as a currently liability as the Company was in arrears with its interest at June 30, 2017. The line of credit of $3,000,000 has a due date of July 2018. See Note 9 Bank Line of Credit for more details.

As of the date of this report, the Company is in default on three (3) short-term convertible notes with the principal amount totaling $337,969. The Company is working on an agreement with the holders of certain short-term convertible notes exchanged in September through November 2016 (the “Exchange Notes”) to extend the maturity date to September 30, 2017. The Exchange Notes shall have a principal amount totaling $2,384,222, which represents the Original Principal Amount plus accrued interest of 10% per annum for each of the Exchange Notes. In addition, the notes shall extend the maturity dates under the Exchange Notes to September 30, 2017. As mentioned above, one element of the Company’s strategy to manage its liquidity and capital resources and otherwise continue as a going concern is to obtain extensions and modifications to outstanding debt.

During the six months ended June 30, 2017, the Company’s debt obligation to stockholders decreased by $2,646,719 due to the Company issuing 36,520,494 shares of its Common Stock and warrants to purchase an aggregate of 73,040,988 shares of Common Stock as part of the Company’s “Insider Debt Conversion Agreement.” In June 2017, the Class A and Class B warrants that had been issued with the same terms as the 2016/17 Offering, were exchanged for 54,880,744 shares of Common Stock. See Note 10 Obligations to Shareholders and Note 13 Common Stock for additional information about these transactions.

In the first quarter of 2017, the Company issued 9,173,332 shares of its Common Stock and warrants to purchase an aggregate of 18,346,662 shares of Common Stock resulting in gross proceeds of $688,000 associated with the 2016-17 Offering. See Note 13 Common Stock and Note 15 Warrants for additional information about these transactions.

We have sold most our investment in AzurRx BioPharma, Inc. (“AzurRx”) as a means of obtaining additional cash in prior periods. As of June 30, 2017, our ownership interest in AzurRx was 1.36% on a fully-diluted basis. As of the date of this report, the Company holds 100,757 shares of AzurRx common stock, 100,000 of which is subject to an option agreement under which a counterparty, who is the CEO of AzurRx and a former board of director of the Company, has an option to purchase these shares from the Company for $1.00 per share from January 4, 2016 through January 4, 2021. In May 2017, as a means of obtaining additional cash, the Company sold 25,000 shares of its AzurRx common stock for $85,355 on the open market.

Certain of the Company’s outstanding financial instruments contain anti-dilution provisions that may be triggered by the issuance of Common Stock or financial instruments such as Preferred Stock and warrants that are convertible or otherwise exchangeable for shares of the Company’s Common Stock. As a result of the 2016/17 Offering anti-dilution provisions under certain outstanding financial instruments have been triggered and 72,448,325 shares of Common Stock were issued to the 2013 investors with anti-dilutuion protection. Under such provisions the Company shall issue 1,567,653 shares of Common Stock to the 2015 investors with anti-dilution protection. The amount of anti-dilution shares relating to this trigger results in significant dilution to investors without such protection. See Note 4 Fair Value of Financial Assets and Liabilities – Derivative Financial Instruments for additional information. See also Note 3 Derivative Liabilities for additional information related to the estimated fair value of the anti-dilution provisions included in the Company’s financial instruments that were outstanding as of June 30, 2017.

Aside from further issuances of its Common Stock, the Company is exploring other options for obtaining additional financial resources such as the issuances of short-term debentures and Preferred Stock.

There can be no assurance that we will be successful in raising enough funds to sustain operations.

Since inception, we have been successful in raising funds and selling certain assets to fund our operations and believe that we will be successful in obtaining the necessary capital resources to fund our operations going forward; however, there can be no assurances that we will be able to secure any additional funding or capital resources or the terms and conditions of any such arrangements. These factors raise substantial doubt about our ability to continue as a going-concern.

The accompanying Consolidated Financial Statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

9

2. Gross Revenue

The Company recognizes revenue from three major components: molecular information services, LAESI® instrument platform and research products.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Molecular information services	$	256,947	$	494,821	$	514,700	$	711,873
LAESI® instrument platform		24,361		7,126		31,243		186,921
Research products		46,784		79,817		136,985		158,308
Gross revenue	$	328,092	$	581,764	$	682,928	$	1,057,102

3. Derivative Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. However, the Company has certain financial instruments that are embedded derivatives associated with certain capital raises and common stock purchase warrants. The Company evaluates all of its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with FASB Accounting Standards Codification 815-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. If the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either income or expense. Upon conversion or exercise, the derivative liability is marked to fair value at the conversion date and then the related fair value is reclassified to equity. See also Note 4 Fair Value of Financial Assets and Liabilities – Derivative Financial Instruments.

4. Fair Value of Financial Assets and Liabilities – Derivative Financial Instruments

We measure the fair value of financial assets and liabilities in accordance with GAAP, which defines fair value, establishes a framework for measuring fair value and requires certain disclosures about fair value measurements.

GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The three levels of inputs used to measure fair value:

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example, the probability of a capital raise in a “binomial” methodology for valuation of a derivative liability directly related to the issuance of common stock warrants)

The Company has entered into certain financial instruments, such as convertible debentures and equity financing arrangements, which include variable conversion rates, include anti-dilution provisions (“down-round protection”) and detachable warrants that are: (i) not afforded equity classification; (ii) embody risks not clearly and closely related to host contracts, or; (iii) may be net-cash settled by the counterparty. Such derivative liabilities are recorded at fair value at the issuance date. Subsequent changes in fair value are recorded through the consolidated statement of comprehensive loss. For the Company, the Level 3 financial liability is the derivative liabilities related to certain Common Stock and warrants that include “down-round protection” that are valued using the “Monte Carlo Simulation” technique. While the majority of inputs are Level 2, this technique necessarily incorporates a capital raise assumption which is unobservable and, therefore, a Level 3 input.

As of June 30, 2017, a range of key quantitative assumptions related to the Common Stock and warrants that include “down round protection” are as follows:

	Expected life  (years)		Risk-free rate	Volatility		Probability of a  capital raise
Derivative liabilities		0.25 – 4.75	1.03% and 1.31 %		86.55%		100%

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

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The Company’s derivative liabilities are related to certain Common Stock issuances that included “down-round protection”, warrants issued in conjunction with certain Common Stock and debt issuances, including warrants granted to the Placement Agent related to such issuances, that included “down-round protection”, and the variable conversion rate feature of certain short-term convertible debentures. See also Note 12 Debt, Note 13 Common Stock, and Note 15 Warrants.

The derivative liabilities measured at fair value on a recurring basis are summarized below:

	Fair value measurements as of June 30, 2017
	Carrying value		Level 1		Level 2		Level 3
Derivative liabilities – Common Stock	$	524,736	$	–	$	–	$	524,736
Derivative liabilities – Warrants		670,752		–		–		670,752
Derivative liabilities – Convertible debentures		556,734		–		–		556,734
Total	$	1,752,222	$	–	$	–	$	1,752,222

	Fair value measurements as of December 31, 2016
	Carrying value		Level 1		Level 2		Level 3
Derivative liabilities – Common Stock	$	2,016,370	$	–	$	–	$	2,016,370
Derivative liabilities – Warrants		854,553		–		–		854,553
Derivative liabilities – Convertible debentures		226,998		–		–		226,998
Total	$	3,097,921	$	–	$	–	$	3,097,921

The Company’s assessment of the probability of future capital raises is considered to be high. Such capital raise activities are estimated to take place at levels that could possibly result in anti-dilution triggers—currently at $0.075 per share, based on the 2016/17 Offering unit sales of Common Shares—especially considering the current market price for the Company’s Common Stock (which currently trades at $0.07 per share). The assumptions used for estimating future capital raises could be materially different from the actual results. Any such differences could materially impact the derivative liabilities and have a materially adverse effect on the Company’s results of operations and financial condition in the near term.

As a result of the 2016/17 Offering unit share issuances, anti-dilution provisions under certain outstanding financial instruments have been triggered, which was considered in the assumptions for future capital raise activities at June 30, 2017.

The table below provides a summary of the changes in fair value of the derivative liabilities measured at fair value on a recurring basis:

	Six Months Ended June 30, 2017
									Total fair value
	Derivative liabilities								measurements
	Common						Convertible		using Level 3
	stock			Warrants			debt		inputs
Balance as of December 31, 2016	$	2,016,370		$	854,553		$	226,998	$	3,097,921
Unrealized gain on derivative liabilities from the conversion of certain instruments of June 30, 2017		(1,491,634	)		(1,447,002	)				(2,938,636	)
Fair value of variable conversion rate for convertible debentures issued in 2017								329,736		329,736
Fair value of derivative liabilities associated with other financial instruments issued in 2017					1,263,201					1,263,201
Balance as of June 30, 2017	$	524,736		$	670,752		$	556,734	$	1,752,222

5. Net Loss per Share

Basic and diluted loss per common share is computed based on the weighted average number of shares of Common Stock outstanding, or 305,163,939 and 237,439,183 for the three and six months ended June 30, 2017, respectively; for the comparative periods in 2016, weighted average number of shares of Common Stock outstanding was 133,687,522 and 133,494,583, respectively. Common share equivalents (which may consist of stock options, warrants and convertible debt) are excluded from the computation of diluted loss per share for all periods presented because including them would be anti-dilutive. Common share equivalents that could potentially dilute basic earnings per share in the future, and which were excluded from the computation of diluted loss per share, were 261,188,100 and 103,624,925 shares as of June 30, 2017 and June 30, 2016, respectively.

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6. Inventory

Inventory represents finished goods and work in progress. Finished goods and work in progress consist primarily of specifically identifiable items that are valued at the lower of cost or fair market value using the first-in, first-out (FIFO) method. Inventory consists of the following at:

	June 30, 2017		December 31, 2016
Finished goods	$	9,564	$	8,725
Work-in progress		28,717		83,519
Total inventory	$	38,281	$	92,244

7. Property and Equipment

Property and equipment and leasehold improvements are capitalized at cost and depreciated using the straight-line method (however, the Company used the double-declining balance method for property and equipment placed in service prior to January 2011) over estimated lives as follows:

Equipment	5 – 10 years
Vehicles	5 years
Leasehold improvements	Life of lease
Software	3 years

Property and equipment consists of the following:

	June 30, 2017			December 31, 2016
Lab equipment	$	5,775,541		$	5,698,009
Computer equipment		538,705			552,423
Office equipment		191,248			191,248
Leasehold improvements		212,730			212,730
		6,718,224			6,654,410
Accumulated depreciation		(4,412,479	)		(4,188,285	)
Property and equipment, net	$	2,305,745		$	2,466,125

For the three and six months ended June 30, 2017, depreciation expense was $149,015 and $306,359, respectively. For the three and six months ended June 30, 2016, depreciation expense was $160,135 and $319,128, respectively.

8. Trade Accounts Receivable and Other Noncurrent Assets

Trade accounts receivable, net, includes a bad debt allowance of $3,000 and $7,000 for June 30, 2017 and December 31, 2016, respectively.

Other noncurrent assets consisted of deposits totaling $19,166 of June 30, 2017 and $19,041 December 31, 2016.

9. Bank Line of Credit

The Company has a line of credit with United Bank (the “Bank”) that is authorized to $3,000,000. The interest rate is variable and equal to 0.75% plus prime with a minimum rate of 5.87% per annum. This line of credit is subject to an annual review and certain covenants. Borrowings under the line of credit are secured by the personal guarantee of two board members and the estate of two former board members. On June 20, 2016, the Company and the Bank entered into an agreement that established July 12, 2018 as the maturity date for the outstanding balance of the line of credit, which was $3,000,000 as of June 30, 2017 and December 31, 2016.

The Company’s line of credit with the Bank requires the Company to adhere to certain customary covenants. For example, the bank can issue a default notice to the Company and accelerate payment of the outstanding balance if the Company fails to make a scheduled interest payment to the Bank, is in default under any agreement with a third party which materially and adversely affects the Company’s property, operations or financial condition, or the Company does not make timely payments on property that is useful its business, including maintenance and repairs of such property.

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As of the date of this report, the Company is one month in arrears with scheduled payments to the Bank. The Bank has not issued any notice to the Company regarding any default or possible default under the line of credit; however, this has caused the Company to classify the line of credit as a current liability.

10. Obligations to Stockholders

During the six months ended June 30, 2017, the Company received advances equal to an aggregate of 1,424,148 from various directors and current stockholders of the Company increasing the advance obligation to $1,942,185 including promissory notes, less a discount of $280,042. The advances have no terms of repayment and do not bear interest. Certain Stockholders have converted some of their 2017 advances into Common Stock and warrants. See below.

During 2014, the Company received advances equal to an aggregate of $1,415,000 from Summit Resources Inc. (“Summit). In exchange for a portion of the advances received, the Company entered into Note and Warrant Purchase Agreements and issued (a) one-year promissory notes bearing simple interest at the rate of 10% per annum to Summit in an aggregate principal amount of $1,415,000 and (b) five-year warrants to purchase up to 1,415,000 shares of Common Stock at an exercise price of $0.80 per share. On June 3, 2014, the Board approved an increase in the total offering amount of the promissory notes issuable to $1,500,000 from $900,000. The fair value of these warrants was estimated to be $101,177, which was recorded as a discount to the promissory note, and will be accreted based on the repayment of the obligation. The Company repaid $250,000 as of December 31, 2014. Accretion expense of $10,950 was recognized during the year ended December 31, 2014. On March 20, 2015, the Company converted the $165,000 of outstanding principal and unpaid accrued interest of $105,078, and issued Summit 1,080,312 shares of Common Stock at a conversion price of $0.25 per share and as an inducement to convert, warrants in aggregate of 540,156 to purchase shares of Common Stock at an exercise price of $0.50 per share. The Company recognized accretion expense of $7,227 during the three months ended March 31, 2015. In addition, the Company recognized debt conversion inducement costs related to the fair value of the warrants issued to Summit of $31,455 during the three months ended March 31, 2015. As of December 31, 2016, the outstanding balance was $1,000,000 or $917,000, net of discount. On March 14, 2017, Summit agreed to convert the balance of this note and accrued interest into securities, as further discussed below. Accretion expense of $83,000 was recognized in March 2017 due to the note being converted.

During the six months ending June 2017, certain related parties agreed to convert $2,320,400 of such Stockholder advances received on or before December 31, 2016 and $326,319 of such Stockholder advanced received in 2017 along with accrued interest of $92,319 into units of our securities consisting of (a) 36,520,494 shares of our Common Stock (at a conversion price of $0.075 per share) plus (b) an eighteen-month warrant to purchase an additional 36,520,494 share of Common Stock at an exercise price of $0.09 per share and (c) a five-year warrant to purchase an additional 36,520,494 shares of Common Stock at an exercise price of $0.1125 per share containing identical terms to the units of equity securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017. In May 2017, the related parties agreed to exchange their Class A and Class B warrants for Common Stock. They would receive 1.5 shares of Common Stock for one (1) Class A warrant and one (1) Class B warrant. See Note 13 Common Stock for more information relating to this exchange.

The $200,000 interest-bearing promissory note, dated July 2015, with a stockholder has reached maturity. This obligation has a current principal amount of $194,556. In February 2017, the Company and the stockholder discussed the possibility of converting the unpaid principal balance into units of our securities containing identical terms of the units of equity securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017 only when the accrued and unpaid interest of $15,047, as of March 31, 2017, is paid in cash. As of June 30, 2017, accrued interest on this note was $19,911 and the Company is still in discussions with the related party regarding timing of the conversion.

On March 14, 2017, the Company received an extension of maturity on its $255,000 related party note. This note was obtained from a bank and the Company is responsible for repaying the related party note directly to the Bank on or before August 28, 2017.

On April 7, 2017, we received a loan for proceeds of up to $1,750,000 from Summit Resources, Inc. (“Summit”), one of our principal stockholders and an affiliate of Steve Antoline, one of our directors. The loaned amount includes $500,000 advanced as of June 30, 2017 by Summit and an additional $1,250,000 will be advanced to us from April 2017 through August 2017 for the purchase of a new mass spectrometer. In August 2017, the Company decided to not purchase the new mass spectrometer and is working with Summit Resources, Inc. to amend the note agreement. We issued to Summit our senior secured promissory note in the principal amount of up to $1,750,000 that is payable in monthly installments over a period of 36 months. In addition, the Company granted a seven year warrant to purchase 20,000,000 shares of the Company’s common stock at an exercise price of $0.075 per share. The relative fair value of the warrants at the issuance date was $305,500, which was recorded as a discount against the note and will be accreted over the life of the note. The Company recognized accretion expense of $25,458 relating to the warrant for the three and six months ending June 30, 2017.

We have agreed to apply 30% of the net proceeds (after commissions and offering expenses) we receive from any equity or equity type financing to reduce and prepay the $500,000 working capital portion of the loan. In addition, the entire loan is subject to mandatory prepayment in the event and to the extent that we receive gross proceeds of $5,000,000 or more from any subsequent public offering of our securities. We are currently in default of this agreement for which proceeds were received, from an original issued discounted note, at the end of June and the Company was unable to made the required 30% of net proceeds payment on the loan.

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10. Obligations to Stockholders (Continued)

Commencing 30 days after installation of the Instrument we will pay monthly installments of principal and accrued interest in the amount equal to the greater of (a) $62,030.86 (representing 36 monthly installments of principal and accrued interest at the rate of 15% per annum), or (b) 20% of the cash proceeds we receive from customers who request services from the Company using the new mass spectrometer equipment. We also agreed to establish a special lock box to deposit cash proceeds we receive from use of such equipment.

The Note is convertible into shares of our Common Stock, at the option of the holder at a conversion price equal to the lower of $0.075 per share (as adjusted by the contemplated reverse stock split), or (b) 85% of the offering price per share of the Common Stock in any subsequent public offering of our Common Stock.

The loan is secured by a first lien and security interest on all of our assets and properties, including the purchased equipment and all purchase orders we receive in connection therewith.

In a related development on April 21, 2017, we entered into an agreement with Summit under which Summit:

• Consented to the exchange agreement with GRQ Consultants Inc. 401K (“GRQ”) and waived any defaults on our part under the Summit loan agreement; and

• agreed to waive its security interest in the GRQ Collateral until such time as we pay the $301,578 obligation to GRQ.

The Company and our subsidiary reaffirmed Summit’s senior priority lien and security interest on all of our assets and properties, other than the specific GRQ Collateral. On June 28, 2017, the Company has paid the GRQ note in full and such security interest has been reinstated.

See also Note 18 Evaluation of Subsequent Events for activity related to advances and other loans payable to stockholders after June 30, 2017.

11. Other Current Liabilities

Other current liabilities consist of the following at:

	June 30, 2017		December 31, 2016
Accrued expenses	$	227,849	$	68,411
Accrued interest		299,278		264,507
Accrued warranty expense		35,000		45,000
Accrued payroll and benefits		191,944		119,619
Accrued sales tax		–		103
Unearned revenue		47,572		58,407
Other payables and accrued expenses	$	801,643	$	556,047

12. Debt

Convertible Promissory Notes with WVJITB

The Company has outstanding two convertible promissory notes with the West Virginia Jobs Investment Trust Board (“WVJITB”). One is an 18-month note issued in March 2012 with a principal amount of $290,000 (“March 2012 Promissory Note”) and the second a 3-month note issued in April 2012 with principal amount of $400,000 (“April 2012 Promissory Note”). As of June 30, 2017, the principal balance of the March 2012 Promissory Note was $290,000 with the principal balance of the April 2012 Promissory Note having been reduced to $300,000 as the result of a payment made by the Company in 2013. Since the issuance of these notes, the Company and WVJITB have enacted several addendums to both notes, including extending the maturity dates and reducing the rate at which the notes are convertible into shares of Common Stock.

On January 17, 2017, the Company and WVJITB entered into another addendum, loan modification, whereby the maturity date of the promissory note was extended until December 31, 2017. The loan modification requires the Company to pay all accrued unpaid interest is due in full on March 1, 2017. Starting in April 2017 principal payments of $50,000 are owed, which payments will be split evenly between the two notes and interest is due monthly until the notes reach maturity. In return for the extension, the Company paid a $5,000 loan modification fee and granted WVJITB another five-year warrant to purchase 750,000 shares of the Company’s Common Stock at an exercise price of $0.10 per share. As of June 30, 2017, the Company is four months in arears on principal payments and three months in arears on interest payments. As of the date of this report, the Company has not been placed in default with these notes.

As of June 30, 2017, the principal balance of each note has been offset with the fair value of the warrant. The relative fair value of the warrant at the issuance date was estimated at $30,825 and $15,028 has been accreted for the six months ending June 30, 2017.

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12. Debt (Continued)

Promissory Note with WVDO

As of January 31, 2017, the Company was eleven months is arrears on scheduled principal and interest payments on an outstanding note payable to the West Virginia Development Office (“WVDO”). The deferral amount totaled $92,873. The promissory note matured on January 31, 2017. In February 2017, the Company and WVDO reached an agreement whereby the Company would defer payment for another year.

Convertible Debentures and September 2016 OID Note

As of June 30, 2017, the Company was in default under approximately $589,969 of outstanding debt securities owed to six investors and was unable to obtain an extension of the maturity at this time. The Company is offering to the holder(s) of all $2,270,688 of OID Debentures plus accrued interest of $113,534, an opportunity under Section 3(a)(9) of the Securities Act of 1933, as amended, to exchange their debentures for a new 20% OID convertible debenture due September 30, 2017, plus one share of our Common Stock for each $1.00 outstanding principal amount of the new 20% OID convertible debenture issued to them. As proposed, the contemplated restated 20% OID convertible debenture would be in face amount equal to 100% of the outstanding principal of and accrued interest on the earlier convertible debentures and, upon consummation of any subsequent public offering of our Common Stock that is registered under the Securities Act prior to the new maturity date, would be subject to mandatory conversion at a 20% discount to the initial public offering price of our Common Stock (the “OID Convertible Debenture Exchange Offer”). The OID Convertible Debenture Exchange Offering was offered for a period expiring on the earlier of June 30, 2017 or acceptance of the OID Convertible Debenture Exchange Offer by 100% of the holders of such OID Debentures.

As of June 30, 2017, an aggregate of $1,680,719 of the 2016 20% OID Debentures were exchanged for $1,764,755 of new 20% OID Debentures due September 30, 2017, and the parties to the exchange offer received an additional 1,764,755 shares of our common stock.

September 2016 10% OID Secured Promissory Note

On April 20, 2017, we entered into an exchange agreement with GRQ Consulting Inc. 401k (“GRQ”) under Section 3(a)(9) of the Securities Act of 1933, as amended. Under the terms of the exchange agreement, GRQ exchanged the Original GRQ Note for a new Company note that requires the Borrowers to pay in full the overdue $301,578 amount by not later than June 30, 2017, plus an additional unsecured amount of $375,000 by September 30, 2017 (the “Final Maturity Date”); which latter amount is convertible by the holder at any time at a conversion price $0.075 per share or may be paid at our option at any time prior to the Final Maturity Date by delivering to the note holder 5,000,000 shares of our Common Stock. On April 21, 2017, GRQ exercised its conversion right and converted the $375,000 balance of the note into 5,000,000 shares of our common stock.

The guaranty of our Protea subsidiary and GRQ’s security interest in the GRQ collateral remain in full force and effect pending our payment of the $301,578 amount due on June 30, 2017.

In a related development on April 21, 2017, we entered into an agreement with Summit under which Summit:

• Consented to the exchange agreement with GRQ and waived any defaults on our part under the Summit loan agreement; and

• Agreed to waive its security interest in the GRQ Collateral until such time as we pay the $301,578 obligation to GRQ.

The Company and our subsidiary reaffirmed Summit’s senior priority lien and security interest on all of our assets and properties, other than the specific GRQ Collateral.

On June 28, 2017, the Company had made payment of $311,305 which included the then principal balance of $301,578 and $9,727 of accrued interest, thus the Company’s obligation to GRQ has been satisfied. 

CKR Convertible Note

In June 2017, we issued to our legal counsel, CKR Law LLP, a $308,439 convertible note due September 30, 2017, representing accrued and unpaid legal fees through December 31, 2016 and in connection with the preparation and filing of our recent proxy statement. Such note will, at the option of the holder, either be paid out of the net proceeds of any public offering of our common stock we consummate prior to the maturity date of such note, or be convertible into shares of our common stock at a price equal to 85% of the initial per share offering price of our common stock we may offer in connection with such public offering. We have agreed to register the shares of common stock issuable upon conversion of the note in the registration statement relating to such public offering.

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12. Debt (Continued)

June 2017 20% OID Note

In June 2017, we received the sum of $1,000,000 from the issuance of a 20% original issue discount debenture in $1,200,000 face amount to a 5% shareholder. The debenture is due and payable on the earlier of November 30, 2017 or from the net proceeds of our sale of $5,000,000 or more of our securities in any public or private offering. The debenture is convertible into our common stock at a conversion price of $0.075 per share. We also issued to the debenture holder a three-year warrant to purchase additional shares of our common stock equal to 100% of the shares issuable upon conversion of the debenture at an exercise price of $0.075 per share.

Capital Leases

From time to time, in the normal course of business, the Company enters into capital leases to finance equipment. As of June 30, 2017, the Company had six capital lease obligations outstanding with imputed interest rates ranging from 5.04% to 9.45%. The capital leases require 24 – 60 monthly payments and expire in June 2017 – June 2020. These leases are secured by equipment with an aggregate cost of $1,868,809. As of June 30, 2017, the Company was two and a half months in arears on two capital lease payments.

See Note 18 Evaluation of Subsequent Events for additional activity and information regarding debt.

Total outstanding debt, including capital lease obligations, are as follows (table excludes the outstanding balance of the bank line of credit because it was presented as a current liability, as discussed in Note 9 Bank Line of Credit; table also excludes obligations to stockholders, which are detailed in Note 10 Obligations to Stockholders and presented as a separate line item on the Company’s Consolidated Balance Sheets):

	June 30, 2017			December 31, 2016
1)     Note Payable to the WVDO	$	92,873		$	92,873
2)     Note Payable to the WVEDA (a)		143,312			143,312
3)     Note Payable to the WVIJDC (b)		139,229			139,229
4)     Note Payable to the WVEDA (a)		572,148			572,148
5)     Note Payable to the WVIJDC (b)		581,987			581,987
6)     Note Payable to the WVJITB		290,000			290,000
7)     Note Payable to the WVJITB		300,000			300,000
8)     Note Payable to the WVEDA (a)		168,362			168,362
9)     Convertible Debenture 2nd & 3rd Quarters 2016		2,190,661			2,114,438
10)   September 2016 10% OID Secured Promissory Note		–			480,000
11)   September 2016 20% OID Note		164,063			156,250
12)   June 2017 20% OID Note		1,200,000			–
13)   CKR Convertible Note		308,439			–
14)   Capital leases		846,318			928,530
Total		6,997,392			5,967,129
Less: current portion		(4,496,239	)		(4,012,149	)
Less: unamortized original issue discount		(172,222	)		(22,001	)
Less: unamortized debt issuance costs		(552,746	)		(163,624	)
Long-term portion	$	1,776,185		$	1,769,355

(a) West Virginia Economic Development Authority

(b) West Virginia Infrastructure and Jobs Development Council

Future required minimum principal repayments over the next five years are as follows (same exclusions as noted for the table above):

	Future  required minimum
Year Ended December 31:	principal payments
2017	$	4,985,174
2018		622,198
2019		500,357
2020		495,353
2021 and thereafter		394,310
Total	$	6,997,392

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13. Common Stock

The Company was authorized to issue a total of 510,000,000 shares of stock, of which 500,000,000 shares were designated Common Stock, par value of $0.0001 per share with one vote in respect of each share held and no cumulative voting rights (“Common Stock”), and 10,000,000 are designated preferred stock, par value of $0.0001 per share with one vote in respect of each share held (“Preferred Stock”). There were no shares of Preferred Stock issued or outstanding as of December 31, 2016 and no such shares were issued during the three months ended March 31, 2017. In January 2017, the Board of Directors agreed to increase the Company’s authorized shares of common stock to 750,000,000.

The Company filed the Restated Charter with the Secretary of State of the State of Delaware on April 25, 2017 to increase the Company’s authorized shares to 760,000,000, of which 750,000,000 shares were designated common stock, par value of $0.0001 per share and 10,000,000 designated preferred stock, par value of $0.0001 per share.

Proxy

On January 31, 2017, at a special meeting of the Board of Directors, our Board of Directors approved by unanimous vote to seek shareholder approval of certain proposals by written consent that, to adopt and effectuate, will require the majority consent of our stockholders. These proposals were submitted to our stockholders pursuant to our definitive proxy statement on Schedule 14A, filed on March 2, 2017 with the Securities and Exchange Commission (“SEC”). On April 24, 2017, the Company received the written consent of more than a majority of the voting power of its common stock outstanding as of the record date in favor of the proposals. Under the proposals we were soliciting our stockholders’ written consent to approve the filing of an amended and restated certificate of incorporation in Delaware (“Restated Charter”), to increase the number of authorizes shares of our Common Stock, $0.0001 par value per share (“Common Stock”) from 500,000,000 shares of Common Stock to 750,000,000 shares of Common Stock (the “Authorized Common Stock Increase”), and with such Authorized Common Stock Increase to be effective at such time and date within one year after the date such action is approved by the Majority Stockholders, if at all, as determined by the Board of Directors in its sole discretion (the “Authorized Common Stock Increase Proposal”).

Included within our definitive proxy statement on Schedule 14A, filed as of March 2, 2017 with the SEC, we submitted a proposal to our stockholders seeking written consent to approve the filing of an amended and restated certificate of incorporation in Delaware (the “Restated Charter”), or in a subsequent amendment to the Restated Charter, provisions to effect a reverse split of our issued and outstanding Common Stock, within a range of not less than one-for-fifteen (1:15) and not more than one-for-fifty (1:50), with such ratio to be determined by the Board of Directors, in its sole discretion (the “Reverse Split”), and with such Reverse Split to be effective at such time and date within one year after the date such action is approved by the stockholders, if at all, as determined by the Board of Directors in its sole discretion (the “Reverse Split Proposal”).

We obtained stockholder consent to the Reverse Split Proposal, but have yet to effectuate the Reverse Split. Any decision to effectuate the Reverse Split will be determined by our Board of Directors based on the requirements to list our Common Stock on the Nasdaq Capital Market and shall become effective only (a) upon the approved filing of the Restated Charter to consummate the Reverse Split with the Secretary of State of the State of Delaware, including the final reduced number of shares of Common Stock into which our currently outstanding shares will be converted; and (b) upon announcement of the Reverse Split by FINRA.

If implemented, the Reverse Stock Split will only effect our outstanding Common Stock and shares of Common Stock issuable upon conversion of convertible securities and exercise of warrants and options. It will not effect the number of shares of Common Stock we are authorized to issue under our Restated Charter.

The purpose of the Reverse Split is to enable us to qualify our Common Stock for listing on a national stock exchange such as The Nasdaq Capital Market or the NYSE AMEX. Our Common Stock is currently traded on the OTC Markets OTCQB marketplace. Such trading market is considered to be less efficient than that provided by a stock exchange such as The Nasdaq Stock Market or NYSE AMEX. In order for us to list our Common Stock on The Nasdaq Stock Market or NYSE MKT, we must fulfill certain listing requirements, including minimum bid price requirements for our Common Stock.

17

13. Common Stock (Continued)

Conversion of Obligations to Stockholder

During the six months ended June 30, 2017, certain related parties agreed to convert $2,320,400 of such Stockholder advances received on or before December 31, 2016 and $326,319 of such Stockholder advanced received in 2017 along with accrued interest of $92,319 into units of our securities consisting of (a) 36,520,494 shares of our Common Stock (at a conversion price of $0.075 per share) plus (b) an eighteen-month warrant to purchase an additional 36,520,494 share of Common Stock at an exercise price of $0.09 per share and (c) a five-year warrant to purchase an additional 36,520,494 shares of Common Stock at an exercise price of $0.1125 per share containing identical terms to the units of equity securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017. In May 2017, the related parties agreed to exchange one Class A warrant and one Class B warrants for 1.5 shares of Common Stock. Upon exchange, the holders will receive 54,680,744 shares of Common Stock.

Sale of Common Stock

In January through March 2017 (the “Closing”), the Company received an aggregate of $688,000 in gross cash proceeds from 21 accredited investors (the “Purchasers”) in connection with the sale of approximately 68.80 units of securities (each a “Unit” and collectively, the “Units”) pursuant to the terms and conditions of Subscription Agreements (the “Subscription Agreements”) by and among the Company and each of the Purchasers.

Pursuant to its private placement memorandum, dated as of October 31, 2016 (the “Memorandum”), the Company is offering, through a placement agent, a maximum of 500 Units of securities at a purchase price of $10,000 per Unit for up to $5,000,000 in gross proceeds (the “Offering”). Each Unit consists of up to (a) 133,333.33 shares of Common Stock, par value $0.0001 (the “Common Stock”), (b) 18 month warrants to purchase 133,333.33 shares of Common Stock at an exercise price of $0.09 per share (the “Class A Warrants”), and (c) five year warrants to purchase 133,333.33 shares of Common Stock at an exercise price of $0.1125 per share (the “Class B Warrants” and together with the Class A Warrants, the “Investor Warrants”). If all 500 Units are sold, the Company will issue an aggregate of 66,666,667 shares of its Common Stock and Investor Warrants to purchase up to 133,333,334 shares of Common Stock. The Offering terminated on March 31, 2017.

In connection with the Closing, the Company issued an aggregate of 9,173,331 shares of Common Stock at $0.075, Class A Warrants to purchase 9,173,331 shares of Common Stock at an exercise price of $0.09 per share and Class B Warrants to purchase 9,173,331 shares of Common Stock at an exercise price of $0.1125 per share. See Note 15 Warrants for additional information.

In connection with the Closing, the Company paid to the placement agent an aggregate of $88,040 in cash compensation, representing fees and an expense allowance. In addition, the Company agreed to issue a warrant to the placement agent to purchase an aggregate of 2,222,000 shares of Common Stock, with an exercise price of $0.075 per share and term of three years. The Company also issued one Unit to the placement agent’s legal counsel for services rendered in connection with the Closing.

In connection with the Closing, the Company also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with each of the Purchasers, which requires the Company to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) registering for resale (i) all Common Stock issued to the Purchasers as part of the Units, (ii) all shares of Common Stock issuable upon exercise of the Investor Warrants and the warrants issued to the placement agent, and (iii) all shares of Common Stock issued to legal counsel for services rendered in connection with the Closing.

If the Registration Statement is not declared effective by the SEC within the specified deadlines set forth in the Registration Rights Agreement, the Company will be required to pay to each Purchaser an amount in cash, as partial liquidated damages, equal to 1.0% of the aggregate purchase price paid by such Purchaser per 30-day period that such failure continues, up to the maximum of 6% of the aggregate Purchase Price. If the Company fails to pay any partial liquidated damages in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum. As of the date of this filing, the Company is in negotiations with the placement agent to amend the Registration Rights Agreement and with filing the Registration Statement.

18

13. Common Stock (Continued)

Exchange Agreements

In addition, the anti-dilution provisions contained in many of our outstanding securities between 2013 and 2017 has created significant derivative liabilities for our Company. As of December 31, 2016, such derivative liability has been calculated to be in excess of $3,100,000 and increases as we sell additional warrants. Such derivative liability directly impacts and reduces our stockholders equity which could materially and adversely affect our ability in the future to qualify to list our common stock for trading on the Nasdaq Capital Market or other comparable national securities exchange.

In order to cure our defaults in payment of our debt securities and to reduce, if not eliminate, the derivative liability, we:

Offered to the holder(s) of all $2,270,688 of 20% original issue discount debentures issued in 2016, an opportunity under Section 3(a)(9) of the Securities Act of 1933, as amended, to exchange their debentures for a new 20% original issued discount convertible debenture due September 30, 2017, plus one share of our Common Stock for each $1.00 outstanding principal amount of the new 20% OID convertible debenture issued to them. As proposed, the contemplated restated 20% OID convertible debenture would be in face amount equal to 100% of the outstanding principal of and accrued interest on the earlier convertible debentures and, upon consummation of any subsequent public offering of our common stock that is registered under the Securities Act prior to the new maturity date, would be subject to mandatory conversion at a 20% discount to the initial public offering price of our Common Stock (the “OID Convertible Debenture Exchange Offer”). As of the date of this report, an aggregate of $1,680,719 of the 2016 20% OID Debentures were exchanged for $1,764,755 of new 20% OID Debentures due September 30, 2017, and the parties to the exchange offer received an additional 1,856,196 shares of our common stock.

Offered to the 156 holders of our common stock and warrants issued in the 2013 offering, an opportunity under Section 3(a)(9) of the Securities Act, to (a) waive for all purposes the “make whole” provisions in their subscription agreement in exchange for one-quarter of a warrant exercisable at $0.09 per share for each of the 103,497,609 shares of Common Stock issued and issuable to them in the 2013 Offering (approximately 25,874,399 additional warrants) which would contain no weighted average or full ratchet anti-dilution provisions, plus (b) exchange all of the outstanding 2013 B Warrants issued in the 2013 offering (approximately 7,762,321 warrants) for one additional share of our common stock (the “2013 Exchange Offer”). As of the date of this report, 116 of the purchasers of our securities in the 2013 offering accepted the exchange offer resulting in 6,162,570 shares of common stock and warrants to purchase 20,541,895 shares of common stock being issued.  

Offered to the 72 holders of our common stock and warrants issued in the 2016-17 offering, an opportunity under Section 3(a)(9) of the Securities Act of 1933, as amended, to exchange all of their 2016-17 Class A Warrants and 2016-17 Class B Warrants for 1.5 shares of Common Stock for each 2016-17 Class A Warrant and 2016-17 Class B Warrant (the “2016-17 Exchange Offer”). Accordingly, each $10,000 Unit that represented 13,333.33 shares of common stock, plus 13,333.33 of 2016-17 Class A Warrants and 13,333.33 of 2016-17 Class B Warrants would be exchanged for 70,180,982 shares of Common Stock, representing (a) 28,072,393 shares of Common Stock, plus (ii) 42,108,589 additional shares of common stock issued in lieu of the 2016-17 Class A Warrants and 2016-17 Class B Warrants. As of the date of this report, 69 of the purchasers of our securities in the 2016-17 offering accepted the exchange offer resulting in 38,608,616 additional shares of common stock being issued.

Consultant Agreements

On January 31, 2017, the Board of Directors approved payment of $50,000 to a certain Consultant for Consulting Services of which is to be paid as units of our securities consisting of (a) 666,667 shares of our Common Stock (a conversion price of $0.075 per share) plus (b) an eighteen-month warrant to purchase an additional 666,667 share of Common Stock at an exercise price of $0.09 per share and (c) a five-year warrant to purchase an additional 666,667 shares of Common Stock at an exercise price of $0.1125 per share containing identical terms to the units of equity securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017. In June 2017, the consultant was offered an opportunity to exchange every two warrants for 1.5 shares of common stock. As of the date of this report the consultant was issued an additional 1,000,000 shares of common stock pursuant to this exchange.

On January 31, 2017, the Board of Directors approved payment of 2,000,000 shares of Common Stock to one Consultants for Consulting Services.

In February 2017, the Company has issued an aggregate of 750,000 in Common Stock for consulting services. The consulting agreement required 500,000 shares of Common Stock to be issued upon execution of the Consulting Agreement. The aggregate of 250,000 shares of Commons Stock were issued as upon execution of the Consulting Agreement, in 2016, leaving an aggregate of 250,000 shares of Common Stock to be issued for execution of the agreement. In addition to the 500,000 shares of Common Stock to be issued upon execution of the Consulting Agreement, and for each quarter thereafter for the remainder of the Consulting Period, Common Stock and warrants to purchase Common Stock will be issued 250,000 shares of Common Stock and a warrant to purchase 250,000 shares of Common Stock to the Consultant on the first day of each quarter. The issuance of 750,000 comprised of 250,000 shares of Common Stock due upon execution of the Consulting Agreement, 250,000 shares of Common Stock for the first quarter in 2017 and 250,000 shares of Common Stock for the second quarter of 2017. On January 31, 2017, the Board of Directors approved the request to accelerate the issuance of 250,000 shares of Common Stock for the second quarter of 2017.

19

13. Common Stock (Continued)

On February 28, 2017, the Company entered into a consulting agreement for business advisory services and has term period from February 28, 2017 through January 31, 2018. The Company will compensate the Consultant by issuing 100,000 shares of Common Stock.

On March 8, 2017, the Company entered into a consulting agreement with a firm for professional financial advisory and introductory services for a period is from March 8, 2017 through December 31, 2017. Besides a one-time $10,000 retainer payment the consulting agreement requires payment of 1,200,000 shares of the Company’s Common Stock which were issued in May 2017.

On April 25, 2017, the Company entered into one (1) consulting agreement. This agreement was entered into for business advisory services and has a term period from April 25, 2017 through December 31, 2017. The Company will compensate the Consultant by issuing 250,000 shares of Common Stock no later than 30 days from the effective date. These shares were issued in May 2017.

On June 30, 2017, the Company issued 250,000 shares of Common Stock to a certain consultant as part of his consulting agreement dated December 2016. The agreement states the Company is to pay 250,000 shares of Common Stock upon completion of the 2016-17 Unit Offering which was completed on March 31, 2017.

Conversion of Accounts Payable

In December 2016, the Company’s Board of Directors authorized the conversion of an aggregate of $50,000 of accounts payable to a vendor into 666,667 shares of Common Stock at the rate of $0.075 per share. The vendor was also issued an A Warrant and B Warrant with the same terms and agreement as the 2016-17 offering. In June 2017, the vendor was offered an opportunity to exchange one (1) Class A warrant and one (1) Class B warrant for 1.5 shares of common stock. In June 2017, the vendor was issued an additional 1,000,000 shares of common stock pursuant to this exchange.

Anti-Dilution Triggering Event

The sale of Common Stock in the 2016/17 Offering was completed at a unit price of $0.075 per share, which triggered the anti-dilution provisions contained in certain outstanding financial instruments. As a result, to satisfy the Company’s obligations under such provisions, the Company expects to issue 1,567,653 shares of Common Stock and has already issued 72,448,325 shares of Common Stock, issue 25,244,336 Warrants to purchase shares of Common Stock, reduce the conversion rate for the Exchange Notes to $0.075 per share and has reduced the exercise price of 49,459,532 warrants. 

Common Stock issued and outstanding is as follows:

	Shares			Price
	issued and			per		Gross		Par		Additional
	outstanding			share		proceeds		value		paid-in capital
Balance as of December 31, 2016		162,471,373			Various	$	59,801,216	$	16,247	$	62,440,674
Issuance (a)		9,173,330		$	0.075		688,000		917		687,083
Issuance (b)		103,508,126		$	0.075		–		10,351		7,752,758
Issuance (c)		5,416,667		$	various		–		542		355,808
Issuance (d)		5,000,000		$	0.075		–		500		374,500
Issuance (e)		36,520,495		$	0.075		–		3,652		2,735,385
Issuance (f)		72,448,325		$	0.075		–		7,245		–
Balance as of June 30, 2017		394,538,316	(g)			$	60,489,216	$	39,454	$	74,346,208

(a)	Shares issued in conjunction with the 2016/17 Offering and contains no anti-dilution provisions
(b)	Shares issued in conjunction with exchange offers
(c)	Shares issued in conjunction with certain Consultant Agreements
(d)	Shares issued in conjunction with short-term convertible note
(e)	Shares issued for conversion of debt and interests. Shares do not contain anti-dilution provisions
(f)	Shares issued in conjunction with trigger of anti-dilution provision, previously recognized in 2016
(g)	Includes 8,889,503 shares that contain an anti-dilution provision

20

14. Stock Options and Stock-Based Compensation

In 2002, the Board adopted the 2002 Equity Incentive Plan (the “2002 Plan”) that governed equity awards to employees, members of the Board of Directors, and consultants of the Company. Under the 2002 Plan, 450,000 shares of Common Stock were reserved for issuance. From 2006 through 2012, the 2002 Plan was amended several times to increase the total number of shares authorized under this plan to 4,150,000 shares. In 2013, the Board of Directors adopted the 2013 Equity Incentive Plan (the “2013 Plan”) and, together with the 2002 Plan (the “Plans”), governs the equity awards to employees, members of the Board of Directors, and consultants of the Company. Under the 2013 Plan, an additional 12,500,000 shares of Common Stock were reserved for issuance.

The types of awards permitted under the Plans include qualified incentive stock options (“ISO”), non-qualified stock options (“NQO”), and restricted stock. Each stock option shall be exercisable at such times and subject to such terms and conditions as the Board of Directors may specify. Stock options generally vest over four (4) years and expire no later than ten (10) years from the date of grant. A summary of stock option activity is as follows:

				Weighted average		Weighted avg. remaining
	Stock options			exercise price		contractual life (years)
Outstanding as of December 31, 2016		10,780,086		$	0.57		7.30
Granted		2,435,000		$	0.13
Exercised		–		$	–
Cancelled or expired		(480,000	)	$	0.56
Outstanding as of March 31, 2017		12,735,086		$	0.48		7.41
Exercisable as of December 31, 2016		5,680,899		$	0.84		5.70
Exercisable as of June 30, 2017		7,271,024		$	0.67		6.34

21

14. Stock Options and Stock-Based Compensation (Continued)

The following table summarizes information about stock options at June 30, 2017:

Stock options outstanding								Stock options exercisable
						Weighted				Weighted
				Weighted average		average				average
				remaining contractual		exercise				exercise
Exercise price		Outstanding		life (in years)		price		Exercisable		price
$	0.11		1,100,000						1,100,000
$	0.12		350,000						65,625
$	0.15		3,985,000						531,875
$	0.25		1,573,336						904,586
$	0.48		150,000						65,625
$	0.50		79,000						79,000
$	0.53		325,000						162,500
$	0.55		3,312,000						2,501,063
$	1.50		1,646,000						1,646,000
$	2.00		214,750						214,750
	$0.11 – $2.00		12,735,086		7.41	$	0.48		7,271,024	$	0.67

As of June 30, 2017, the total aggregate intrinsic value for stock options currently exercisable and stock options outstanding was estimated to be $0.  This value represents the total pre-tax, intrinsic value based on the estimated fair value of the Company’s Common Stock price of $0.09 per share as of June 30, 2017.

The following table summarizes the activity of the Company’s stock options that have not yet vested: 

				Weighted average
				grant-date fair
	Stock options			value (per option)
Non-vested as of December 31, 2016		5,340,687		$	0.12
Granted		2,435,000		$	0.13
Forfeited		(480,000	)	$	0.56
Vested		(1,831,625	)	$	0.05
Non-vested as of June 30, 2017		5,464,062		$	0.21

The fair value of non-vested stock options to be recognized in future periods is $498,247, which is expected to be recognized over a weighted average period of 2.25 years. The total fair value of stock options vested during the six months ended June 30, 2017 was $124,877 compared to $122,223 for the six months ended June 30, 2016.

Stock-based compensation expense is as follows:

	Six Months Ended June 30,
	2017		2016
Selling, general, and administrative expense	$	118,840	$	113,741
Research and development expense		6,036		8,482
Total stock-based compensation	$	124,876	$	122,223

The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2017 was $0.05 per stock option and for the six months ended June 30, 2016 it was $0 per stock option.

The fair value of the stock option grants was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Six Months Ended June 30,
	2017			2016
Weighted average risk-free interest rate		2.06	%		N/A	%
Volatility factor		66.32	%		N/A	%
Weighted average expected life (in years)		7			N/A
Dividend rate		0	%		N/A	%

22

14. Stock Options and Stock-Based Compensation (Continued)

The Company utilizes a peer group to estimate its expected volatility assumptions used in the Black-Scholes option-pricing model. The Company completed an analysis and identified four similar public companies considering their industry, stage of life cycle, size, and financial leverage. Given the Company’s limited history with stock options, the Company’s expected term is based on an average of the contractual term and the vesting period of the options (the SEC Staff Accounting Bulletin No. 110, “Simplified” method).

15. Warrants

See Note 12 Debt and Note 13 Common Stock for information related to the issuance of warrants to related parties, WVJITB, Consultants, Investors of 2016-17 Offering, Placement Agent, Wawrla, Anti-Dilution and Exchange Offer for the purchase of 114,040,998, 750,000, 3,053,334, 18,346,662, 2,222,000, 13,333,334, 21,700,003 and 25,366,271 shares of Common Stock, respectively during the six months ended June 30, 2017.

As part of the Exchange Offers, certain investors and related parties exchanged 138,306,056 of their warrants for shares of Common Stock thus reducing the total number of outstanding warrants to purchase shares of Common Stock. See Note 13 Common Stock for more information relating to the Exchange Offers.

As of June 30, 2017, warrants to purchase 181,749,129 shares of Common Stock were outstanding and exercisable. During the six months ended June 30, 2017, the Company recognized a total of 42,563 in interest expense resulting from the accretion of the fair value of issued warrants.

The following table summarizes the activity of the Company’s warrants:

				Weighted		Weighted
				average		average remaining
				exercise		contractual life
	Warrants			price		(in years)
Outstanding as of December 31, 2016		122,475,881		$	0.43		2.13
Granted		198,812,592		$	0.04		2.88
Exercised		–		$
Cancelled or expired		(139,539,344	)	$	0.14
Outstanding as of June 30, 2017		181,749,129	(a)	$	0.24		3.64

(a) includes 71,942,807 warrants that contain an anti-dilution provision

The following table summarizes information about warrants as of June 30, 2017:

Warrants Outstanding
Exercise Price		Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price
$	0.075		82,702,683
$	0.080		5,618,750
$	0.090		22,875,228
$	0.100		1,810,000
$	0.110		1,250,000
$	0.1125		2,333,333
$	0.190		4,654,145
$	0.200		2,751,250
$	0.240		7,500,000
$	0.270		14,831,098
$	0.280		2,845,000
$	0.325		1,685,625
$	0.400		1,040,000
$	0.450		1,730,000
$	0.500		7,153,097
$	0.740		7,309,395
$	0.800		1,415,000
$	1.100		11,773,275
$	1.120		263,750
$	2.200		70,000
$	2.250		137,500
	$0.075 - $2.250		181,749,129		3.64	$	0.24

23

16. Commitments and Contingencies

Legal Proceedings

The Company currently is not a party to any material legal proceeding and has no knowledge of any material legal proceeding contemplated by any governmental authority or third party. The Company may be subject to a number of claims and legal proceedings which, in the opinion of our management, are incidental to normal business operations. In managements’ opinion, although final settlement of these claims and suits may impact the financial statements in a particular period, they will not, in the aggregate, have a material adverse effect on the Company’s financial position, cash flows or results of operations.

In 2016, the Company received three court summonses for past due accounts payables. The claims totaled $213,032 and are related to amounts the Company has properly accounted for in its accounting records, including late-payment fees and interest, if applicable. In December 2016, the Company entered into a confessed judgement with one of the vendor agreeing to make payment of $161,889.16 in full by January 31, 2017. Two payments of $25,000 each were made in December 2016 leaving a balance of $111,889.16 to pay by January 31, 2017. The Company made full and final payment of $111,889.16 on the confessed judgement on January 31, 2017.

In July 2017, the Company received a Request for Entry of Judgement from Johns Hopkins University dated June 14, 2017. The judgement against the Company is in excess of $93,664 ($74,359 in fees plus $19,305 in interest) pursuant to the Agreement between Johns Hopkins University and the Company. As of the date of this report total claims are $130,455.   

Warranty Reserve

The Company provides for a one-year warranty with the sale of its LAESI® instruments. As the Company does not currently have sufficient historical data on warranty claims, the Company’s estimates of anticipated rates of warranty claims and costs are primarily based on comparable industry metrics. The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its products. As of June 30, 2017 and December 31, 2016, the Company had accrued warranty expense of $35,000 and $45,000, respectively.

University License Agreements

The Company has agreements with West Virginia University (“WVU”) and George Washington University (“GWU”) related to in-licensed technologies as follows:

WVU The Company has entered into a License and Exclusive Option to License Agreement with the West Virginia University Research Corporation (“WVURC”), a nonprofit West Virginia corporation acting for and on behalf of WVU. Under the terms of this agreement, the WVURC has granted the Company an exclusive option to license technology from the laboratories of certain WVU principal investigators in the field of protein discovery, for therapeutic, diagnostic and all other commercial fields worldwide. Under the terms of this Agreement, the Company pays expenses for the preparation, filing and prosecution of related patent applications, and the Company will pay royalties on the net revenue resulting from the sale of products and services that utilize the WVU subject technology.

GWU In March 2009, the Company entered into an Exclusive License Agreement with GWU for technology developed in the laboratory of Dr. Akos Vertes Ph.D., Professor of Chemistry, Professor of Biochemistry & Molecular Biology, Founder and Co-Director of the W.M. Keck Institute for Proteomics Technology and Applications, the Department of Chemistry, who is a science advisor to the Company. The technology field is laser ablation electrospray ionization, or “LAESI”, a new method of bioanalytical analysis that enables high throughput biomolecule characterization. Under the terms of this agreement, the Company has the exclusive, worldwide rights to commercialize the technology. The Company has obtained a registered trademark for “LAESI®”. The Company is obligated to pay expenses for the preparation, filing and prosecution of related patent applications, and the Company pays royalties on the net revenues resulting from the sale of products and services that utilize the GWU subject technology. During the six months ended June 30, 2017, the Company recorded royalty expenses of $2,199. During the six months ended June 30, 2016, the Company recorded royalty expenses of $4,538.

In January 2017, the Company had received a payment on demand letter from GWU regarding the exclusive license agreement for the “LAESI License” along with the patent license agreement for the “Protein Microscope License.” As these letters relate to such agreements and past due payments, they allow the Company to make payment or release their rights to each of such license agreement by a specified amount of days for each agreement or provide requested plans.

24

16. Commitments and Contingencies (Continued)

GWU requested that all LAESI License past due royalties and interest of $110,374 be paid within sixty (60) days of the letter dated January 27, 2017. GWU is preserving itsrights under article 10.9 and 7.3(b) of the LAESI License agreement. The Company has made payment in full on March 28, 2017, and this request has been fulfilled.

As of June 30, 2017, the Company’s accounts payable balance included $50,800 payable to GWU, of which $0, for royalties on sales of the LAESI® instrument platform and $2,199 was owed for royalties on Imaging Services work using the LAESI® instrument. Under the terms of the Company’s Exclusive License Agreement with GWU, as amended, the Company is required to pay interest on amounts that are more than five (5) business days overdue. In addition, the Company’s agreement with GWU allows GWU to terminate the agreement under certain circumstances, including related to late payments.

In January 2014, the Company became a subcontractor to GWU in a multi-year project with the Defense Advanced Research Projects Agency (“DARPA”) to develop new tools and methods to elucidate the mechanism of action of a threat agent, drug, biologic or chemical on living cells within thirty (30) days of exposure. This product is called REDIchip™ (an acronym for Resonance-Enhanced Desorption Ionization).

Yale In April 2016, we entered into an exclusive license agreement for technology with Yale University related to the differential diagnosis of melanoma, specifically designated as a "Method of Differentiating Benign Melanocytic Nevi from Malignant Melanoma." The technology was co-invented by Dr. Rossitza Lazova, of the Department of Dermatology at Yale School of Medicine, and Dr. Erin Seeley, our Principal Investigator. Under the terms of the license agreement, we have been granted the exclusive worldwide rights to commercialize the technology.  We are obligated to pay expenses for the preparation, filing and prosecution of future related patent applications governed by the license agreement and related license fees. We are obligated to pay a non-refundable royalty of $5,000 payable to Yale University in May 2016, and an annual license maintenance royalty of $2,500 in April 2017, and an annual license maintenance royalty of $5,000 in each anniversary year thereafter. We are also obligated to pay a non-refundable royalty of $5,000 upon our making our first sale of a licensed product, $7,500 when we file for an approval for commercial sale with a government regulatory agency and $10,000 upon our “first sale” of a licensed product that is approved by such governmental agency. In addition, we will pay Yale an earned royalty of 2.5% on worldwide cumulative net sales of licensed products by our company or under any sub-license or affiliate arrangements, to accrue within thirty (30) days from the end of each calendar quarter, subject to the payment of minimum annual royalties of $10,000, payable on the first day of January in the year following our first sale of licensed products (the “Minimum Royalty Effective Date”), and increasing to $15,000 on the first anniversary of the Minimum Royalty Effective Date, $20,000 on the second anniversary of the Minimum Royalty Effective Date, $30,000 on the third anniversary of the Minimum Royalty Effective Date, $40,000 on the fourth anniversary of the Minimum Royalty Effective Date and $50,000 on the fifth anniversary of the Minimum Royalty Effective Date and each subsequent anniversary year thereafter. Unless earlier terminated in accordance with its terms, the Yale license agreement expires upon the later of 20 years from the effective date or the end of the term of the last underlying patent to expire.

17. Supplemental Cash Flow Information

Cash paid for interest and income taxes

During the six months ended June 30, 2017, cash paid for interest totaled $233,226. Cash paid for interest for the six months ended June 30, 2016 was $122,354.

The Company did not pay any income taxes during 2016 or the six months ended June 30, 2017.

Non-cash investing and financing activities 

	Six Months Ended June 30,
	2017		2016
Equipment acquired under capital leases	$	124,503	$	567,888
Issuance of common stock upon conversion of accrued interest	$	–	$	41,393
Issuance of common stock upon conversion of related party debt and interest	$	2,739,037	$	–
Issuance costs for short-term debt	$	–	$	5,000
Issuance of common stock for short-term convertible note	$	375,000	$	–
Anti-dilution warrants to be issued	$	–	$	6,878
Fair value of warrant committed to placement agent	$	–	$	5,436

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18. Evaluation of Subsequent Events

Convertible Promissory Note

Subsequent to June 30, 2017, we were able to obtain the collaboration agreement with Massachusetts General Hospital (“Mass General”) through the efforts of certain members of PPLL, LLC. In July 2017, we entered into a two year advisory agreement with PPLL under which they have agreed, in addition to the services previously rendered to us, to finance a portion of our financial obligations to Mass General under the collaboration agreement and continue to assist our Company in obtaining additional collaboration agreements and other business initiatives. We have valued the prior and ongoing services of PPLL at $360,000 and issued to PPLL our 4% promissory note due June 30, 2019 which we can pay at our option after July 15, 2018 by issuing to PPLL or its members an aggregate of 36,000,000 shares of our common stock. Conversely, PPLL may, at any time on or after January 1, 2018, convert the note at any times into all or a portion of such 36,000,000 shares.

Common Stock

Subsequent to June 30, 2017, the Company issued 250,000 shares of Common Stock in lieu of cash as partial payment to a certain vendor. The issuance doesn’t fulfill the entire amount due to the vendor.

Subsequent to June 30, 2017, the Board of Directors approved issuing 2,000,000 shares of Common Stock to a certain consultant for his services to the company.

Obligations to Stockholders

Subsequent to June 30, 2017, the Company received advances totaling $406,850 from certain related parties. Advances have no terms of repayment and do not bear interest. The related party received two warrants to purchase 60,000,000 shares of common stock at a purchase price of $0.075 per share in exchange for the advances.

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Part I, Item 2 of this report should be read in conjunction with Part II, Item 7 of Protea Biosciences Group, Inc. (“we,” “us,” “our,” “Protea” or the “Company”) Annual Report to the U.S. Securities and Exchange Commission (“SEC”) on Form 10-K for the year ended December 31, 2016, as filed with the SEC on April 14, 2017 (the “2016 Form 10-K”). The information contained herein is not a comprehensive discussion and analysis of the financial condition and results of operations of the Company, but rather updates disclosures made in the 2016 Form 10-K.

Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

As discussed under Note 1 Description of Business and Basis of Presentation in Notes to Consolidated Financial Statements contained in Item I, Part 1 of this report, the Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).

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OVERVIEW

Protea Biosciences Group, Inc. (referred to herein as “Protea,” “the Company,” “we,” “us” and “our”) is an emerging growth, molecular information company that has developed a revolutionary platform technology that enables the direct analysis, mapping and display of biologically active molecules in living cells and tissue samples. The technology platform offers new, unprecedented capabilities useful to the pharmaceutical, diagnostic, clinical research, agricultural and life science industries. “Molecular information” refers to the generation and bioinformatic processing of very large data sets, known as “big data,” obtained by applying the Company’s technology to identify and characterize the proteins, metabolites, lipids and other molecules which are the biologically active molecular products of all living cells and life forms.

For a comprehensive discussion of the Company’s business, its strategy, products and services, competitive environment and related information please see Part I, Item 1 of the Company’s 2016 Form 10-K.

RESULTS OF OPERATIONS 

The following section pertains to activity included in the Company’s Consolidated Statements of Operations and Comprehensive Loss, which are contained in Part I, Item 1 of this report.

Three Months Ended June 30, 2017 Compared to the Three Months Ended June 30, 2016

The Company recorded a net loss of $5,501,348 for the three months ended June 30, 2017. This result represents an increased loss of $3,693,751 over the $1,807,598 net loss recorded for the three months ended June 30, 2016. The change reflects a $5,891,250 decrease in the Company’s estimate of the fair value of the anti-dilutive provisions included in certain of the Company’s outstanding financial instruments compared to June 30, 2016. See Note 5 Fair Value of Financial Assets and Liabilities – Derivative Financial Instruments for additional information. Other quarter-over-quarter changes include an increase in interest expense of $817,810 due to the expensing of the estimated fair value of warrants associated with related party advances which have no terms.

Gross revenue for the three months ended June 30, 2017 decreased by 44% over the gross revenue recognized for the three months ended June 30, 2016. Traditionally the second quarter of the year trends higher than the first quarter due to the nature of the business. However, a major customer changed from outsourcing to insourcing which has led to a decrease in revenue, along with a turnover in our sales force. Revenue from molecular information services decreased by 48%. The revenue component reflects a decrease the number of services projects completed in the quarter offset by the actual dollar amount of the service projects. At the end of the three months ended June 30, 2017, there was a back log of projects due to customers that were unable to provide samples to process. This is a continuation of the back log known as of the three months ending March 31, 2017. Molecular information service customers include pharmaceutical, biotechnology, chemical and medical device companies.

In the three months ending June 30, 2017, we did not sell any LAESI® devices and didn’t sell any devices during the three months ended June 30, 2016. The revenue for LAESI Instrument Platform has increased by 242% quarter-over-quarter. This is due to income from warranty plans and spare parts for the units has increased compared to the three months ending June 30, 2016.

Revenue from research products decreased by 41%. The decrease reflects fewer bulk sales from one significant customer, items on backorder thus missing sales opportunities and from discontinuing certain products.

For the three months ended June 30, 2017 versus the three months ended June 30, 2016, cost of revenue as presented in the Statement of Operations and Comprehensive Loss decreased by $100,087 or 20% primarily as a result of the Company not having significant ongoing revenue generating projects.

Selling, general and administrative (“SG&A”) expenses recognized during the three months ended June 30, 2017 were $1,110,475 or 20% less than the SG&A expenses recorded during the comparable period in 2016. This decrease is due to a decrease in outside services, legal expense and merchant service fees with an offset of an increase in executed consulting agreements.

For the three months ended June 30, 2017 compared to the three months ended June 30, 2016, research and development expenses increased 42% primarily due to an increase in lab supplies offset with a decrease in consulting fees and salaries, wages and benefits. In addition, funding for certain expenses incurred by the Company in support of its ongoing participation in the Defense Advanced Research Projects Agency (“DARPA”) program referred to as the Rapid Threat Assessment program is recorded in this line item. The funding was $57,314 for the three months ended June 30, 2017 versus $63,364 for the three months ended June 30, 2016. The amount and timing of future expenses and expense recovery related to our participation in this program are difficult to forecast considering the research and development nature of the collaboration.

For the three months ended June 30, 2017, interest expense increased 219% versus the three months ended June 30, 2016 reflecting both an overall increase in debt issuance costs and original issue discount associated with those obligations (i.e., the amortization of debt issuance costs and accretion of original issue discount to interest expense over the term of the underlying obligation). As of June 30, 2017, total interest-bearing indebtedness was $10,946,948 versus $9,473,024 as of June 30, 2016. As of December 31, 2016, interest-bearing indebtedness was $10,329,070. See also Note 9 Bank Line of Credit, Note 10 Obligations to Stockholders, Note 12 Debt, and Note 18 Evaluation of Subsequent Events in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for additional information regarding the Company’s short and long-term debt and advances and loans from stockholders.

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The Company recorded other income of $5,171,902 for the net decrease in the fair value of derivative liabilities during the three months ended June 30, 2017. The decrease in the expense is due to the Exchange Offers accepted by investors, which eliminated down-round anti-dilution provisions that were causing certain instruments to be accounted for as derivatives. These derivative liabilities include certain anti-dilution provisions contained in various financial instruments issued by the Company, in particular convertible notes and warrants. There have been no changes in the assumptions underlying the calculation of estimated fair value of these liabilities in 2017. Detailed information regarding the fair value of these liabilities, including the assumptions used to estimate the fair value of these liabilities, can be found in Note 4 Fair Value of Financial Assets and Liabilities – Derivative Financial Instruments in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report.

In connection with the Exchange Offers, the Company recognized a one-time non-cash inducement expense of $8,138,109 related to the fair value of the additional shares of common stock and additional stock warrants that were issued to shareholders holding the original shares that contained down-round anti-dilution provisions. Detailed information regarding the Exchange Offers can be found in Note 13 Common Stock in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report.

The Company did not recognize a provision for income taxes for the three months ended June 30, 2017 or for the comparable periods in 2016. The Company has evaluated its income tax position in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 740, Income Taxes, and determined that a full valuation allowance against its deferred tax asset was appropriate as of June 30, 2017 and December 31, 2016, the two balance sheet dates included in the Consolidated Balance Sheets included in this report. As of June 30, 2017, the Company had a deferred tax asset of $32,000,000 with a full, offsetting valuation allowance. Net operating loss (“NOL”) carryforwards totaled approximately $81,200,000 as of June 30, 2017. These NOLs begin to expire in 2021 for both federal and state income tax purposes.

Six Months Ended June 30, 2017 Compared to the Six Months Ended June 30, 2016 

The Company recorded a net loss for the six months ended June 30, 2017 of $11,365,977, a 293% increased loss over the comparable six months ended June 30, 2016 of $2,893,141. The increase in net loss is related to the exchange agreements contributing $8,143,109 of expense associated with the issuance of stock related to the exchange offers and debt inducement costs, stock warrant expense increasing $70,497 and loss on asset disposal increased $73,420 over the comparable period in 2016. See Note 13 Common Stock in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for additional information regarding the exchange agreements.

Gross revenue for the six months ended June 30, 2017 decreased by 35% over the gross revenue recognized for the six months ended June 30, 2016. Revenue from molecular information services decreased by 28%. The decrease reflects decreases in both the number of customers for whom we performed services and the number of services projects completed in the period. The major contributor to our decrease in revenues is one of our major customers, who contributed to 30% of overall molecular information services in 2016, has changed from outsourcing projects to insourcing projects.

We recorded revenue from the sales of one LAESI® device in the six months ended June 30, 2016. However, we did not sell any devices in the six months ending June 30, 2017. With recorded revenues from this extended warranties and sales of LAESI spare parts this component decreased 83% over the six months ending June 30, 2016. The lack of sales is due to the Company changing directions toward a fee for service platform.

For the six months ended June 30, 2017 versus the six months ended June 30, 2016, cost of revenue as presented in the Consolidated Statements of Operations and Comprehensive Loss decreased 2% primarily as a result of the Company having less revenue producing activities during the six months ended June 30, 2017.

SG&A expenses recognized during the six months ended June 30, 2017 were 2,607,781, which was 13% decrease than the SG&A expenses recorded for the comparable period in 2016. The decrease is from the decrease in wages and benefits, depreciation, merchant services fees and a decrease in legal fees in the six months ended June 30, 2017.

For the six months ended June 30, 2017 compared to the six months ended June 30, 2016, R&D expenses decreased 12% primarily due to a decrease in costs associated with the development of the LAESI® instrument platform. In addition, funding for certain expenses incurred by the Company in support of its ongoing participation in the DARPA program referred to as the Rapid Threat Assessment program is recorded in this line item. The funding was $120,678 for the six months ended June 30, 2017 versus $86,116 for the six months ended June 30, 2016.

The gains from sales of investment of $85,355 recorded during the six months ended June 30, 2017 reflects the Company’s sale of 25,000 shares of AzurRx Common Stock. The gains are equivalent to the proceeds resulting from the sales of the shares less transaction costs as the basis for the Company’s AzurRx investment had previously been reduced to $0.

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During the six months ended June 30, 2016, the Company received proceeds from an insurance claim of $45,952. No insurance claims were filed during the first six months ending June 30, 2017.

For the six months ended June 30, 2017, interest expense increased 215% versus the six months ended June 30, 2016 reflecting both an overall increase in outstanding debt and the interest expense associated with those obligations, including the amortization of issuance costs and accretion of original-issue-discount. See Note 9 Bank Line of Credit, Note 10 Obligations to Stockholders, and Note 12 Debt in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for additional information regarding the Company’s short and long-term debt. Although there were no debt conversion inducement costs recognized in the first six months of 2016 the Company recognized debt conversion inducement costs of $8,143,109 in the six months ending June 30, 2017 as part of the exchange agreements and inducement costs. See Note 13 Common Stock in Notes to Consolidated Financial Statements in Part I, Item I of this report for additional information.

For the change in fair value of derivative liabilities, see the related discussion above under Three Months Ended June 30, 2017 Compared to the Three Months Ended June 30, 2016.

As detailed above under Three Months Ended June 30, 2017 Compared to the Three Months Ended June 30, 2016, the Company did not recognize a provision for income taxes for the six months ended June 30, 2017 or the comparable period in 2016.

Going Concern

The accompanying Consolidated Financial Statements have been prepared on the assumption that the Company will continue as a going concern. As detailed below, the Company requires additional financial resources to continue its operations. If we cannot obtain additional financial resources through additional debt and equity financings or the sale of assets, we may be forced to further curtail our operations or consider other strategic alternatives, which would likely result in substantially dilution of our current stockholders. Even if we are successful in raising additional financial resources, there can be no assurance regarding the timing or terms of any such transaction.

The Company continues to explore its alternatives as far as obtaining additional financial resources.  Since inception, we have been successful in raising funds and selling certain assets to fund our operations and believe that we will be successful in obtaining the necessary capital resources to fund our operations going forward; however, there can be no assurances that we will be able to secure any additional funding or capital resources or the terms and conditions of any such arrangements. These factors raise substantial doubt about our ability to continue as a going-concern.

The accompanying Consolidated Financial Statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

LIQUIDITY AND CAPITAL RESOURCES

The following section pertains to activity included in the Company’s Consolidated Balance Sheets and Consolidated Statements of Cash Flows, both of which are contained in Part I, Item 1 of this report.

As of June 30, 2017, the Company’s current assets totaled $500,448, current liabilities totaled $12,855,255, and working capital was a deficit of $12,354,807. As of December 31, 2016, current assets totaled $728,924, current liabilities $15,550,489, and working capital was a deficit of $14,821,565. Current assets decreased as accounts receivable, net, decreased due primarily to a decrease in sales for June 2017 as compared to December 2016 and the Company held a lower investment in inventory related to reclassifying LAESI inventory to fixed asset. The 20% decrease in current liabilities is due primarily to the decrease of derivative liabilities and related party advances offset by the increase in current maturities on short and long term debt, and a decrease in accounts payables.

As detailed in Note 10 Obligations to Stockholders and Note 12 Debt in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report, the Company continues to have a substantial amount of indebtedness outstanding that is payable within twelve months. As of the date of this report through September 30, 2017, scheduled interest and principal payments on outstanding debt (including capital leases) and payments related to debt obligations reaching maturity, total $3,289,361, excluding the balance of the line of credit, which the Company has reclassified as a current liability, but for which, by terms, does not mature until July 2018. As discussed under Cash Requirements below, the Company is in arrears on certain scheduled interest and principal payments on outstanding debt and has deferred payments to certain vendors and suppliers past stated terms. The Company also expects cash flows from operating activities to be a deficit during this period putting an additional burden on the Company to raise additional financial resources in order to meet its obligations and otherwise sustain operations.

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Net cash used in operating activities for the six months ended June 30, 2017 totaled $2,270,549, which represents a decrease of $570,142 or 20% from the net cash used in operating activities of $2,840,691 for the six months ended June 30, 2016. The largest factors for the improvement include a lower overall cost structure in 2017 and delaying payment of certain accounts payable and other current liabilities (see related discussion below under Cash Requirements).

Net cash provided in investing activities decreased 99% in the six months ended June 30, 2017 compared to the six months ended June 30, 2016. An increase usage of cash of $69,890 to purchase equipment for the lab in the six months ended June 30, 2017 offset by the receipt of cash of $85,355 from the sale of AzurRx stock contributed to the decrease in funds used in investing activities for the six months ending June 30, 2017. The comparable six months ending June 30, 2016 cash used in investing was only $7,817 offset by cash received of $1,358,127 from the sale of AzurRx stock sales and insurance claim.

Net cash provided by financing activities for the six months ended June 30, 2017 was 2,258,914, which represents an increase of $600,754 or 36% from the net cash provided by financing activities of 1,658,160 for the six months ended June 30, 2016. The first six months of 2017 include payments on debt and capital leases of $708,292 with payments of $201,133 in the comparable period in 2016. However, net activity involving stockholder advances and debt was $1,247,773 higher during the first six months of 2017. In addition, the first six months of 2017 included proceeds of $554,258 from the sale of common stock. Additional information regarding the Company’s issuance of debt to third parties during the first six months of 2017 can be found in Note 12 Debt in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report. Additional information regarding activity involving stockholder advances and debt can be found in Note 10 Obligation to Stockholders in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report. As discussed below, the Company requires additional capital resources to fund future operations, service outstanding debt, and continue as a going concern.

Cash Requirements

The Company’s Consolidated Financial Statements included in Part I, Item 1 of this report have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has funded its activities to date almost exclusively from debt and equity financings as well as sales of certain assets. Substantially all of the Company’s property and equipment are security for outstanding indebtedness. We will continue to require substantial funds to support our molecular information services business and service outstanding debt obligations, including scheduled interest and principal payments, and fulfilling payment obligations related to debt that has reached maturity.

The Company has experienced negative cash flows from operations since inception. Since inception, our operations have been funded primarily through proceeds received from the issuance of debt and sale of equity securities in private placement offerings and, from time-to-time, sales of certain assets. Management intends to continue to meet the Company’s operating cash flow requirements by raising additional funds from the sale of equity or debt securities, the sale of certain assets, and possibly developing corporate development partnerships to advance our molecular information technology development activities by sharing the costs of development and commercialization. For example, we could also enter into a transaction such as a merger with a business that is complimentary to ours.

We have also worked closely with various parties that financed our short- and long-term debt to obtain extensions and modifications that deferred or reduced amounts due under these obligations. Such extensions and modifications have included, in certain cases, the issuance of warrants. In addition, three members of the Company’s Board of Directors and the estate of a former board member guarantee payment of the Company’s outstanding bank line of credit. Such extensions, modifications and guarantees have been an important part of the Company’s ability to manage its liquidity and short-term capital resources. In addition, as part of these efforts, the Company has delayed payments to certain vendors and suppliers–as of June 30, 2017 the Company’s accounts payable balance of $1,143,007 included $1,112,900 that was overdue by terms, which includes $988,985 that was more than 90 days past due (see Note 16 Commitments and Contingencies included in Part I, Item 1 of this report for related information). The Company is also in arrears on scheduled interest and principal payments on certain other debt obligations, as discussed in more detail in Note 10 Obligations to Stockholders and Note 12 Debt, both of which are included in Part I, Item 1 of this report. There can be no assurances that the Company will be able to continue to obtain such extensions and modifications to outstanding debt, delay certain payments or use other methods such as guarantees by or advances from stockholders, when and if necessary, to ensure the Company has the liquidity and capital resources necessary to fund future operations and to continue as a going concern.

In January 2017 through March 2017, the Company sold Common Stock and accompanying warrants resulting in gross proceeds of $688,000; the Company received $554,258 after transaction costs.

Certain of the Company’s outstanding financial instruments contain anti-dilution provisions that may be triggered by the issuance of Common Stock or financial instruments such as Preferred Stock and warrants that are convertible or otherwise exchangeable or exercisable for shares of the Company’s Common Stock. As detailed in Note 13 Common Stock included in Part I, Item 1 of this report, the Company’s sale of Common Stock in the 2016-17 Offering triggered anti-dilution provisions included in certain outstanding financial instruments and resulted in substantial dilution to the Company’s existing investors that did not have such protection. See also Note 4 Derivative Liabilities included in Part I, Item 1 of this report for additional information related to the estimated fair value of the anti-dilution provisions included in the Company’s financial instruments that were outstanding as of June 30, 2017.

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The Company continues to explore its alternatives as far as obtaining additional financial resources.  Since inception, we have been successful in raising funds and selling certain assets to fund our operations and believe that we will be successful in obtaining the necessary capital resources to fund our operations going forward; however, there can be no assurances that we will be able to secure any additional funding or capital resources or the terms and conditions of any such arrangements. These factors raise substantial doubt about our ability to continue as a going-concern.

The accompanying Consolidated Financial Statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

The Company continues to have an immediate need for additional working capital to sustain its current level of operations. Based on our current projections, management estimates that the Company will need in approximately $8.5 – $10 million in additional working capital to maintain the current level of operations, meet scheduled interest and principal payments on outstanding debt, and meet payment obligations related to debt reaching maturity, for the next twelve calendar months. As discussed above, the Company has recently raised additional funds through the issuance of and Common Stock; however, the Company must raise additional capital resources to sustain operations and meet existing obligations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts. 

CRITICAL ACCOUNTING POLICIES

For information regarding critical accounting policies see Note 1 Description of Business and Basis of Presentation in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For information regarding recently issued accounting pronouncements please see Note 1 Description of Business and Basis of Presentation in Notes to Consolidated Financial Statements, which are included in Part I, Item 1 of this report.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, regulations and related forms, and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of June 30, 2017, we carried out an evaluation, under the supervision and with the participation of our principal executive officer on the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our management concluded as a result of material weaknesses in our internal control over financial reporting, our disclosure controls and procedures were not effective as of June 30, 2017. The ineffectiveness of our disclosure controls and procedures was due to the following material weaknesses of our internal control over financial reporting, which are common to many small companies: (1) lack of sufficient personnel commensurate with the Company’s reporting requirements; (2) the Company did not consistently establish appropriate authorities and responsibilities in pursuit of the Company’s financial reporting objectives; and (3) insufficient written documentation or training of internal control policies and procedures which provide staff with guidance or framework for accounting and disclosing financial transactions.

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Despite the existence of the material weaknesses cited above, we believe that the Consolidated Financial Statements contained in this Form 10-Q fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting during the quarter ended June 30, 2017 that have materially affected or are reasonably likely to materially affect our internal controls.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm business.

In 2016, the Company received three court summonses for past due accounts payables. The claims totaled $213,032 and are related to amounts the Company has properly accounted for in its accounting records, including late-payment fees and interest, if applicable. In December 2016, the Company entered into a confessed judgement with one of the vendor agreeing to make payment of $161,889.16 in full by January 31, 2017. Two payments of $25,000 each were made in December 2016 leaving a balance of $111,889.16 to pay by January 31, 2017. The Company made full and final payment of $111,889.16 on the confessed judgement on January 31, 2017.

In July 2017, the Company received a Request for Entry of Judgement from Johns Hopkins University dated June 14, 2017. The judgement against the Company is in excess of $93,664 ($74,359 in fees plus $19,305 in interest) pursuant to the Agreement between Johns Hopkins University and the Company. As of the date of this report total claims are $130,664.

Legal Proceedings

The Company currently is not a party to any material legal proceeding and has no knowledge of any material legal proceeding contemplated by any governmental authority or third party. The Company may be subject to a number of claims and legal proceedings which, in the opinion of our management, are incidental to normal business operations. In managements’ opinion, although final settlement of these claims and suits may impact the financial statements in a particular period, they will not, in the aggregate, have a material adverse effect on the Company’s financial position, cash flows or results of operations.

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Item 1A. Risk Factors.

There are no material changes from the risk factors previously disclosed in the 2016 Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

Other than as reported in our Current Reports on Form 8-K filed with the SEC, and as set forth below, we have not sold any of our equity securities during the period covered by this Report.

Conversion of Obligations to Stockholder

During the six months ended June 30, 2017, certain related parties agreed to convert $2,320,400 of such Stockholder advances received on or before December 31, 2016 and $326,319 of such Stockholder advances received in 2017 along with accrued interest of $92,319 into units of our securities consisting of (a) 36,520,494 shares of our Common Stock (at a conversion price of $0.075 per share) plus (b) an eighteen-month warrant to purchase an additional 36,520,494 share of Common Stock at an exercise price of $0.09 per share and (c) a five-year warrant to purchase an additional 36,520,494 shares of Common Stock at an exercise price of $0.1125 per share containing identical terms to the units of equity securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017. In May 2017, the related parties agreed to exchange one Class A warrant and one Class B warrant for 1.5 shares of Common Stock. Upon exchange, the holders will receive 54,680,744 shares of Common Stock.

Exchange Agreements

In addition, the anti-dilution provisions contained in many of our outstanding securities between 2013 and 2017 has created significant derivative liabilities for our Company. As of December 31, 2016, such derivative liability has been calculated to be in excess of $3,100,000 and increases as we sell additional warrants. Such derivative liability directly impacts and reduces our stockholders equity which could materially and adversely affect our ability in the future to qualify to list our common stock for trading on the Nasdaq Capital Market or other comparable national securities exchange.

In order to cure our defaults in payment of our debt securities and to reduce, if not eliminate, the derivative liability, we:

Offered to the holder(s) of all $2,270,688 of 20% original issue discount debentures issued in 2016, an opportunity under Section 3(a)(9) of the Securities Act of 1933, as amended, to exchange their debentures for a new 20% original issued discount convertible debenture due September 30, 2017, plus one share of our Common Stock for each $1.00 outstanding principal amount of the new 20% OID convertible debenture issued to them. As proposed, the contemplated restated 20% OID convertible debenture would be in face amount equal to 100% of the outstanding principal of and accrued interest on the earlier convertible debentures and, upon consummation of any subsequent public offering of our common stock that is registered under the Securities Act prior to the new maturity date, would be subject to mandatory conversion at a 20% discount to the initial public offering price of our Common Stock (the “OID Convertible Debenture Exchange Offer”). As of the date of this report, an aggregate of $1,680,719 of the 2016 20% OID Debentures were exchanged for $1,764,755 of new 20% OID Debentures due September 30, 2017, and the parties to the exchange offer received an additional 1,856,196  shares of our common stock.

Offered to the 156 holders of our common stock and warrants issued in the 2013 offering, an opportunity under Section 3(a)(9) of the Securities Act, to (a) waive for all purposes the “make whole” provisions in their subscription agreement in exchange for one-quarter of a warrant exercisable at $0.09 per share for each of the 103,497,609 shares of Common Stock issued and issuable to them in the 2013 Offering (approximately 25,874,399 additional warrants) which would contain no weighted average or full ratchet anti-dilution provisions, plus (b) exchange all of the outstanding 2013 B Warrants issued in the 2013 offering (approximately 7,762,321 warrants) for one additional share of our common stock (the “2013 Exchange Offer”). As of the date of this report, 116 of the purchasers of our securities in the 2013 offering accepted the exchange offer resulting in 6,162,570 shares of common stock and warrants to purchase 20,541,895 shares of common stock being issued.  

Offered to the 72 holders of our common stock and warrants issued in the 2016-17 Offering, an opportunity under Section 3(a)(9) of the Securities Act of 1933, as amended, to exchange all of their 2016-17 Class A Warrants and 2016-17 Class B Warrants for 1.5 shares of Common Stock for each 2016-17 Class A Warrant and 2016-17 Class B Warrant (the “2016-17 Exchange Offer”). Accordingly, each $10,000 Unit that represented 13,333.33 shares of common stock, plus 13,333.33 of 2016-17 Class A Warrants and 13,333.33 of 2016-17 Class B Warrants would be exchanged for 70,180,982 shares of Common Stock, representing (a) 28,072,393 shares of Common Stock, plus (ii) 42,108,589 additional shares of common stock issued in lieu of the 2016-17 Class A Warrants and 2016-17 Class B Warrants. As of the date of this report, 69 of the purchasers of our securities in the 2016-17 offering accepted the exchange offer  resulting in 38,608,616 additional shares of common stock being issued.

33

Consultant Agreements

On April 25, 2017, the Company entered into one (1) consulting agreement. This agreement was entered into for business advisory services and has a term period from April 25, 2017 through December 31, 2017. The Company will compensate the Consultant by issuing 250,000 shares of Common Stock no later than 30 days from the effective date. These shares were issued in May 2017.

On June 30, 2017, the Company issued 250,000 shares of Common Stock to a certain consultant as part of his consulting agreement dated December 2016. The agreement states the Company is to pay 250,000 shares of Common Stock upon completion of the 2016-17 Unit Offering, which was completed on March 31, 2017.

Conversion of Accounts Payable

In December 2016, the Company’s Board of Directors authorized the conversion of an aggregate of $50,000 of accounts payable to a vendor into 666,667 shares of Common Stock at the rate of $0.075 per share. The vendor was also issued an A Warrant and B Warrant with the same terms and agreement as the 2016-17 offering. In June 2017, the vendor was offered an opportunity to exchange one (1) Class A warrant and one (1) Class B warrant for 1.5 shares of common stock. In June 2017, vendor was issued an additional 1,000,000 shares of common stock pursuant to this exchange.

The securities described above were issued pursuant to the exemption from registration provided by Rule 506 of Regulation D or Section 4(a)(2) of the Securities Act of 1933, as amended. In determining that the issuance of the securities qualified for an exemption under Section 4(a)(2) of the Securities Act, the Company relied on the following facts:(i) the recipients were either accredited investors or sophisticated investors as defined in Rule 501 promulgated under the Securities Act who had access to information about the Company that was generally the same as information required to be delivered in a registered offering; and (ii) the Company did not use any form of general solicitation or advertising to offer the securities issued.

Item 3.  Defaults upon Senior Securities.

Convertible Debentures and September 2016 OID Note

As of June 30, 2017, the Company is in default under approximately $589,969 of outstanding debt securities owed to six investors and were unable to obtaining extension of the maturity at this time. The Company is offering to the holder(s) of all $2,270,688 of OID Debentures plus accrued interest of $113,534, an opportunity under Section 3(a)(9) of the Securities Act of 1933, as amended, to exchange their debentures for a new 20% OID convertible debenture due September 30, 2017, plus one share of our Common Stock for each $1.00 outstanding principal amount of the new 20% OID convertible debenture issued to them. As proposed, the contemplated restated 20% OID convertible debenture would be in face amount equal to 100% of the outstanding principal of and accrued interest on the earlier convertible debentures and, upon consummation of any subsequent public offering of our Common Stock that is registered under the Securities Act prior to the new maturity date, would be subject to mandatory conversion at a 20% discount to the initial public offering price of our Common Stock (the “OID Convertible Debenture Exchange Offer”). The OID Convertible Debenture Exchange Offering will be offered for a period expiring on the earlier of June 30, 2017 or acceptance of the OID Convertible Debenture Exchange Offer by 100% of the holders of such OID Debentures.

As of June 30, 2017, an aggregate of $1,680,719 of the 2016 20% OID Debentures were exchanged for $1,764,755 of new 20% OID Debentures due September 30, 2017, and the parties to the exchange offer received an additional 1,764,755 shares of our common stock.

Capital Leases

From time to time, in the normal course of business, the Company enters into capital leases to finance equipment. As of June 30, 2017, the Company had six capital lease obligations outstanding with imputed interest rates ranging from 5.04% to 9.45%. The capital leases require 24 – 60 monthly payments and expire in June 2017 – June 2020. These leases are secured by equipment with an aggregate cost of $1,868,809. As of June 30, 2017, the Company was two and a half months in arears on two capital lease payments. 

Obligations to Stockholder

On April 7, 2017, we received a loan for proceeds of up to $1,750,000 from Summit Resources, Inc., one of our principal stockholders and an affiliate of Steve Antoline, one of our directors. The loaned amount includes $500,000 advanced as of June 30, 2017 by Summit and an additional $1,250,000 will be advanced to us from April 2017 through August 2017 for the purchase of a new mass spectrometer. In August 2017, the Company decided not to purchase the new mass spectrometer and is working with Summit Resources, Inc. to amend the note agreement. We issued to Summit our senior secured promissory note in the principal amount of up to $1,750,000 that is payable in monthly installments over a period of 36 months. In addition, the Company granted a seven-year warrant to purchase 20,000,000 shares of the Company’s common stock at an exercise price of $0.075 per share. The relative fair value of the warrants at the issuance date was $305,500, which was recorded as a discount against the note and will be accreted over the life of the note. The Company recognized accretion expense of $25,458 relating to the warrant for the three and six months ending June 30, 2017.

We have agreed to apply 30% of the net proceeds (after commissions and offering expenses we receive) from any equity or equity type financing to reduce and prepay the $500,000 working capital portion of the loan. In addition, the entire loan is subject to mandatory prepayment in the event and to the extent that we receive gross proceeds of $5,000,000 or more from any subsequent public offering of our securities. We are currently in default of this agreement for which proceeds were received, from an original issued discounted note, at the end of June and the Company was unable to made the required 30% of net proceeds payment on the loan.

Commencing 30 days after installation of the Instrument we will pay monthly installments of principal and accrued interest in the amount equal to the greater of (a) $62,030.86 (representing 36 monthly installments of principal and accrued interest at the rate of 15% per annum), or (b) 20% of the cash proceeds we receive from customers who request services from the Company using the new mass spectrometer equipment. We also agreed to establish a special lock box to deposit cash proceeds we receive from use of such equipment.

34

The Note is convertible into shares of our Common Stock, at the option of the holder at a conversion price equal to the lower of $0.075 per share (as adjusted by the contemplated reverse stock split), or (b) 85% of the offering price per share of the Common Stock in any subsequent public offering of our Common Stock.

The loan is secured by a first lien and security interest on all of our assets and properties, including the purchased equipment and all purchase orders we receive in connection therewith.

In a related development on April 21, 2017, we entered into an agreement with Summit under which Summit:

• Consented to the exchange agreement with GRQ and waived any defaults on our part under the Summit loan agreement; and

• Agreed to waive its security interest in the GRQ Collateral until such time as we pay the $301,577.79 obligation to GRQ.

The Company and our subsidiary reaffirmed Summit’s senior priority lien and security interest on all of our assets and properties, other than the specific GRQ Collateral. On June 28, 2017, the Company has paid the GRQ note in full and such security interest has been reinstated.

Bank Line of Credit

The Company has a line of credit with a bank that is authorized to $3,000,000. The interest rate is variable and equal to 0.75% plus prime with a minimum rate of 5.87% per annum. The line of credit is subject to an annual review and certain covenants. Borrowings under the line are secured by the personal guarantee of two members of the Board of Directors and the estate of two former members of the Board of Directors. On June 20, 2016, the Company and the bank entered into an agreement that established July 12, 2018 as the maturity date for the outstanding balance of the line of credit, which was $3,000,000 as of June 30, 2017 and December 31, 2016, respectively.

The Company’s line of credit with the bank requires the Company to adhere to certain customary covenants. For example, the bank can issue a default notice to the Company and accelerate payment of the outstanding balance if the Company fails to make a scheduled interest payment to the bank, is in default under any agreement with a third party which materially and adversely affects the Company’s property, operations or financial condition, or the Company does not make timely payments on property that is useful its business, including maintenance and repairs of such property.

As of the date of this report, the Company is one month in arrears with scheduled payments to the bank. The bank has not issued any notice to the Company regarding any default or possible default under the line of credit; however, this has caused the Company to classify the line of credit as a current liability.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information.

Not applicable.

35

Item 6.  Exhibits.

(a) Exhibits required by Item 601 of Regulation S-K.

Exhibit No.	Description
31.1	Certification of the Company’s Chief Executive Officer (principal executive and interim principal financial officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (filed herewith)
32.1	Certification of the Company’s Chief Executive Officer (principal executive and interim principal financial officer) pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) (This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.)

EX-101.INS	XBRL Instance Document (filed herewith)
EX-101.SCH	XBRL Taxonomy Extension Schema (filed herewith)
EX-101.CAL	XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
EX-101.DEF	XBRL Taxonomy Extension Definition Linkbase (filed herewith)
EX-101.LAB	XBRL Taxonomy Extension Label Linkbase (filed herewith)
EX-101.PRE	XBRL Taxonomy Extension Presentation Linkbase (filed herewith)

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Protea Bioscience Group, Inc. (Registrant)
Dated: August 18, 2017	By:	/s/ Stephen Turner
		Stephen Turner
		Chief Executive Officer and Chairman of the Board
		(Principal Executive Officer, Interim Principal Financial and Accounting Officer)

37

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and

Securities and Exchange Commission Release 34-46427

I, Stephen Turner, certify that:

1. I have reviewed this Current Report on Form 10-Q for the quarter ended June 30, 2017, of Protea Biosciences Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 18, 2017	/s/ Stephen Turner
	Stephen Turner
	Chief Executive Officer and Chairman of the Board
	(Principal Executive Officer, Interim Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Protea Biosciences Group, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2017, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen Turner, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 18, 2017	/s/ Stephen Turner
	Stephen Turner
	Chief Executive Officer and Chairman of the Board
	(Principal Executive Officer, Interim Principal Financial and Accounting Officer)

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 17, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Entity Registrant Name	Protea Biosciences Group, Inc.
Entity Central Index Key	0001335103
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	PRGB
Entity Common Stock, Shares Outstanding		397,066,287

XML

Consolidated Balance Sheets - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 82,652	$ 78,720
Accounts receivable, less allowance for doubtful accounts of $3,000 and $7,000 as of June 30, 2017 and December 31, 2016, respectively	202,540	436,933
Inventory	38,281	92,244
Prepaid expenses	176,975	121,027
Total current assets	500,448	728,924
Property and equipment, net	2,305,745	2,466,125
Deposits and other noncurrent assets	19,166	19,041
Total Assets	2,825,359	3,214,090
Current liabilities
Current maturities on short and long-term debt, net of discount	4,496,239	4,012,149
Accounts payable	1,143,007	1,796,416
Bank line of credit	3,000,000	3,000,000
Obligations to stockholders, net of discount	1,662,144	3,087,956
Derivative liabilities	1,752,222	3,097,921
Other current liabilities	801,643	556,047
Total current liabilities	12,855,255	15,550,489
Long-term debt, net of current maturities	1,776,185	1,769,355
Stockholders’ Deficit
Preferred stock ($0.0001 par value; 10,000,000 shares authorized; none issued or outstanding as of June 30, 2017 and December 31, 2016)	0	0
Common stock ($0.0001 par value; 750,000,000 shares authorized; 394,538,316 and 162,471,373 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively)	39,454	16,247
Additional paid-in capital	94,765,824	81,123,483
Accumulated deficit	(106,611,507)	(95,245,530)
Accumulated other comprehensive income	148	46
Total Stockholders’ Deficit	(11,806,081)	(14,105,754)
Total Liabilities and Stockholders’ Deficit	$ 2,825,359	$ 3,214,090

XML

Consolidated Balance Sheets [Parenthetical] - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Allowance for Doubtful Accounts Receivable, Current	$ 3,000	$ 7,000
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	750,000,000	750,000,000
Common stock, shares issued	394,538,316	162,471,373
Common stock, shares outstanding	394,538,316	162,471,373

XML

Consolidated Statements of Operations and Comprehensive Loss - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Gross revenue	$ 328,092	$ 581,764	$ 682,928	$ 1,057,102
Cost of revenue	(389,518)	(489,605)	(676,914)	(693,980)
Gross profit	(61,426)	92,159	6,014	363,122
Selling, general and administrative expenses	(1,110,475)	(1,388,139)	(2,607,781)	(2,992,542)
Research and development expense	(198,551)	(139,502)	(327,491)	(372,112)
Loss from operations	(1,370,452)	(1,435,482)	(2,929,258)	(3,001,532)
Other income (expense)
Gains from sales of investment	85,355	675,000	85,355	1,312,100
Gain (loss) on disposal of assets	(58,544)	(329)	(73,931)	(511)
Gain from insurance recovery	0	45,952	0	45,952
Interest expense	(1,191,154)	(373,345)	(1,651,472)	(523,674)
Exchange conversion costs	(8,138,109)	0	(8,143,109)	0
Change in fair value of derivative liabilities	5,171,902	(719,349)	1,345,699	(726,817)
Other income (expense)	(346)	(45)	739	1,341
Total other income (expense)	(4,130,896)	(372,116)	(8,436,719)	108,391
Loss before income taxes	(5,501,348)	(1,807,598)	(11,365,977)	(2,893,141)
Provision for income taxes	0	0	0	0
Net loss	(5,501,348)	(1,807,598)	(11,365,977)	(2,893,141)
Foreign currency translation adjustment	47	(272)	102	(224)
Total comprehensive loss	$ (5,501,301)	$ (1,807,870)	$ (11,365,875)	$ (2,893,365)
Weighted average number of shares of Common stock outstanding - basic and diluted (in shares)	305,163,939	133,687,552	237,439,183	133,494,583
Net loss per share - basic and diluted (in dollars per share)	$ (0.02)	$ (0.01)	$ (0.05)	$ (0.02)

XML

Consolidated Statements of Stockholders' Deficit - 6 months ended Jun. 30, 2017 - USD ($)	Total	Preferred Stock [Member]	Common Stock [Member]		Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Dec. 31, 2016	$ (14,105,754)	$ 0	$ 16,247		$ 81,123,483	$ (95,245,530)	$ 46
Balance (in shares) at Dec. 31, 2016		0	162,471,373
Issuance of common stock, net issuance costs of $133,742	554,258	$ 0	$ 917		553,341	0	0
Issuance of common stock, net issuance costs of $133,742 (in shares)		0	9,173,330
Issuance of stock per exchange offers, net of issuance costs of $4,150	7,758,960	$ 0	$ 10,351		7,748,609	0	0
Issuance of stock per exchange offers, net of issuance costs of $4,150 (in shares)		0	103,508,126
Issuance of stock for services	356,350	$ 0	$ 542		355,808	0	0
Issuance of stock for services (in shares)		0	5,416,667
Issuance of stock for short-term convertible note	375,000	$ 0	$ 500		374,500	0	0
Issuance of stock for short-term convertible note (in shares)		0	5,000,000
Issuance of stock upon conversion of related party debt	2,739,037	$ 0	$ 3,652		2,735,385	0	0
Issuance of stock upon conversion of related party debt (in shares)		0	36,520,495
Issuance of stock under anti-dilution provision	0	$ 0	$ 7,245		(7,245)	0	0
Issuance of stock under anti-dilution provision (in shares)		0	72,448,325
Stock warrants issued for services and debt	1,757,067	$ 0	$ 0		1,757,067	0	0
Stock-based compensation expense	124,876	0	0		124,876	0	0
Net loss	(11,365,977)	0	0		0	(11,365,977)	0
Foreign currency translation adjustment	102	0	0		0	0	102
Balance at Jun. 30, 2017	$ (11,806,081)		$ 39,454		$ 94,765,824	$ (106,611,507)	$ 148
Balance (in shares) at Jun. 30, 2017			394,538,316	[1]

[1] Includes 8,889,503 shares that contain an anti-dilution provision

XML

Consolidated Statements of Stockholders' Deficit [Parenthetical]	6 Months Ended
	Jun. 30, 2017 USD ($) $ / shares
Common Stock, Par or Stated Value Per Share	$ 0.0001
Preferred Stock, Par or Stated Value Per Share	0.0001
Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share	0.0001
Common Stock [Member]
Common Stock, Par or Stated Value Per Share	$ 0.0001
Issuance Cost | $	$ 133,742
Exchange Offer [Member]
Issuance Cost | $	$ 4,150

XML

Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net loss	$ (11,365,977)	$ (2,893,141)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	306,359	319,128
Stock-based compensation	124,876	122,223
Issuance of common stock and warrants for services	2,113,417	75,000
Issuance of preferred and common stock for accrued interest	0	0
Accretion of original issue discount on short-term convertible notes	42,563	145,681
Accretion of warrants and debt issue costs on short-term convertible notes	(578,947)	105,255
Exchange conversion costs	8,143,109	0
(Gains) losses from disposal of assets	101,477	511
Gains from sales of investment	(85,355)	(1,312,100)
Gain from insurance recovery	0	(45,952)
Bad debt expense	0	0
Expense from the change in fair value of derivative liabilities	(1,345,699)	726,817
Net changes in certain assets and liabilities:
Accounts receivable	234,393	(179,258)
Prepaid expenses	(55,948)	(23,816)
Inventory	900	521
Other noncurrent assets	(125)	0
Accounts payable	(349,120)	(39,164)
Other current liabilities	443,528	157,604
Net cash used in operating activities	(2,270,549)	(2,840,691)
Cash flows from investing activities:
Purchase of and deposits on equipment	(69,890)	(7,817)
Proceeds from sale of equipment	0	75
Proceeds from sale of investment	85,355	1,312,100
Proceeds from insurance recovery	0	45,952
Net cash provided by investing activities	15,465	1,350,310
Cash flows from financing activities:
Proceeds from advances from stockholders	1,424,148	176,375
Payments on advances from stockholders	(6,200)	(74,376)
Proceeds from issuances of debt	1,000,000	2,060,000
Payments of debt issuance costs	0	(302,707)
Payments on debt	(501,577)	(7,783)
Payments on capital leases	(206,715)	(193,349)
Payment on loan modification fee	(5,000)	0
Proceeds from sale of common stock, net	554,258	0
Net cash provided by financing activities	2,258,914	1,658,160
Effect of exchange rate changes on cash	102	(224)
Net increase (decrease) in cash	3,932	167,555
Cash, beginning of period	78,720	6,450
Cash, end of period	$ 82,652	$ 174,005

XML

Description of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations [Text Block]

1. Description of Business and Basis of Presentation

The Company

Protea Biosciences Group, Inc. (referred to herein as “Protea,” “the Company,” “we,” “us” and “our”) is an emerging growth, molecular information company that has developed a revolutionary platform technology that enables the direct analysis, mapping and display of biologically active molecules in living cells and tissue samples. The technology platform offers new, unprecedented capabilities useful to the pharmaceutical, diagnostic, clinical research, agricultural and life science industries. “Molecular information” refers to the generation and bioinformatic processing of very large data sets, known as “big data,” obtained by applying the Company’s technology to identify and characterize the proteins, metabolites, lipids and other molecules which are the biologically active molecular products of all living cells and life forms.

Our technology is used to improve pharmaceutical development and life science research productivity and outcomes, and to extend and add value to other technologies that are used in research and development, such as three-dimensional tissue models, biomarker discovery, synthetic biologicals and mass spectrometry. In particular, the Company believes that its ability to rapidly provide comprehensive molecular image-based datasets addresses a universal need of the pharmaceutical, diagnostic and clinical research and life science industries.

The Company’s commercial development is centered on three lines of business:

⋅ Molecular information services – We believe that we are the commercial leader in providing multi-modal Mass Spectrometry Imaging (“MSI”), combining Laser Ablation Electrospray Ionization (“LAESI®”), Matrix Assisted Laser Desorption Ionization (“MALDI”) and optical microscopy. Our proprietary services enable the identification and quantitation of both small molecules (e.g., lipids and metabolites) and large molecules (e.g., proteins) and our services portfolio, inclusive of MSI, proteomics, metabolomics, lipidomics and bioinformatics is unique in the industry. Our clients include major pharmaceutical, chemical and biotechnology companies;

⋅ LAESI® instrument platform – We offer our proprietary LAESI® DP-1000 instrument, software and bioanalytical consumables to corporate and academic research laboratories; and

⋅ Molecular diagnostics and clinical research – We apply our multi-modal MSI technologies and workflows in partnership with top-tier medical research institutions to co-develop new molecular diagnostic tests that the company believes can be used to improve the diagnosis and prognosis of cancer and provide requisite information useful in predicting the outcome of cancer treatment. Our current test development programs target the differential diagnosis and prognosis of malignant melanoma and the molecular profiling of subpopulations of cells in lung adenocarcinoma.

Basis of Presentation

The unaudited consolidated financial statements (the “Consolidated Financial Statements”) include the accounts of Protea Biosciences Group, Inc. and its wholly-owned subsidiary, Protea Biosciences, Inc. In the opinion of management, these statements have been prepared on a basis consistent with the December 31, 2016 audited Consolidated Financial Statements and include all material adjustments, consisting of normal recurring adjustments and the elimination of material intercompany transactions and balances, necessary for a fair presentation of the Company’s consolidated financial position and results of operations for the interim periods presented. These unaudited, interim, Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include certain information and footnotes normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements.

The consolidated results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results of operations for the full fiscal year. These Consolidated Financial Statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on April 14, 2017 (the “2016 Form 10-K”).

Emerging Growth Company

The Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections 14A(a) and (b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to hold a nonbinding advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved.

The Company has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our consolidated financial statements may not be comparable to companies that are required to comply with revised dates.

We will remain an “emerging growth company” for up to five years following our initial public offering, that is, until February 2019, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our common stock held by non-affiliates exceeds $700 million as of any period ending June 30.

To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange Act, even after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosure requirements, and; (3) the requirement to provide only two years of audited financial statements instead of three years of audited financial statements in our annual report.

Critical Accounting Policies

Information with respect to the Company’s critical accounting policies which management believes are the most important to the portrayal of the Company’s reported results of operations and financial condition and that require management’s most difficult, subjective or complex judgements, often as the result of the need to make estimates about the effects of matters that are inherently uncertain, is contained in Part II, Item 7, of our 2016 Form 10-K.

Recently Issued Accounting Pronouncements

There were no changes, except as described below to the recently issued accounting pronouncements as described in the consolidated financial statements included in our 2016 Form 10-K.

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815). Part I of this Update addresses the complexity of accounting for certain financial instruments with down-round features. The amendments sin Part I of this update change the classification analysis of certain equity-lined financial instruments (or embedded features) with down-round features. When determining whether certain financial instruments should be classified as liability or equity instruments, a down-round feature no longer precludes equity classification when assessing wither the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. For public business entities, the amendments in Part I for this update are effective for fiscal years and interim periods with those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes the interim period. The Company is evaluating the impact of the revised guidance and believes that this will have a significant impact on its consolidated financial statements.

Going Concern

The Company’s Consolidated Financial Statements included in this report have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has funded its activities to date almost exclusively from debt and equity financings as well as sales of certain assets. Substantially all of the Company’s property and equipment are security for outstanding indebtedness. We will continue to require substantial funds to support our molecular information services business and advance global commercialization of our LAESI® instrument platform and service outstanding debt obligations, including scheduled interest and principal payments, and fulfilling payment obligations related to debt that has reached maturity.

The Company has experienced negative cash flows from operations since inception. Since inception, our operations have been funded primarily through proceeds received from the issuance of debt, the sale of equity securities in private placement offerings and from time-to-time, sales of certain assets. Management intends to continue to meet the Company’s operating cash flow requirements by raising additional funds from the sale of equity or debt securities, the sale of certain assets, and possibly through developing corporate development partnerships to advance our molecular information technology development activities by sharing the costs of development and commercialization. For example, we could also enter into a transaction such as a merger with a business that is complimentary to ours.

We have also worked closely with various parties that financed our short- and long-term debt to obtain extensions and modifications that deferred or reduced amounts due under these obligations. Such extensions and modifications have included, in certain cases, the issuance of warrants. In addition, two members of the Company’s Board of Directors and the estate of two former board members guarantee payment of the Company’s outstanding bank line of credit. Such extensions, modifications and guarantees have been an important part of the Company’s ability to manage its liquidity and short-term capital resources. In addition, as part of these efforts, the Company has delayed payments to certain vendors and suppliers. As of June 30, 2017, the Company’s accounts payable balance of $1,143,007 included $1,112,900 that was overdue by its terms, $988,985 of which that was more than 90 days past due. Included in the $988,985 balance are amounts the Company owes for lab supplies, temporary employees, legal fees, interest payments and consulting. In April 2017, we received $500,000 in working capital from the loan of $1,750,000 from Summit Resources, Inc. (the “Summit Resources Loan”), one of our principal stockholders and an affiliate of Steve Antoline, one of our directors that was executed on April 7, 2017, see Note 12 Debt for more information. In June 2017, we received a original issue discount note (or OID Note) of $1,000,000 with a face value of $1,200,000, see Note 12 Debt for more information. The Company is in arrears on scheduled interest and principal payments on certain other debt obligations, as discussed in more detail Note 12 Debt. There can be no assurances that the Company will be able to continue to obtain such extensions and modifications to outstanding debt, delay certain payments or use other methods such as guarantees by or advances from stockholders, when and if necessary, to ensure the Company has the liquidity and capital resources necessary to fund future operations and to continue as a going concern.

The bank line of credit has been presented as a currently liability as the Company was in arrears with its interest at June 30, 2017. The line of credit of $3,000,000 has a due date of July 2018. See Note 9 Bank Line of Credit for more details.

As of the date of this report, the Company is in default on three (3) short-term convertible notes with the principal amount totaling $337,969. The Company is working on an agreement with the holders of certain short-term convertible notes exchanged in September through November 2016 (the “Exchange Notes”) to extend the maturity date to September 30, 2017. The Exchange Notes shall have a principal amount totaling $2,384,222, which represents the Original Principal Amount plus accrued interest of 10% per annum for each of the Exchange Notes. In addition, the notes shall extend the maturity dates under the Exchange Notes to September 30, 2017. As mentioned above, one element of the Company’s strategy to manage its liquidity and capital resources and otherwise continue as a going concern is to obtain extensions and modifications to outstanding debt.

During the six months ended June 30, 2017, the Company’s debt obligation to stockholders decreased by $2,646,719 due to the Company issuing 36,520,494 shares of its Common Stock and warrants to purchase an aggregate of 73,040,988 shares of Common Stock as part of the Company’s “Insider Debt Conversion Agreement.” In June 2017, the Class A and Class B warrants that had been issued with the same terms as the 2016/17 Offering, were exchanged for 54,880,744 shares of Common Stock. See Note 10 Obligations to Shareholders and Note 13 Common Stock for additional information about these transactions.

In the first quarter of 2017, the Company issued 9,173,332 shares of its Common Stock and warrants to purchase an aggregate of 18,346,662 shares of Common Stock resulting in gross proceeds of $688,000 associated with the 2016-17 Offering. See Note 13 Common Stock and Note 15 Warrants for additional information about these transactions.

We have sold most our investment in AzurRx BioPharma, Inc. (“AzurRx”) as a means of obtaining additional cash in prior periods. As of June 30, 2017, our ownership interest in AzurRx was 1.36% on a fully-diluted basis. As of the date of this report, the Company holds 100,757 shares of AzurRx common stock, 100,000 of which is subject to an option agreement under which a counterparty, who is the CEO of AzurRx and a former board of director of the Company, has an option to purchase these shares from the Company for $1.00 per share from January 4, 2016 through January 4, 2021. In May 2017, as a means of obtaining additional cash, the Company sold 25,000 shares of its AzurRx common stock for $85,355 on the open market.

Certain of the Company’s outstanding financial instruments contain anti-dilution provisions that may be triggered by the issuance of Common Stock or financial instruments such as Preferred Stock and warrants that are convertible or otherwise exchangeable for shares of the Company’s Common Stock. As a result of the 2016/17 Offering anti-dilution provisions under certain outstanding financial instruments have been triggered and 72,448,325 shares of Common Stock were issued to the 2013 investors with anti-dilutuion protection. Under such provisions the Company shall issue 1,567,653 shares of Common Stock to the 2015 investors with anti-dilution protection. The amount of anti-dilution shares relating to this trigger results in significant dilution to investors without such protection. See Note 4 Fair Value of Financial Assets and Liabilities – Derivative Financial Instruments for additional information. See also Note 3 Derivative Liabilities for additional information related to the estimated fair value of the anti-dilution provisions included in the Company’s financial instruments that were outstanding as of June 30, 2017.

Aside from further issuances of its Common Stock, the Company is exploring other options for obtaining additional financial resources such as the issuances of short-term debentures and Preferred Stock.

There can be no assurance that we will be successful in raising enough funds to sustain operations.

Since inception, we have been successful in raising funds and selling certain assets to fund our operations and believe that we will be successful in obtaining the necessary capital resources to fund our operations going forward; however, there can be no assurances that we will be able to secure any additional funding or capital resources or the terms and conditions of any such arrangements. These factors raise substantial doubt about our ability to continue as a going-concern.

The accompanying Consolidated Financial Statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

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Gross Revenue

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

2. Gross Revenue

The Company recognizes revenue from three major components: molecular information services, LAESI® instrument platform and research products.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Molecular information services	$	256,947	$	494,821	$	514,700	$	711,873
LAESI® instrument platform		24,361		7,126		31,243		186,921
Research products		46,784		79,817		136,985		158,308
Gross revenue	$	328,092	$	581,764	$	682,928	$	1,057,102

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Derivative Liabilities

6 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

3. Derivative Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. However, the Company has certain financial instruments that are embedded derivatives associated with certain capital raises and common stock purchase warrants. The Company evaluates all of its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with FASB Accounting Standards Codification 815-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. If the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either income or expense. Upon conversion or exercise, the derivative liability is marked to fair value at the conversion date and then the related fair value is reclassified to equity. See also Note 4 Fair Value of Financial Assets and Liabilities – Derivative Financial Instruments.

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Fair Value of Financial Assets and Liabilities - Derivative Financial Instruments

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Derivatives and Fair Value [Text Block]

4. Fair Value of Financial Assets and Liabilities – Derivative Financial Instruments

We measure the fair value of financial assets and liabilities in accordance with GAAP, which defines fair value, establishes a framework for measuring fair value and requires certain disclosures about fair value measurements.

GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The three levels of inputs used to measure fair value:

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example, the probability of a capital raise in a “binomial” methodology for valuation of a derivative liability directly related to the issuance of common stock warrants)

The Company has entered into certain financial instruments, such as convertible debentures and equity financing arrangements, which include variable conversion rates, include anti-dilution provisions (“down-round protection”) and detachable warrants that are: (i) not afforded equity classification; (ii) embody risks not clearly and closely related to host contracts, or; (iii) may be net-cash settled by the counterparty. Such derivative liabilities are recorded at fair value at the issuance date. Subsequent changes in fair value are recorded through the consolidated statement of comprehensive loss. For the Company, the Level 3 financial liability is the derivative liabilities related to certain Common Stock and warrants that include “down-round protection” that are valued using the “Monte Carlo Simulation” technique. While the majority of inputs are Level 2, this technique necessarily incorporates a capital raise assumption which is unobservable and, therefore, a Level 3 input.

As of June 30, 2017, a range of key quantitative assumptions related to the Common Stock and warrants that include “down round protection” are as follows:

	Expected life (years)		Risk-free rate		Volatility		Probability of a capital raise
Derivative liabilities		0.25 – 4.75		1.03% and 1.31 %		86.55%		100%

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company’s derivative liabilities are related to certain Common Stock issuances that included “down-round protection”, warrants issued in conjunction with certain Common Stock and debt issuances, including warrants granted to the Placement Agent related to such issuances, that included “down-round protection”, and the variable conversion rate feature of certain short-term convertible debentures. See also Note 12 Debt, Note 13 Common Stock, and Note 15 Warrants.

The derivative liabilities measured at fair value on a recurring basis are summarized below:

	Fair value measurements as of June 30, 2017
	Carrying value		Level 1		Level 2		Level 3
Derivative liabilities – Common Stock	$	524,736	$	–	$	–	$	524,736
Derivative liabilities – Warrants		670,752		–		–		670,752
Derivative liabilities – Convertible debentures		556,734		–		–		556,734
Total	$	1,752,222	$	–	$	–	$	1,752,222

	Fair value measurements as of December 31, 2016
	Carrying value		Level 1		Level 2		Level 3
Derivative liabilities – Common Stock	$	2,016,370	$	–	$	–	$	2,016,370
Derivative liabilities – Warrants		854,553		–		–		854,553
Derivative liabilities – Convertible debentures		226,998		–		–		226,998
Total	$	3,097,921	$	–	$	–	$	3,097,921

The Company’s assessment of the probability of future capital raises is considered to be high. Such capital raise activities are estimated to take place at levels that could possibly result in anti-dilution triggers—currently at $0.075 per share, based on the 2016/17 Offering unit sales of Common Shares—especially considering the current market price for the Company’s Common Stock (which currently trades at $0.07 per share). The assumptions used for estimating future capital raises could be materially different from the actual results. Any such differences could materially impact the derivative liabilities and have a materially adverse effect on the Company’s results of operations and financial condition in the near term.

As a result of the 2016/17 Offering unit share issuances, anti-dilution provisions under certain outstanding financial instruments have been triggered, which was considered in the assumptions for future capital raise activities at June 30, 2017.

The table below provides a summary of the changes in fair value of the derivative liabilities measured at fair value on a recurring basis:

	Six Months Ended June 30, 2017
							Total fair value
	Derivative liabilities						measurements
	Common				Convertible		using Level 3
	stock		Warrants		debt		inputs
Balance as of December 31, 2016	$	2,016,370	$	854,553	$	226,998	$	3,097,921
Unrealized gain on derivative liabilities from the conversion of certain instruments of June 30, 2017		(1,491,634)		(1,447,002)				(2,938,636)
Fair value of variable conversion rate for convertible debentures issued in 2017						329,736		329,736
Fair value of derivative liabilities associated with other financial instruments issued in 2017				1,263,201				1,263,201
Balance as of June 30, 2017	$	524,736	$	670,752	$	556,734	$	1,752,222

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Net Loss per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

5. Net Loss per Share

Basic and diluted loss per common share is computed based on the weighted average number of shares of Common Stock outstanding, or 305,163,939 and 237,439,183 for the three and six months ended June 30, 2017, respectively; for the comparative periods in 2016, weighted average number of shares of Common Stock outstanding was 133,687,522 and 133,494,583, respectively. Common share equivalents (which may consist of stock options, warrants and convertible debt) are excluded from the computation of diluted loss per share for all periods presented because including them would be anti-dilutive. Common share equivalents that could potentially dilute basic earnings per share in the future, and which were excluded from the computation of diluted loss per share, were 261,188,100 and 103,624,925 shares as of June 30, 2017 and June 30, 2016, respectively.

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Inventory

6 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

6. Inventory

Inventory represents finished goods and work in progress. Finished goods and work in progress consist primarily of specifically identifiable items that are valued at the lower of cost or fair market value using the first-in, first-out (FIFO) method. Inventory consists of the following at:

	June 30, 2017		December 31, 2016
Finished goods	$	9,564	$	8,725
Work-in progress		28,717		83,519
Total inventory	$	38,281	$	92,244

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Property and Equipment

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

7. Property and Equipment

Property and equipment and leasehold improvements are capitalized at cost and depreciated using the straight-line method (however, the Company used the double-declining balance method for property and equipment placed in service prior to January 2011) over estimated lives as follows:

Equipment	5 – 10 years
Vehicles	5 years
Leasehold improvements	Life of lease
Software	3 years

Property and equipment consists of the following:

	June 30, 2017		December 31, 2016
Lab equipment	$	5,775,541	$	5,698,009
Computer equipment		538,705		552,423
Office equipment		191,248		191,248
Leasehold improvements		212,730		212,730
		6,718,224		6,654,410
Accumulated depreciation		(4,412,479)		(4,188,285)
Property and equipment, net	$	2,305,745	$	2,466,125

For the three and six months ended June 30, 2017, depreciation expense was $149,015 and $306,359, respectively. For the three and six months ended June 30, 2016, depreciation expense was $160,135 and $319,128, respectively.

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Trade Accounts Receivable and Other Noncurrent Assets

6 Months Ended

Jun. 30, 2017

Investments, All Other Investments [Abstract]

Investments and Other Noncurrent Assets [Text Block]

8. Trade Accounts Receivable and Other Noncurrent Assets

Trade accounts receivable, net, includes a bad debt allowance of $3,000 and $7,000 for June 30, 2017 and December 31, 2016, respectively.

Other noncurrent assets consisted of deposits totaling $19,166 of June 30, 2017 and $19,041 December 31, 2016.

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Bank Line of Credit

6 Months Ended

Jun. 30, 2017

Bank Line of Credit [Abstract]

Bank Line of Credit [Text Block]

9. Bank Line of Credit

The Company has a line of credit with United Bank (the “Bank”) that is authorized to $3,000,000. The interest rate is variable and equal to 0.75% plus prime with a minimum rate of 5.87% per annum. This line of credit is subject to an annual review and certain covenants. Borrowings under the line of credit are secured by the personal guarantee of two board members and the estate of two former board members. On June 20, 2016, the Company and the Bank entered into an agreement that established July 12, 2018 as the maturity date for the outstanding balance of the line of credit, which was $3,000,000 as of June 30, 2017 and December 31, 2016.

The Company’s line of credit with the Bank requires the Company to adhere to certain customary covenants. For example, the bank can issue a default notice to the Company and accelerate payment of the outstanding balance if the Company fails to make a scheduled interest payment to the Bank, is in default under any agreement with a third party which materially and adversely affects the Company’s property, operations or financial condition, or the Company does not make timely payments on property that is useful its business, including maintenance and repairs of such property.

As of the date of this report, the Company is one month in arrears with scheduled payments to the Bank. The Bank has not issued any notice to the Company regarding any default or possible default under the line of credit; however, this has caused the Company to classify the line of credit as a current liability.

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Obligations to Stockholders

6 Months Ended

Jun. 30, 2017

Loan Payable [Abstract]

Loans Payable to Stockholders [Text Block]

10. Obligations to Stockholders

During the six months ended June 30, 2017, the Company received advances equal to an aggregate of 1,424,148 from various directors and current stockholders of the Company increasing the advance obligation to $1,942,185 including promissory notes, less a discount of $280,042. The advances have no terms of repayment and do not bear interest. Certain Stockholders have converted some of their 2017 advances into Common Stock and warrants. See below.

During 2014, the Company received advances equal to an aggregate of $1,415,000 from Summit Resources Inc. (“Summit). In exchange for a portion of the advances received, the Company entered into Note and Warrant Purchase Agreements and issued (a) one-year promissory notes bearing simple interest at the rate of 10% per annum to Summit in an aggregate principal amount of $1,415,000 and (b) five-year warrants to purchase up to 1,415,000 shares of Common Stock at an exercise price of $0.80 per share. On June 3, 2014, the Board approved an increase in the total offering amount of the promissory notes issuable to $1,500,000 from $900,000. The fair value of these warrants was estimated to be $101,177, which was recorded as a discount to the promissory note, and will be accreted based on the repayment of the obligation. The Company repaid $250,000 as of December 31, 2014. Accretion expense of $10,950 was recognized during the year ended December 31, 2014. On March 20, 2015, the Company converted the $165,000 of outstanding principal and unpaid accrued interest of $105,078, and issued Summit 1,080,312 shares of Common Stock at a conversion price of $0.25 per share and as an inducement to convert, warrants in aggregate of 540,156 to purchase shares of Common Stock at an exercise price of $0.50 per share. The Company recognized accretion expense of $7,227 during the three months ended March 31, 2015. In addition, the Company recognized debt conversion inducement costs related to the fair value of the warrants issued to Summit of $31,455 during the three months ended March 31, 2015. As of December 31, 2016, the outstanding balance was $1,000,000 or $917,000, net of discount. On March 14, 2017, Summit agreed to convert the balance of this note and accrued interest into securities, as further discussed below. Accretion expense of $83,000 was recognized in March 2017 due to the note being converted.

During the six months ending June 2017, certain related parties agreed to convert $2,320,400 of such Stockholder advances received on or before December 31, 2016 and $326,319 of such Stockholder advanced received in 2017 along with accrued interest of $92,319 into units of our securities consisting of (a) 36,520,494 shares of our Common Stock (at a conversion price of $0.075 per share) plus (b) an eighteen-month warrant to purchase an additional 36,520,494 share of Common Stock at an exercise price of $0.09 per share and (c) a five-year warrant to purchase an additional 36,520,494 shares of Common Stock at an exercise price of $0.1125 per share containing identical terms to the units of equity securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017. In May 2017, the related parties agreed to exchange their Class A and Class B warrants for Common Stock. They would receive 1.5 shares of Common Stock for one (1) Class A warrant and one (1) Class B warrant. See Note 13 Common Stock for more information relating to this exchange.

The $200,000 interest-bearing promissory note, dated July 2015, with a stockholder has reached maturity. This obligation has a current principal amount of $194,556. In February 2017, the Company and the stockholder discussed the possibility of converting the unpaid principal balance into units of our securities containing identical terms of the units of equity securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017 only when the accrued and unpaid interest of $15,047, as of March 31, 2017, is paid in cash. As of June 30, 2017, accrued interest on this note was $19,911 and the Company is still in discussions with the related party regarding timing of the conversion.

On March 14, 2017, the Company received an extension of maturity on its $255,000 related party note. This note was obtained from a bank and the Company is responsible for repaying the related party note directly to the Bank on or before August 28, 2017.

On April 7, 2017, we received a loan for proceeds of up to $1,750,000 from Summit Resources, Inc. (“Summit”), one of our principal stockholders and an affiliate of Steve Antoline, one of our directors. The loaned amount includes $500,000 advanced as of June 30, 2017 by Summit and an additional $1,250,000 will be advanced to us from April 2017 through August 2017 for the purchase of a new mass spectrometer. In August 2017, the Company decided to not purchase the new mass spectrometer and is working with Summit Resources, Inc. to amend the note agreement. We issued to Summit our senior secured promissory note in the principal amount of up to $1,750,000 that is payable in monthly installments over a period of 36 months. In addition, the Company granted a seven year warrant to purchase 20,000,000 shares of the Company’s common stock at an exercise price of $0.075 per share. The relative fair value of the warrants at the issuance date was $305,500, which was recorded as a discount against the note and will be accreted over the life of the note. The Company recognized accretion expense of $25,458 relating to the warrant for the three and six months ending June 30, 2017.

We have agreed to apply 30% of the net proceeds (after commissions and offering expenses) we receive from any equity or equity type financing to reduce and prepay the $500,000 working capital portion of the loan. In addition, the entire loan is subject to mandatory prepayment in the event and to the extent that we receive gross proceeds of $5,000,000 or more from any subsequent public offering of our securities. We are currently in default of this agreement for which proceeds were received, from an original issued discounted note, at the end of June and the Company was unable to made the required 30% of net proceeds payment on the loan.

Commencing 30 days after installation of the Instrument we will pay monthly installments of principal and accrued interest in the amount equal to the greater of (a) $62,030.86 (representing 36 monthly installments of principal and accrued interest at the rate of 15% per annum), or (b) 20% of the cash proceeds we receive from customers who request services from the Company using the new mass spectrometer equipment. We also agreed to establish a special lock box to deposit cash proceeds we receive from use of such equipment.

The Note is convertible into shares of our Common Stock, at the option of the holder at a conversion price equal to the lower of $0.075 per share (as adjusted by the contemplated reverse stock split), or (b) 85% of the offering price per share of the Common Stock in any subsequent public offering of our Common Stock.

The loan is secured by a first lien and security interest on all of our assets and properties, including the purchased equipment and all purchase orders we receive in connection therewith.

In a related development on April 21, 2017, we entered into an agreement with Summit under which Summit:

• Consented to the exchange agreement with GRQ Consultants Inc. 401K (“GRQ”) and waived any defaults on our part under the Summit loan agreement; and

• agreed to waive its security interest in the GRQ Collateral until such time as we pay the $301,578 obligation to GRQ.

The Company and our subsidiary reaffirmed Summit’s senior priority lien and security interest on all of our assets and properties, other than the specific GRQ Collateral. On June 28, 2017, the Company has paid the GRQ note in full and such security interest has been reinstated.

See also Note 18 Evaluation of Subsequent Events for activity related to advances and other loans payable to stockholders after June 30, 2017.

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Other Current Liabilities

6 Months Ended

Jun. 30, 2017

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

11. Other Current Liabilities

Other current liabilities consist of the following at:

	June 30, 2017		December 31, 2016
Accrued expenses	$	227,849	$	68,411
Accrued interest		299,278		264,507
Accrued warranty expense		35,000		45,000
Accrued payroll and benefits		191,944		119,619
Accrued sales tax		–		103
Unearned revenue		47,572		58,407
Other payables and accrued expenses	$	801,643	$	556,047

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Debt

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Long-term Debt [Text Block]

12. Debt

Convertible Promissory Notes with WVJITB

The Company has outstanding two convertible promissory notes with the West Virginia Jobs Investment Trust Board (“WVJITB”). One is an 18-month note issued in March 2012 with a principal amount of $290,000 (“March 2012 Promissory Note”) and the second a 3-month note issued in April 2012 with principal amount of $400,000 (“April 2012 Promissory Note”). As of June 30, 2017, the principal balance of the March 2012 Promissory Note was $290,000 with the principal balance of the April 2012 Promissory Note having been reduced to $300,000 as the result of a payment made by the Company in 2013. Since the issuance of these notes, the Company and WVJITB have enacted several addendums to both notes, including extending the maturity dates and reducing the rate at which the notes are convertible into shares of Common Stock.

On January 17, 2017, the Company and WVJITB entered into another addendum, loan modification, whereby the maturity date of the promissory note was extended until December 31, 2017. The loan modification requires the Company to pay all accrued unpaid interest is due in full on March 1, 2017. Starting in April 2017 principal payments of $50,000 are owed, which payments will be split evenly between the two notes and interest is due monthly until the notes reach maturity. In return for the extension, the Company paid a $5,000 loan modification fee and granted WVJITB another five-year warrant to purchase 750,000 shares of the Company’s Common Stock at an exercise price of $0.10 per share. As of June 30, 2017, the Company is four months in arears on principal payments and three months in arears on interest payments. As of the date of this report, the Company has not been placed in default with these notes.

As of June 30, 2017, the principal balance of each note has been offset with the fair value of the warrant. The relative fair value of the warrant at the issuance date was estimated at $30,825 and $15,028 has been accreted for the six months ending June 30, 2017.

Promissory Note with WVDO

As of January 31, 2017, the Company was eleven months is arrears on scheduled principal and interest payments on an outstanding note payable to the West Virginia Development Office (“WVDO”). The deferral amount totaled $92,873. The promissory note matured on January 31, 2017. In February 2017, the Company and WVDO reached an agreement whereby the Company would defer payment for another year.

Convertible Debentures and September 2016 OID Note

As of June 30, 2017, the Company was in default under approximately $589,969 of outstanding debt securities owed to six investors and was unable to obtain an extension of the maturity at this time. The Company is offering to the holder(s) of all $2,270,688 of OID Debentures plus accrued interest of $113,534, an opportunity under Section 3(a)(9) of the Securities Act of 1933, as amended, to exchange their debentures for a new 20% OID convertible debenture due September 30, 2017, plus one share of our Common Stock for each $1.00 outstanding principal amount of the new 20% OID convertible debenture issued to them. As proposed, the contemplated restated 20% OID convertible debenture would be in face amount equal to 100% of the outstanding principal of and accrued interest on the earlier convertible debentures and, upon consummation of any subsequent public offering of our Common Stock that is registered under the Securities Act prior to the new maturity date, would be subject to mandatory conversion at a 20% discount to the initial public offering price of our Common Stock (the “OID Convertible Debenture Exchange Offer”). The OID Convertible Debenture Exchange Offering was offered for a period expiring on the earlier of June 30, 2017 or acceptance of the OID Convertible Debenture Exchange Offer by 100% of the holders of such OID Debentures.

As of June 30, 2017, an aggregate of $1,680,719 of the 2016 20% OID Debentures were exchanged for $1,764,755 of new 20% OID Debentures due September 30, 2017, and the parties to the exchange offer received an additional 1,764,755 shares of our common stock.

September 2016 10% OID Secured Promissory Note

On April 20, 2017, we entered into an exchange agreement with GRQ Consulting Inc. 401k (“GRQ”) under Section 3(a)(9) of the Securities Act of 1933, as amended. Under the terms of the exchange agreement, GRQ exchanged the Original GRQ Note for a new Company note that requires the Borrowers to pay in full the overdue $301,578 amount by not later than June 30, 2017, plus an additional unsecured amount of $375,000 by September 30, 2017 (the “Final Maturity Date”); which latter amount is convertible by the holder at any time at a conversion price $0.075 per share or may be paid at our option at any time prior to the Final Maturity Date by delivering to the note holder 5,000,000 shares of our Common Stock. On April 21, 2017, GRQ exercised its conversion right and converted the $375,000 balance of the note into 5,000,000 shares of our common stock.

The guaranty of our Protea subsidiary and GRQ’s security interest in the GRQ collateral remain in full force and effect pending our payment of the $301,578 amount due on June 30, 2017.

In a related development on April 21, 2017, we entered into an agreement with Summit under which Summit:

• Consented to the exchange agreement with GRQ and waived any defaults on our part under the Summit loan agreement; and

• Agreed to waive its security interest in the GRQ Collateral until such time as we pay the $301,578 obligation to GRQ.

The Company and our subsidiary reaffirmed Summit’s senior priority lien and security interest on all of our assets and properties, other than the specific GRQ Collateral.

On June 28, 2017, the Company had made payment of $311,305 which included the then principal balance of $301,578 and $9,727 of accrued interest, thus the Company’s obligation to GRQ has been satisfied. 

CKR Convertible Note

In June 2017, we issued to our legal counsel, CKR Law LLP, a $308,439 convertible note due September 30, 2017, representing accrued and unpaid legal fees through December 31, 2016 and in connection with the preparation and filing of our recent proxy statement. Such note will, at the option of the holder, either be paid out of the net proceeds of any public offering of our common stock we consummate prior to the maturity date of such note, or be convertible into shares of our common stock at a price equal to 85% of the initial per share offering price of our common stock we may offer in connection with such public offering. We have agreed to register the shares of common stock issuable upon conversion of the note in the registration statement relating to such public offering.

June 2017 20% OID Note

In June 2017, we received the sum of $1,000,000 from the issuance of a 20% original issue discount debenture in $1,200,000 face amount to a 5% shareholder. The debenture is due and payable on the earlier of November 30, 2017 or from the net proceeds of our sale of $5,000,000 or more of our securities in any public or private offering. The debenture is convertible into our common stock at a conversion price of $0.075 per share. We also issued to the debenture holder a three-year warrant to purchase additional shares of our common stock equal to 100% of the shares issuable upon conversion of the debenture at an exercise price of $0.075 per share.

Capital Leases

From time to time, in the normal course of business, the Company enters into capital leases to finance equipment. As of June 30, 2017, the Company had six capital lease obligations outstanding with imputed interest rates ranging from 5.04% to 9.45%. The capital leases require 24 – 60 monthly payments and expire in June 2017 – June 2020. These leases are secured by equipment with an aggregate cost of $1,868,809. As of June 30, 2017, the Company was two and a half months in arears on two capital lease payments.

See Note 18 Evaluation of Subsequent Events for additional activity and information regarding debt.

Total outstanding debt, including capital lease obligations, are as follows (table excludes the outstanding balance of the bank line of credit because it was presented as a current liability, as discussed in Note 9 Bank Line of Credit; table also excludes obligations to stockholders, which are detailed in Note 10 Obligations to Stockholders and presented as a separate line item on the Company’s Consolidated Balance Sheets):

	June 30, 2017		December 31, 2016
1)      Note Payable to the WVDO	$	92,873	$	92,873
2)      Note Payable to the WVEDA (a)		143,312		143,312
3)      Note Payable to the WVIJDC (b)		139,229		139,229
4)      Note Payable to the WVEDA (a)		572,148		572,148
5)      Note Payable to the WVIJDC (b)		581,987		581,987
6)      Note Payable to the WVJITB		290,000		290,000
7)      Note Payable to the WVJITB		300,000		300,000
8)      Note Payable to the WVEDA (a)		168,362		168,362
9)      Convertible Debenture 2nd & 3rd Quarters 2016		2,190,661		2,114,438
10)    September 2016 10% OID Secured Promissory Note		–		480,000
11)    September 2016 20% OID Note		164,063		156,250
12)    June 2017 20% OID Note		1,200,000		–
13)    CKR Convertible Note		308,439		–
14)    Capital leases		846,318		928,530
Total		6,997,392		5,967,129
Less: current portion		(4,496,239)		(4,012,149)
Less: unamortized original issue discount		(172,222)		(22,001)
Less: unamortized debt issuance costs		(552,746)		(163,624)
Long-term portion	$	1,776,185	$	1,769,355

(a) West Virginia Economic Development Authority

(b) West Virginia Infrastructure and Jobs Development Council

Future required minimum principal repayments over the next five years are as follows (same exclusions as noted for the table above):

	Future
	required minimum
Year Ended December 31:	principal payments
2017	$	4,985,174
2018		622,198
2019		500,357
2020		495,353
2021 and thereafter		394,310
Total	$	6,997,392

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Common Stock

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Common Stock [Text Block]

13. Common Stock

The Company was authorized to issue a total of 510,000,000 shares of stock, of which 500,000,000 shares were designated Common Stock, par value of $0.0001 per share with one vote in respect of each share held and no cumulative voting rights (“Common Stock”), and 10,000,000 are designated preferred stock, par value of $0.0001 per share with one vote in respect of each share held (“Preferred Stock”). There were no shares of Preferred Stock issued or outstanding as of December 31, 2016 and no such shares were issued during the three months ended March 31, 2017. In January 2017, the Board of Directors agreed to increase the Company’s authorized shares of common stock to 750,000,000.

The Company filed the Restated Charter with the Secretary of State of the State of Delaware on April 25, 2017 to increase the Company’s authorized shares to 760,000,000, of which 750,000,000 shares were designated common stock, par value of $0.0001 per share and 10,000,000 designated preferred stock, par value of $0.0001 per share.

Proxy

On January 31, 2017, at a special meeting of the Board of Directors, our Board of Directors approved by unanimous vote to seek shareholder approval of certain proposals by written consent that, to adopt and effectuate, will require the majority consent of our stockholders. These proposals were submitted to our stockholders pursuant to our definitive proxy statement on Schedule 14A, filed on March 2, 2017 with the Securities and Exchange Commission (“SEC”). On April 24, 2017, the Company received the written consent of more than a majority of the voting power of its common stock outstanding as of the record date in favor of the proposals. Under the proposals we were soliciting our stockholders’ written consent to approve the filing of an amended and restated certificate of incorporation in Delaware (“Restated Charter”), to increase the number of authorizes shares of our Common Stock, $0.0001 par value per share (“Common Stock”) from 500,000,000 shares of Common Stock to 750,000,000 shares of Common Stock (the “Authorized Common Stock Increase”), and with such Authorized Common Stock Increase to be effective at such time and date within one year after the date such action is approved by the Majority Stockholders, if at all, as determined by the Board of Directors in its sole discretion (the “Authorized Common Stock Increase Proposal”).

Included within our definitive proxy statement on Schedule 14A, filed as of March 2, 2017 with the SEC, we submitted a proposal to our stockholders seeking written consent to approve the filing of an amended and restated certificate of incorporation in Delaware (the “Restated Charter”), or in a subsequent amendment to the Restated Charter, provisions to effect a reverse split of our issued and outstanding Common Stock, within a range of not less than one-for-fifteen (1:15) and not more than one-for-fifty (1:50), with such ratio to be determined by the Board of Directors, in its sole discretion (the “Reverse Split”), and with such Reverse Split to be effective at such time and date within one year after the date such action is approved by the stockholders, if at all, as determined by the Board of Directors in its sole discretion (the “Reverse Split Proposal”).

We obtained stockholder consent to the Reverse Split Proposal, but have yet to effectuate the Reverse Split. Any decision to effectuate the Reverse Split will be determined by our Board of Directors based on the requirements to list our Common Stock on the Nasdaq Capital Market and shall become effective only (a) upon the approved filing of the Restated Charter to consummate the Reverse Split with the Secretary of State of the State of Delaware, including the final reduced number of shares of Common Stock into which our currently outstanding shares will be converted; and (b) upon announcement of the Reverse Split by FINRA.

If implemented, the Reverse Stock Split will only effect our outstanding Common Stock and shares of Common Stock issuable upon conversion of convertible securities and exercise of warrants and options. It will not effect the number of shares of Common Stock we are authorized to issue under our Restated Charter.

The purpose of the Reverse Split is to enable us to qualify our Common Stock for listing on a national stock exchange such as The Nasdaq Capital Market or the NYSE AMEX. Our Common Stock is currently traded on the OTC Markets OTCQB marketplace. Such trading market is considered to be less efficient than that provided by a stock exchange such as The Nasdaq Stock Market or NYSE AMEX. In order for us to list our Common Stock on The Nasdaq Stock Market or NYSE MKT, we must fulfill certain listing requirements, including minimum bid price requirements for our Common Stock.

Conversion of Obligations to Stockholder

During the six months ended June 30, 2017, certain related parties agreed to convert $2,320,400 of such Stockholder advances received on or before December 31, 2016 and $326,319 of such Stockholder advanced received in 2017 along with accrued interest of $92,319 into units of our securities consisting of (a) 36,520,494 shares of our Common Stock (at a conversion price of $0.075 per share) plus (b) an eighteen-month warrant to purchase an additional 36,520,494 share of Common Stock at an exercise price of $0.09 per share and (c) a five-year warrant to purchase an additional 36,520,494 shares of Common Stock at an exercise price of $0.1125 per share containing identical terms to the units of equity securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017. In May 2017, the related parties agreed to exchange one Class A warrant and one Class B warrants for 1.5 shares of Common Stock. Upon exchange, the holders will receive 54,680,744 shares of Common Stock.

Sale of Common Stock

In January through March 2017 (the “Closing”), the Company received an aggregate of $688,000 in gross cash proceeds from 21 accredited investors (the “Purchasers”) in connection with the sale of approximately 68.80 units of securities (each a “Unit” and collectively, the “Units”) pursuant to the terms and conditions of Subscription Agreements (the “Subscription Agreements”) by and among the Company and each of the Purchasers.

Pursuant to its private placement memorandum, dated as of October 31, 2016 (the “Memorandum”), the Company is offering, through a placement agent, a maximum of 500 Units of securities at a purchase price of $10,000 per Unit for up to $5,000,000 in gross proceeds (the “Offering”). Each Unit consists of up to (a) 133,333.33 shares of Common Stock, par value $0.0001 (the “Common Stock”), (b) 18 month warrants to purchase 133,333.33 shares of Common Stock at an exercise price of $0.09 per share (the “Class A Warrants”), and (c) five year warrants to purchase 133,333.33 shares of Common Stock at an exercise price of $0.1125 per share (the “Class B Warrants” and together with the Class A Warrants, the “Investor Warrants”). If all 500 Units are sold, the Company will issue an aggregate of 66,666,667 shares of its Common Stock and Investor Warrants to purchase up to 133,333,334 shares of Common Stock. The Offering terminated on March 31, 2017.

In connection with the Closing, the Company issued an aggregate of 9,173,331 shares of Common Stock at $0.075, Class A Warrants to purchase 9,173,331 shares of Common Stock at an exercise price of $0.09 per share and Class B Warrants to purchase 9,173,331 shares of Common Stock at an exercise price of $0.1125 per share. See Note 15 Warrants for additional information.

In connection with the Closing, the Company paid to the placement agent an aggregate of $88,040 in cash compensation, representing fees and an expense allowance. In addition, the Company agreed to issue a warrant to the placement agent to purchase an aggregate of 2,222,000 shares of Common Stock, with an exercise price of $0.075 per share and term of three years. The Company also issued one Unit to the placement agent’s legal counsel for services rendered in connection with the Closing.

In connection with the Closing, the Company also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with each of the Purchasers, which requires the Company to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) registering for resale (i) all Common Stock issued to the Purchasers as part of the Units, (ii) all shares of Common Stock issuable upon exercise of the Investor Warrants and the warrants issued to the placement agent, and (iii) all shares of Common Stock issued to legal counsel for services rendered in connection with the Closing.

If the Registration Statement is not declared effective by the SEC within the specified deadlines set forth in the Registration Rights Agreement, the Company will be required to pay to each Purchaser an amount in cash, as partial liquidated damages, equal to 1.0% of the aggregate purchase price paid by such Purchaser per 30-day period that such failure continues, up to the maximum of 6% of the aggregate Purchase Price. If the Company fails to pay any partial liquidated damages in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum. As of the date of this filing, the Company is in negotiations with the placement agent to amend the Registration Rights Agreement and with filing the Registration Statement.

Exchange Agreements

In addition, the anti-dilution provisions contained in many of our outstanding securities between 2013 and 2017 has created significant derivative liabilities for our Company. As of December 31, 2016, such derivative liability has been calculated to be in excess of $3,100,000 and increases as we sell additional warrants. Such derivative liability directly impacts and reduces our stockholders equity which could materially and adversely affect our ability in the future to qualify to list our common stock for trading on the Nasdaq Capital Market or other comparable national securities exchange.

In order to cure our defaults in payment of our debt securities and to reduce, if not eliminate, the derivative liability, we:

Offered to the holder(s) of all $2,270,688 of 20% original issue discount debentures issued in 2016, an opportunity under Section 3(a)(9) of the Securities Act of 1933, as amended, to exchange their debentures for a new 20% original issued discount convertible debenture due September 30, 2017, plus one share of our Common Stock for each $1.00 outstanding principal amount of the new 20% OID convertible debenture issued to them. As proposed, the contemplated restated 20% OID convertible debenture would be in face amount equal to 100% of the outstanding principal of and accrued interest on the earlier convertible debentures and, upon consummation of any subsequent public offering of our common stock that is registered under the Securities Act prior to the new maturity date, would be subject to mandatory conversion at a 20% discount to the initial public offering price of our Common Stock (the “OID Convertible Debenture Exchange Offer”). As of the date of this report, an aggregate of $1,680,719 of the 2016 20% OID Debentures were exchanged for $1,764,755 of new 20% OID Debentures due September 30, 2017, and the parties to the exchange offer received an additional 1,856,196 shares of our common stock.

Offered to the 156 holders of our common stock and warrants issued in the 2013 offering, an opportunity under Section 3(a)(9) of the Securities Act, to (a) waive for all purposes the “make whole” provisions in their subscription agreement in exchange for one-quarter of a warrant exercisable at $0.09 per share for each of the 103,497,609 shares of Common Stock issued and issuable to them in the 2013 Offering (approximately 25,874,399 additional warrants) which would contain no weighted average or full ratchet anti-dilution provisions, plus (b) exchange all of the outstanding 2013 B Warrants issued in the 2013 offering (approximately 7,762,321 warrants) for one additional share of our common stock (the “2013 Exchange Offer”). As of the date of this report, 116 of the purchasers of our securities in the 2013 offering accepted the exchange offer resulting in 6,162,570 shares of common stock and warrants to purchase 20,541,895 shares of common stock being issued.  

Offered to the 72 holders of our common stock and warrants issued in the 2016-17 offering, an opportunity under Section 3(a)(9) of the Securities Act of 1933, as amended, to exchange all of their 2016-17 Class A Warrants and 2016-17 Class B Warrants for 1.5 shares of Common Stock for each 2016-17 Class A Warrant and 2016-17 Class B Warrant (the “2016-17 Exchange Offer”). Accordingly, each $10,000 Unit that represented 13,333.33 shares of common stock, plus 13,333.33 of 2016-17 Class A Warrants and 13,333.33 of 2016-17 Class B Warrants would be exchanged for 70,180,982 shares of Common Stock, representing (a) 28,072,393 shares of Common Stock, plus (ii) 42,108,589 additional shares of common stock issued in lieu of the 2016-17 Class A Warrants and 2016-17 Class B Warrants. As of the date of this report, 69 of the purchasers of our securities in the 2016-17 offering accepted the exchange offer resulting in 38,608,616 additional shares of common stock being issued.

Consultant Agreements

On January 31, 2017, the Board of Directors approved payment of $50,000 to a certain Consultant for Consulting Services of which is to be paid as units of our securities consisting of (a) 666,667 shares of our Common Stock (a conversion price of $0.075 per share) plus (b) an eighteen-month warrant to purchase an additional 666,667 share of Common Stock at an exercise price of $0.09 per share and (c) a five-year warrant to purchase an additional 666,667 shares of Common Stock at an exercise price of $0.1125 per share containing identical terms to the units of equity securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017. In June 2017, the consultant was offered an opportunity to exchange every two warrants for 1.5 shares of common stock. As of the date of this report the consultant was issued an additional 1,000,000 shares of common stock pursuant to this exchange.

On January 31, 2017, the Board of Directors approved payment of 2,000,000 shares of Common Stock to one Consultants for Consulting Services.

In February 2017, the Company has issued an aggregate of 750,000 in Common Stock for consulting services. The consulting agreement required 500,000 shares of Common Stock to be issued upon execution of the Consulting Agreement. The aggregate of 250,000 shares of Commons Stock were issued as upon execution of the Consulting Agreement, in 2016, leaving an aggregate of 250,000 shares of Common Stock to be issued for execution of the agreement. In addition to the 500,000 shares of Common Stock to be issued upon execution of the Consulting Agreement, and for each quarter thereafter for the remainder of the Consulting Period, Common Stock and warrants to purchase Common Stock will be issued 250,000 shares of Common Stock and a warrant to purchase 250,000 shares of Common Stock to the Consultant on the first day of each quarter. The issuance of 750,000 comprised of 250,000 shares of Common Stock due upon execution of the Consulting Agreement, 250,000 shares of Common Stock for the first quarter in 2017 and 250,000 shares of Common Stock for the second quarter of 2017. On January 31, 2017, the Board of Directors approved the request to accelerate the issuance of 250,000 shares of Common Stock for the second quarter of 2017.

On February 28, 2017, the Company entered into a consulting agreement for business advisory services and has term period from February 28, 2017 through January 31, 2018. The Company will compensate the Consultant by issuing 100,000 shares of Common Stock.

On March 8, 2017, the Company entered into a consulting agreement with a firm for professional financial advisory and introductory services for a period is from March 8, 2017 through December 31, 2017. Besides a one-time $10,000 retainer payment the consulting agreement requires payment of 1,200,000 shares of the Company’s Common Stock which were issued in May 2017.

On April 25, 2017, the Company entered into one (1) consulting agreement. This agreement was entered into for business advisory services and has a term period from April 25, 2017 through December 31, 2017. The Company will compensate the Consultant by issuing 250,000 shares of Common Stock no later than 30 days from the effective date. These shares were issued in May 2017.

On June 30, 2017, the Company issued 250,000 shares of Common Stock to a certain consultant as part of his consulting agreement dated December 2016. The agreement states the Company is to pay 250,000 shares of Common Stock upon completion of the 2016-17 Unit Offering which was completed on March 31, 2017.

Conversion of Accounts Payable

In December 2016, the Company’s Board of Directors authorized the conversion of an aggregate of $50,000 of accounts payable to a vendor into 666,667 shares of Common Stock at the rate of $0.075 per share. The vendor was also issued an A Warrant and B Warrant with the same terms and agreement as the 2016-17 offering. In June 2017, the vendor was offered an opportunity to exchange one (1) Class A warrant and one (1) Class B warrant for 1.5 shares of common stock. In June 2017, the vendor was issued an additional 1,000,000 shares of common stock pursuant to this exchange.

Anti-Dilution Triggering Event

The sale of Common Stock in the 2016/17 Offering was completed at a unit price of $0.075 per share, which triggered the anti-dilution provisions contained in certain outstanding financial instruments. As a result, to satisfy the Company’s obligations under such provisions, the Company expects to issue 1,567,653 shares of Common Stock and has already issued 72,448,325 shares of Common Stock, issue 25,244,336 Warrants to purchase shares of Common Stock, reduce the conversion rate for the Exchange Notes to $0.075 per share and has reduced the exercise price of 49,459,532 warrants. 

Common Stock issued and outstanding is as follows:

	Shares			Price
	issued and			per		Gross		Par		Additional
	outstanding			share		proceeds		value		paid-in capital
Balance as of December 31, 2016		162,471,373			Various	$	59,801,216	$	16,247	$	62,440,674
Issuance (a)		9,173,330		$	0.075		688,000		917		687,083
Issuance (b)		103,508,126		$	0.075		–		10,351		7,752,758
Issuance (c)		5,416,667		$	various		–		542		355,808
Issuance (d)		5,000,000		$	0.075		–		500		374,500
Issuance (e)		36,520,495		$	0.075		–		3,652		2,735,385
Issuance (f)		72,448,325		$	0.075		–		7,245		–
Balance as of June 30, 2017		394,538,316	(g)			$	60,489,216	$	39,454	$	74,346,208

(a)	Shares issued in conjunction with the 2016/17 Offering and contains no anti-dilution provisions
(b)	Shares issued in conjunction with exchange offers
(c)	Shares issued in conjunction with certain Consultant Agreements
(d)	Shares issued in conjunction with short-term convertible note
(e)	Shares issued for conversion of debt and interests. Shares do not contain anti-dilution provisions
(f)	Shares issued in conjunction with trigger of anti-dilution provision, previously recognized in 2016
(g)	Includes 8,889,503 shares that contain an anti-dilution provision

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Stock Options and Stock-Based Compensation

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options and Stock Based Compensation [Text Block]

14. Stock Options and Stock-Based Compensation

 

In 2002, the Board adopted the 2002 Equity Incentive Plan (the “2002 Plan”) that governed equity awards to employees, members of the Board of Directors, and consultants of the Company. Under the 2002 Plan, 450,000 shares of Common Stock were reserved for issuance. From 2006 through 2012, the 2002 Plan was amended several times to increase the total number of shares authorized under this plan to 4,150,000 shares. In 2013, the Board of Directors adopted the 2013 Equity Incentive Plan (the “2013 Plan”) and, together with the 2002 Plan (the “Plans”), governs the equity awards to employees, members of the Board of Directors, and consultants of the Company. Under the 2013 Plan, an additional 12,500,000 shares of Common Stock were reserved for issuance.

The types of awards permitted under the Plans include qualified incentive stock options (“ISO”), non-qualified stock options (“NQO”), and restricted stock. Each stock option shall be exercisable at such times and subject to such terms and conditions as the Board of Directors may specify. Stock options generally vest over four (4) years and expire no later than ten (10) years from the date of grant. A summary of stock option activity is as follows:

				Weighted average		Weighted avg. remaining
	Stock options			exercise price		contractual life (years)
Outstanding as of December 31, 2016		10,780,086		$	0.57		7.30
Granted		2,435,000		$	0.13
Exercised		–		$	–
Cancelled or expired		(480,000	)	$	0.56
Outstanding as of March 31, 2017		12,735,086		$	0.48		7.41
Exercisable as of December 31, 2016		5,680,899		$	0.84		5.70
Exercisable as of June 30, 2017		7,271,024		$	0.67		6.34

The following table summarizes information about stock options at June 30, 2017:

Stock options outstanding								Stock options exercisable
						Weighted				Weighted
				Weighted average		average				average
				remaining contractual		exercise				exercise
Exercise price		Outstanding		life (in years)		price		Exercisable		price
$	0.11		1,100,000						1,100,000
$	0.12		350,000						65,625
$	0.15		3,985,000						531,875
$	0.25		1,573,336						904,586
$	0.48		150,000						65,625
$	0.50		79,000						79,000
$	0.53		325,000						162,500
$	0.55		3,312,000						2,501,063
$	1.50		1,646,000						1,646,000
$	2.00		214,750						214,750
	$0.11 – $2.00		12,735,086		7.41	$	0.48		7,271,024	$	0.67

As of June 30, 2017, the total aggregate intrinsic value for stock options currently exercisable and stock options outstanding was estimated to be $0.  This value represents the total pre-tax, intrinsic value based on the estimated fair value of the Company’s Common Stock price of $0.09 per share as of June 30, 2017.

The following table summarizes the activity of the Company’s stock options that have not yet vested: 

				Weighted average
				grant-date fair
	Stock options			value (per option)
Non-vested as of December 31, 2016		5,340,687		$	0.12
Granted		2,435,000		$	0.13
Forfeited		(480,000	)	$	0.56
Vested		(1,831,625	)	$	0.05
Non-vested as of June 30, 2017		5,464,062		$	0.21

The fair value of non-vested stock options to be recognized in future periods is $498,247, which is expected to be recognized over a weighted average period of 2.25 years. The total fair value of stock options vested during the six months ended June 30, 2017 was $124,877 compared to $122,223 for the six months ended June 30, 2016.

Stock-based compensation expense is as follows:

	Six Months Ended June 30,
	2017		2016
Selling, general, and administrative expense	$	118,840	$	113,741
Research and development expense		6,036		8,482
Total stock-based compensation	$	124,876	$	122,223

The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2017 was $0.05 per stock option and for the six months ended June 30, 2016 it was $0 per stock option.

The fair value of the stock option grants was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Six Months Ended June 30,
	2017			2016
Weighted average risk-free interest rate		2.06	%		N/A	%
Volatility factor		66.32	%		N/A	%
Weighted average expected life (in years)		7			N/A
Dividend rate		0	%		N/A	%

The Company utilizes a peer group to estimate its expected volatility assumptions used in the Black-Scholes option-pricing model. The Company completed an analysis and identified four similar public companies considering their industry, stage of life cycle, size, and financial leverage. Given the Company’s limited history with stock options, the Company’s expected term is based on an average of the contractual term and the vesting period of the options (the SEC Staff Accounting Bulletin No. 110, “Simplified” method).

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Warrants

6 Months Ended

Jun. 30, 2017

Stock Warrants [Abstract]

Stock Warrants [Text Block]

15. Warrants

See Note 12 Debt and Note 13 Common Stock for information related to the issuance of warrants to related parties, WVJITB, Consultants, Investors of 2016-17 Offering, Placement Agent, Wawrla, Anti-Dilution and Exchange Offer for the purchase of 114,040,998, 750,000, 3,053,334, 18,346,662, 2,222,000, 13,333,334, 21,700,003 and 25,366,271 shares of Common Stock, respectively during the six months ended June 30, 2017.

As part of the Exchange Offers, certain investors and related parties exchanged 138,306,056 of their warrants for shares of Common Stock thus reducing the total number of outstanding warrants to purchase shares of Common Stock. See Note 13 Common Stock for more information relating to the Exchange Offers.

As of June 30, 2017, warrants to purchase 181,749,129 shares of Common Stock were outstanding and exercisable. During the six months ended June 30, 2017, the Company recognized a total of 42,563 in interest expense resulting from the accretion of the fair value of issued warrants.

The following table summarizes the activity of the Company’s warrants:

				Weighted		Weighted
				average		average remaining
				exercise		contractual life
	Warrants			price		(in years)
Outstanding as of December 31, 2016		122,475,881		$	0.43		2.13
Granted		198,812,592		$	0.04		2.88
Exercised		–		$
Cancelled or expired		(139,539,344	)	$	0.14
Outstanding as of June 30, 2017		181,749,129	(a)	$	0.24		3.64

(a) includes 71,942,807 warrants that contain an anti-dilution provision

The following table summarizes information about warrants as of June 30, 2017:

Warrants Outstanding
Exercise Price		Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price
$	0.075		82,702,683
$	0.080		5,618,750
$	0.090		22,875,228
$	0.100		1,810,000
$	0.110		1,250,000
$	0.1125		2,333,333
$	0.190		4,654,145
$	0.200		2,751,250
$	0.240		7,500,000
$	0.270		14,831,098
$	0.280		2,845,000
$	0.325		1,685,625
$	0.400		1,040,000
$	0.450		1,730,000
$	0.500		7,153,097
$	0.740		7,309,395
$	0.800		1,415,000
$	1.100		11,773,275
$	1.120		263,750
$	2.200		70,000
$	2.250		137,500
	$0.075 - $2.250		181,749,129		3.64	$	0.24

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

16. Commitments and Contingencies

Legal Proceedings

The Company currently is not a party to any material legal proceeding and has no knowledge of any material legal proceeding contemplated by any governmental authority or third party. The Company may be subject to a number of claims and legal proceedings which, in the opinion of our management, are incidental to normal business operations. In managements’ opinion, although final settlement of these claims and suits may impact the financial statements in a particular period, they will not, in the aggregate, have a material adverse effect on the Company’s financial position, cash flows or results of operations.

In 2016, the Company received three court summonses for past due accounts payables. The claims totaled $213,032 and are related to amounts the Company has properly accounted for in its accounting records, including late-payment fees and interest, if applicable. In December 2016, the Company entered into a confessed judgement with one of the vendor agreeing to make payment of $161,889.16 in full by January 31, 2017. Two payments of $25,000 each were made in December 2016 leaving a balance of $111,889.16 to pay by January 31, 2017. The Company made full and final payment of $111,889.16 on the confessed judgement on January 31, 2017.

In July 2017, the Company received a Request for Entry of Judgement from Johns Hopkins University dated June 14, 2017. The judgement against the Company is in excess of $93,664 ($74,359 in fees plus $19,305 in interest) pursuant to the Agreement between Johns Hopkins University and the Company. As of the date of this report total claims are $130,455.   

Warranty Reserve

The Company provides for a one-year warranty with the sale of its LAESI® instruments. As the Company does not currently have sufficient historical data on warranty claims, the Company’s estimates of anticipated rates of warranty claims and costs are primarily based on comparable industry metrics. The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its products. As of June 30, 2017 and December 31, 2016, the Company had accrued warranty expense of $35,000 and $45,000, respectively.

University License Agreements

The Company has agreements with West Virginia University (“WVU”) and George Washington University (“GWU”) related to in-licensed technologies as follows:

WVU The Company has entered into a License and Exclusive Option to License Agreement with the West Virginia University Research Corporation (“WVURC”), a nonprofit West Virginia corporation acting for and on behalf of WVU. Under the terms of this agreement, the WVURC has granted the Company an exclusive option to license technology from the laboratories of certain WVU principal investigators in the field of protein discovery, for therapeutic, diagnostic and all other commercial fields worldwide. Under the terms of this Agreement, the Company pays expenses for the preparation, filing and prosecution of related patent applications, and the Company will pay royalties on the net revenue resulting from the sale of products and services that utilize the WVU subject technology.

GWU In March 2009, the Company entered into an Exclusive License Agreement with GWU for technology developed in the laboratory of Dr. Akos Vertes Ph.D., Professor of Chemistry, Professor of Biochemistry & Molecular Biology, Founder and Co-Director of the W.M. Keck Institute for Proteomics Technology and Applications, the Department of Chemistry, who is a science advisor to the Company. The technology field is laser ablation electrospray ionization, or “LAESI”, a new method of bioanalytical analysis that enables high throughput biomolecule characterization. Under the terms of this agreement, the Company has the exclusive, worldwide rights to commercialize the technology. The Company has obtained a registered trademark for “LAESI®”. The Company is obligated to pay expenses for the preparation, filing and prosecution of related patent applications, and the Company pays royalties on the net revenues resulting from the sale of products and services that utilize the GWU subject technology. During the six months ended June 30, 2017, the Company recorded royalty expenses of $2,199. During the six months ended June 30, 2016, the Company recorded royalty expenses of $4,538.

  

In January 2017, the Company had received a payment on demand letter from GWU regarding the exclusive license agreement for the “LAESI License” along with the patent license agreement for the “Protein Microscope License.” As these letters relate to such agreements and past due payments, they allow the Company to make payment or release their rights to each of such license agreement by a specified amount of days for each agreement or provide requested plans.

GWU requests that all LAESI License past due royalties and interest of $110,374 be paid within sixty (60) days of the letter dated January 27, 2017. GWU is preserving itsrights under article 10.9 and 7.3(b) of the LAESI License agreement. The Company has made payment in full on March 28, 2017, and this request has been fulfilled.

As of June 30, 2017, the Company’s accounts payable balance included $50,800 payable to GWU, of which $0, for royalties on sales of the LAESI® instrument platform and $2,199 was owed for royalties on Imaging Services work using the LAESI® instrument. Under the terms of the Company’s Exclusive License Agreement with GWU, as amended, the Company is required to pay interest on amounts that are more than five (5) business days overdue. In addition, the Company’s agreement with GWU allows GWU to terminate the agreement under certain circumstances, including related to late payments.

In January 2014, the Company became a subcontractor to GWU in a multi-year project with the Defense Advanced Research Projects Agency (“DARPA”) to develop new tools and methods to elucidate the mechanism of action of a threat agent, drug, biologic or chemical on living cells within thirty (30) days of exposure. This product is called REDIchip™ (an acronym for Resonance-Enhanced Desorption Ionization).

Yale In April 2016, we entered into an exclusive license agreement for technology with Yale University related to the differential diagnosis of melanoma, specifically designated as a "Method of Differentiating Benign Melanocytic Nevi from Malignant Melanoma." The technology was co-invented by Dr. Rossitza Lazova, of the Department of Dermatology at Yale School of Medicine, and Dr. Erin Seeley our Principal Investigator. Under the terms of the license agreement, we have been granted the exclusive worldwide rights to commercialize the technology.  We are obligated to pay expenses for the preparation, filing and prosecution of future related patent applications governed by the license agreement and related license fees. We are obligated to pay a non-refundable royalty of $5,000 payable to Yale University in May 2016, and an annual license maintenance royalty of $2,500 in April 2017 and an annual license maintenance royalty of $5,000 in each anniversary year thereafter. We are also obligated to pay a non-refundable royalty of $5,000 upon our making our first sale of a licensed product, $7,500 when we file for an approval for commercial sale with a government regulatory agency and $10,000 upon our “first sale” of a licensed product that is approved by such governmental agency. In addition, we will pay Yale an earned royalty of 2.5% on worldwide cumulative net sales of licensed products by our company or under any sub-license or affiliate arrangements, to accrue within thirty (30) days from the end of each calendar quarter, subject to the payment of minimum annual royalties of $10,000, payable on the first day of January in the year following our first sale of licensed products (the “Minimum Royalty Effective Date”), and increasing to $15,000 on the first anniversary of the Minimum Royalty Effective Date, $20,000 on the second anniversary of the Minimum Royalty Effective Date, $30,000 on the third anniversary of the Minimum Royalty Effective Date, $40,000 on the fourth anniversary of the Minimum Royalty Effective Date and $50,000 on the fifth anniversary of the Minimum Royalty Effective Date and each subsequent anniversary year thereafter. Unless earlier terminated in accordance with its terms, the Yale license agreement expires upon the later of 20 years from the effective date or the end of the term of the last underlying patent to expire.

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Supplemental Cash Flow Information

6 Months Ended

Jun. 30, 2017

Supplemental Cash Flow Elements [Abstract]

Cash Flow, Supplemental Disclosures [Text Block]

17. Supplemental Cash Flow Information

Cash paid for interest and income taxes

During the six months ended June 30, 2017, cash paid for interest totaled $233,226. Cash paid for interest for the six months ended June 30, 2016 was $122,354.

The Company did not pay any income taxes during 2016 or the six months ended June 30, 2017.

Non-cash investing and financing activities 

	Six Months Ended June 30,
	2017		2016
Equipment acquired under capital leases	$	124,503	$	567,888
Issuance of common stock upon conversion of accrued interest	$	–	$	41,393
Issuance of common stock upon conversion of related party debt and interest	$	2,739,037	$	–
Issuance costs for short-term debt	$	–	$	5,000
Issuance of common stock for short-term convertible note	$	375,000	$	–
Anti-dilution warrants to be issued	$	–	$	6,878
Fair value of warrant committed to placement agent	$	–	$	5,436

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Evaluation of Subsequent Events

6 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

Subsequent Events [Text Block]

18. Evaluation of Subsequent Events

Convertible Promissory Note

Subsequent to June 30, 2017, we were able to obtain the collaboration agreement with Massachusetts General Hospital (“Mass General”) through the efforts of certain members of PPLL, LLC. In July 2017, we entered into a two year advisory agreement with PPLL under which they have agreed, in addition to the services previously rendered to us, to finance a portion of our financial obligations to Mass General under the collaboration agreement and continue to assist our Company in obtaining additional collaboration agreements and other business initiatives. We have valued the prior and ongoing services of PPLL at $360,000 and issued to PPLL our 4% promissory note due June 30, 2019 which we can pay at our option after July 15, 2018 by issuing to PPLL or its members an aggregate of 36,000,000 shares of our common stock. Conversely, PPLL may, at any time on or after January 1, 2018, convert the note at any times into all or a portion of such 36,000,000 shares.

Common Stock

Subsequent to June 30, 2017, the Company issued 250,000 shares of Common Stock in lieu of cash as partial payment to a certain vendor. The issuance doesn’t fulfill the entire amount due to the vendor.

Subsequent to June 30, 2017, the Board of Directors approved issuing 2,000,000 shares of Common Stock to a certain consultant for his services to the company.

Obligations to Stockholders

Subsequent to June 30, 2017, the Company received advances totaling $406,850 from certain related parties. Advances have no terms of repayment and do not bear interest. The related party received two warrants to purchase 60,000,000 shares of common stock at a purchase price of $0.075 per share in exchange for the advances.

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Gross Revenue (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Revenue from External Customers by Products and Services [Table Text Block]

The Company recognizes revenue from three major components: molecular information services, LAESI® instrument platform and research products.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Molecular information services	$	256,947	$	494,821	$	514,700	$	711,873
LAESI® instrument platform		24,361		7,126		31,243		186,921
Research products		46,784		79,817		136,985		158,308
Gross revenue	$	328,092	$	581,764	$	682,928	$	1,057,102

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Fair Value of Financial Assets and Liabilities - Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Inputs, Instruments Classified in Shareholders' Equity, Quantitative Information [Table Text Block]

As of June 30, 2017, a range of key quantitative assumptions related to the Common Stock and warrants that include “down round protection” are as follows:

	Expected life (years)		Risk-free rate		Volatility		Probability of a capital raise
Derivative liabilities		0.25 – 4.75		1.03% and 1.31 %		86.55%		100%

Fair Value, by Balance Sheet Grouping [Table Text Block]

The derivative liabilities measured at fair value on a recurring basis are summarized below:

	Fair value measurements as of June 30, 2017
	Carrying value		Level 1		Level 2		Level 3
Derivative liabilities – Common Stock	$	524,736	$	–	$	–	$	524,736
Derivative liabilities – Warrants		670,752		–		–		670,752
Derivative liabilities – Convertible debentures		556,734		–		–		556,734
Total	$	1,752,222	$	–	$	–	$	1,752,222

	Fair value measurements as of December 31, 2016
	Carrying value		Level 1		Level 2		Level 3
Derivative liabilities – Common Stock	$	2,016,370	$	–	$	–	$	2,016,370
Derivative liabilities – Warrants		854,553		–		–		854,553
Derivative liabilities – Convertible debentures		226,998		–		–		226,998
Total	$	3,097,921	$	–	$	–	$	3,097,921

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

The table below provides a summary of the changes in fair value of the derivative liabilities measured at fair value on a recurring basis:

	Six Months Ended June 30, 2017
							Total fair value
	Derivative liabilities						measurements
	Common				Convertible		using Level 3
	stock		Warrants		debt		inputs
Balance as of December 31, 2016	$	2,016,370	$	854,553	$	226,998	$	3,097,921
Unrealized gain on derivative liabilities from the conversion of certain instruments of June 30, 2017		(1,491,634)		(1,447,002)				(2,938,636)
Fair value of variable conversion rate for convertible debentures issued in 2017						329,736		329,736
Fair value of derivative liabilities associated with other financial instruments issued in 2017				1,263,201				1,263,201
Balance as of June 30, 2017	$	524,736	$	670,752	$	556,734	$	1,752,222

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Inventory (Tables)

6 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventory represents finished goods and work in progress. Finished goods and work in progress consist primarily of specifically identifiable items that are valued at the lower of cost or fair market value using the first-in, first-out (FIFO) method. Inventory consists of the following at:

	June 30, 2017		December 31, 2016
Finished goods	$	9,564	$	8,725
Work-in progress		28,717		83,519
Total inventory	$	38,281	$	92,244

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Property Plant And Equipment Useful Life [Table Text Block]

Property and equipment and leasehold improvements are capitalized at cost and depreciated using the straight-line method (however, the Company used the double-declining balance method for property and equipment placed in service prior to January 2011) over estimated lives as follows:

Equipment	5 – 10 years
Vehicles	5 years
Leasehold improvements	Life of lease
Software	3 years

Property, Plant and Equipment [Table Text Block]

Property and equipment consists of the following:

	June 30, 2017		December 31, 2016
Lab equipment	$	5,775,541	$	5,698,009
Computer equipment		538,705		552,423
Office equipment		191,248		191,248
Leasehold improvements		212,730		212,730
		6,718,224		6,654,410
Accumulated depreciation		(4,412,479)		(4,188,285)
Property and equipment, net	$	2,305,745	$	2,466,125

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Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2017

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

Other current liabilities consist of the following at:

	June 30, 2017		December 31, 2016
Accrued expenses	$	227,849	$	68,411
Accrued interest		299,278		264,507
Accrued warranty expense		35,000		45,000
Accrued payroll and benefits		191,944		119,619
Accrued sales tax		–		103
Unearned revenue		47,572		58,407
Other payables and accrued expenses	$	801,643	$	556,047

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Debt (Tables)

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

Total outstanding debt, including capital lease obligations, are as follows (table excludes the outstanding balance of the bank line of credit because it was presented as a current liability, as discussed in Note 9 Bank Line of Credit; table also excludes obligations to stockholders, which are detailed in Note 10 Obligations to Stockholders and presented as a separate line item on the Company’s Consolidated Balance Sheets):

	June 30, 2017		December 31, 2016
1)      Note Payable to the WVDO	$	92,873	$	92,873
2)      Note Payable to the WVEDA (a)		143,312		143,312
3)      Note Payable to the WVIJDC (b)		139,229		139,229
4)      Note Payable to the WVEDA (a)		572,148		572,148
5)      Note Payable to the WVIJDC (b)		581,987		581,987
6)      Note Payable to the WVJITB		290,000		290,000
7)      Note Payable to the WVJITB		300,000		300,000
8)      Note Payable to the WVEDA (a)		168,362		168,362
9)      Convertible Debenture 2nd & 3rd Quarters 2016		2,190,661		2,114,438
10)    September 2016 10% OID Secured Promissory Note		–		480,000
11)    September 2016 20% OID Note		164,063		156,250
12)    June 2017 20% OID Note		1,200,000		–
13)    CKR Convertible Note		308,439		–
14)    Capital leases		846,318		928,530
Total		6,997,392		5,967,129
Less: current portion		(4,496,239)		(4,012,149)
Less: unamortized original issue discount		(172,222)		(22,001)
Less: unamortized debt issuance costs		(552,746)		(163,624)
Long-term portion	$	1,776,185	$	1,769,355

(a) West Virginia Economic Development Authority

(b) West Virginia Infrastructure and Jobs Development Council

Schedule of Maturities of Long-term Debt [Table Text Block]

Future required minimum principal repayments over the next five years are as follows (same exclusions as noted for the table above):

	Future
	required minimum
Year Ended December 31:	principal payments
2017	$	4,985,174
2018		622,198
2019		500,357
2020		495,353
2021 and thereafter		394,310
Total	$	6,997,392

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Common Stock (Tables)

6 Months Ended

Jun. 30, 2017

Schedule of Stock by Class [Table Text Block]

Common Stock issued and outstanding is as follows: 

	Shares			Price
	issued and			per		Gross		Par		Additional
	outstanding			share		proceeds		value		paid-in capital
Balance as of December 31, 2016		162,471,373			Various	$	59,801,216	$	16,247	$	62,440,674
Issuance (a)		9,173,330		$	0.075		688,000		917		687,083
Issuance (b)		103,508,126		$	0.075		–		10,351		7,752,758
Issuance (c)		5,416,667		$	various		–		542		355,808
Issuance (d)		5,000,000		$	0.075		–		500		374,500
Issuance (e)		36,520,495		$	0.075		–		3,652		2,735,385
Issuance (f)		72,448,325		$	0.075		–		7,245		–
Balance as of June 30, 2017		394,538,316	(g)			$	60,489,216	$	39,454	$	74,346,208

(a) Shares issued in conjunction with the 2016/17 Offering and contains no anti-dilution provisions

(b) Shares issued in conjunction with exchange offers

(c) Shares issued in conjunction with certain Consultant Agreements

(d) Shares issued in conjunction with short-term convertible note

(e) Shares issued for conversion of debt and interests. Shares do not contain anti-dilution provisions

(f) Shares issued in conjunction with trigger of anti-dilution provision, previously recognized in 2016

(g) Includes 8,889,503 shares that contain an anti-dilution provision

XML

Stock Options and Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of stock option activity is as follows:

			Weighted average		Weighted avg. remaining
	Stock options		exercise price		contractual life (years)
Outstanding as of December 31, 2016		10,780,086	$	0.57		7.30
Granted		2,435,000	$	0.13
Exercised		–	$	–
Cancelled or expired		(480,000)	$	0.56
Outstanding as of March 31, 2017		12,735,086	$	0.48		7.41
Exercisable as of December 31, 2016		5,680,899	$	0.84		5.70
Exercisable as of June 30, 2017		7,271,024	$	0.67		6.34

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

The following table summarizes information about stock options at June 30, 2017:

Stock options outstanding								Stock options exercisable
						Weighted				Weighted
				Weighted average		average				average
				remaining contractual		exercise				exercise
Exercise price		Outstanding		life (in years)		price		Exercisable		price
$	0.11		1,100,000						1,100,000
$	0.12		350,000						65,625
$	0.15		3,985,000						531,875
$	0.25		1,573,336						904,586
$	0.48		150,000						65,625
$	0.50		79,000						79,000
$	0.53		325,000						162,500
$	0.55		3,312,000						2,501,063
$	1.50		1,646,000						1,646,000
$	2.00		214,750						214,750
	$0.11 – $2.00		12,735,086		7.41	$	0.48		7,271,024	$	0.67

Schedule of Nonvested Share Activity [Table Text Block]

The following table summarizes the activity of the Company’s stock options that have not yet vested: 

			Weighted average
			grant-date fair
	Stock options		value (per option)
Non-vested as of December 31, 2016		5,340,687	$	0.12
Granted		2,435,000	$	0.13
Forfeited		(480,000)	$	0.56
Vested		(1,831,625)	$	0.05
Non-vested as of June 30, 2017		5,464,062	$	0.21

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

Stock-based compensation expense is as follows:

	Six Months Ended June 30,
	2017		2016
Selling, general, and administrative expense	$	118,840	$	113,741
Research and development expense		6,036		8,482
Total stock-based compensation	$	124,876	$	122,223

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The fair value of the stock option grants was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Six Months Ended June 30,
	2017			2016
Weighted average risk-free interest rate		2.06	%		N/A	%
Volatility factor		66.32	%		N/A	%
Weighted average expected life (in years)		7			N/A
Dividend rate		0	%		N/A	%

XML

Warrants (Tables)

6 Months Ended

Jun. 30, 2017

Stock Warrants [Abstract]

Schedule Of Warrant Activity [Table Text Block]

The following table summarizes the activity of the Company’s warrants:

				Weighted		Weighted
				average		average remaining
				exercise		contractual life
	Warrants			price		(in years)
Outstanding as of December 31, 2016		122,475,881		$	0.43		2.13
Granted		198,812,592		$	0.04		2.88
Exercised		–		$
Cancelled or expired		(139,539,344)		$	0.14
Outstanding as of June 30, 2017		181,749,129	(a)	$	0.24		3.64

(a) includes 71,942,807 warrants that contain an anti-dilution provision

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

The following table summarizes information about warrants as of June 30, 2017:

Warrants Outstanding
				Weighted Average Remaining		Weighted Average
Exercise Price		Outstanding		Contractual Life (in years)		Exercise Price
$	0.075		82,702,683
$	0.080		5,618,750
$	0.090		22,875,228
$	0.100		1,810,000
$	0.110		1,250,000
$	0.1125		2,333,333
$	0.190		4,654,145
$	0.200		2,751,250
$	0.240		7,500,000
$	0.270		14,831,098
$	0.280		2,845,000
$	0.325		1,685,625
$	0.400		1,040,000
$	0.450		1,730,000
$	0.500		7,153,097
$	0.740		7,309,395
$	0.800		1,415,000
$	1.100		11,773,275
$	1.120		263,750
$	2.200		70,000
$	2.250		137,500
	$0.075 - $2.250		181,749,129		3.64	$	0.24

XML

Supplemental Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2017

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

The Company did not pay any income taxes during 2016 or the six months ended June 30, 2017.

Non-cash investing and financing activities 

	Six Months Ended June 30,
	2017		2016
Equipment acquired under capital leases	$	124,503	$	567,888
Issuance of common stock upon conversion of accrued interest	$	–	$	41,393
Issuance of common stock upon conversion of related party debt and interest	$	2,739,037	$	–
Issuance costs for short-term debt	$	–	$	5,000
Issuance of common stock for short-term convertible note	$	375,000	$	–
Anti-dilution warrants to be issued	$	–	$	6,878
Fair value of warrant committed to placement agent	$	–	$	5,436

XML

Description of Business and Basis of Presentation (Details Textual) - USD ($)	1 Months Ended				3 Months Ended	6 Months Ended
	Nov. 30, 2017	Jun. 30, 2017	May 31, 2017	Oct. 31, 2016	Mar. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2017	Apr. 30, 2017	Apr. 07, 2017	Dec. 31, 2016
Nature of Business [Line Items]
Increase (Decrease) in Accounts Payable						$ (349,120)	$ (39,164)
Debt Instrument, Face Amount										$ 1,750,000
Proceeds from Issuance of Debt						688,000
Long-term Line of Credit		$ 3,000,000				$ 3,000,000
Stock Issued During Period, Shares, New Issues				9,173,331	9,173,332
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		18,346,662				18,346,662
Common Stock, Capital Shares Reserved for Future Issuance		12,500,000				12,500,000
Expected Number Of Shares To Be Issued		1,567,653				1,567,653					1,567,653
Accounts Payable, Trade, Current		$ 1,143,007				$ 1,143,007					$ 1,796,416
Substantial Doubt about Going Concern, Conditions or Events						We will remain an “emerging growth company” for up to five years following our initial public offering, that is, until February 2019, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our common stock held by non-affiliates exceeds $700 million as of any period ending June 30.
Working Capital									$ 500,000
Investors [Member]
Nature of Business [Line Items]
Expected Number Of Shares To Be Issued		72,448,325				72,448,325
Class A and Class B Warrant [Member]
Nature of Business [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		54,880,744				54,880,744
June 2017 20 OID Note [Member]
Nature of Business [Line Items]
Increase (Decrease) in Accounts Payable		$ 1,000,000
Debt Instrument, Maturity Date	Nov. 30, 2017
Debt Instrument, Face Amount		1,200,000				$ 1,200,000
Proceeds from Issuance of Debt		$ 1,000,000
Insider Debt Conversion Agreement [Member]
Nature of Business [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		73,040,988				73,040,988
Decreased in Debt Obligation to Shareholders						$ 2,646,719
Stock and Warrants Issued During Period, Shares, Common Stock and Warrants						36,520,494
License Agreement Terms [Member]
Nature of Business [Line Items]
Accrued Liabilities		$ 988,985				$ 988,985
AzurRx BioPharma Inc [Member]
Nature of Business [Line Items]
Equity Method Investment, Ownership Percentage		1.36%				1.36%
Sale of Stock, Number of Shares Issued in Transaction			25,000			100,757
Common Stock, Capital Shares Reserved for Future Issuance		100,000				100,000
Sale of Stock, Price Per Share		$ 1.00				$ 1.00
Sale of Stock, Consideration Received on Transaction			$ 85,355
Exchange Notes [Member]
Nature of Business [Line Items]
Debt Instrument, Interest Rate, Stated Percentage								10.00%
Debt Instrument, Maturity Date						Sep. 30, 2017
Debt Instrument, Face Amount		$ 2,384,222				$ 2,384,222
Exchange Notes [Member] | Convertible Notes [Member]
Nature of Business [Line Items]
Debt Instrument, Face Amount		$ 337,969				337,969
Past Due 90 Days [Member]
Nature of Business [Line Items]
Increase (Decrease) in Accounts Payable						988,985
Overdue Terms [Member]
Nature of Business [Line Items]
Increase (Decrease) in Accounts Payable						$ 1,112,900

XML

Gross Revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting Information [Line Items]
Gross Revenue	$ 328,092	$ 581,764	$ 682,928	$ 1,057,102
Molecular Information Services [Member]
Segment Reporting Information [Line Items]
Gross Revenue	256,947	494,821	514,700	711,873
LAESI Instrument Platform [Member]
Segment Reporting Information [Line Items]
Gross Revenue	24,361	7,126	31,243	186,921
Research Products [Member]
Segment Reporting Information [Line Items]
Gross Revenue	$ 46,784	$ 79,817	$ 136,985	$ 158,308

XML

Fair Value of Financial Assets and Liabilities - Derivative Financial Instruments (Details)	6 Months Ended
	Jun. 30, 2017
Minimum [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Fair Value Assumptions, Expected Term	3 months
Fair Value Assumptions, Risk Free Interest Rate	1.03%
Maximum [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Fair Value Assumptions, Expected Term	4 years 9 months
Fair Value Assumptions, Risk Free Interest Rate	1.31%
Derivative Financial Instruments, Liabilities [Member]
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Fair Value Assumptions, Expected Volatility Rate	86.55%
Probability of Future Capital Raises	100.00%

XML

Fair Value of Financial Assets and Liabilities - Derivative Financial Instruments (Details 1) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	$ 1,752,222	$ 3,097,921
Derivative liabilities - Convertible Debt [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	556,734	226,998
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	0	0
Fair Value, Inputs, Level 1 [Member] | Derivative liabilities - Convertible Debt [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	0	0
Fair Value, Inputs, Level 2 [Member] | Derivative liabilities - Convertible Debt [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	1,752,222	3,097,921
Fair Value, Inputs, Level 3 [Member] | Derivative liabilities - Convertible Debt [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	556,734	226,998
Derivative liabilities - common stock [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	524,736	2,016,370
Derivative liabilities - common stock [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	0	0
Derivative liabilities - common stock [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	0	0
Derivative liabilities - common stock [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	524,736	2,016,370
Derivative liabilities - warrant [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	670,752	854,553
Derivative liabilities - warrant [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	0	0
Derivative liabilities - warrant [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	0	0
Derivative liabilities - warrant [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Liability	$ 670,752	$ 854,553

XML

Fair Value of Financial Assets and Liabilities - Derivative Financial Instruments (Details 2)	6 Months Ended
	Jun. 30, 2017 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	$ 3,097,921
Ending Balance	1,752,222
Derivative liabilities - Convertible Debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	226,998
Ending Balance	556,734
Derivative liabilities - Convertible Debt [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	226,998
Fair value of variable conversion rate for convertible debentures issued in 2017	329,736
Ending Balance	556,734
Derivative liabilities - warrant [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	854,553
Ending Balance	670,752
Derivative liabilities - warrant [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	854,553
Unrealized gain on derivative liabilities from the conversion of certain instruments of June 30, 2017	(1,447,002)
Fair value of derivative liabilities associated with other financial instruments issued in 2017	1,263,201
Ending Balance	670,752
Derivative liabilities - common stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	2,016,370
Ending Balance	524,736
Derivative liabilities - common stock [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	2,016,370
Unrealized gain on derivative liabilities from the conversion of certain instruments of June 30, 2017	(1,491,634)
Ending Balance	524,736
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	3,097,921
Ending Balance	1,752,222
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	3,097,921
Unrealized gain on derivative liabilities from the conversion of certain instruments of June 30, 2017	(2,938,636)
Fair value of variable conversion rate for convertible debentures issued in 2017	329,736
Fair value of derivative liabilities associated with other financial instruments issued in 2017	1,263,201
Ending Balance	1,752,222
Fair Value, Inputs, Level 3 [Member] | Derivative liabilities - Convertible Debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	226,998
Ending Balance	556,734
Fair Value, Inputs, Level 3 [Member] | Derivative liabilities - warrant [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	854,553
Ending Balance	670,752
Fair Value, Inputs, Level 3 [Member] | Derivative liabilities - common stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	2,016,370
Ending Balance	$ 524,736

XML

Fair Value of Financial Assets and Liabilities - Derivative Financial Instruments (Details Textual)	6 Months Ended
	Jun. 30, 2017 $ / shares
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Anti Dilutive Trigger Price	$ 0.075
Share Price	$ 0.07

XML

Net Loss per Share (Details Textual) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Weighted Average Number of Shares Outstanding, Basic and Diluted	305,163,939	133,687,552	237,439,183	133,494,583
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			261,188,100	103,624,925

XML

Inventory (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Inventory:
Finished goods	$ 9,564	$ 8,725
Work-in progress	28,717	83,519
Total Inventory	$ 38,281	$ 92,244

XML

Property and Equipment (Details)	6 Months Ended
	Jun. 30, 2017
Computer Software, Intangible Asset [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years
Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	Life of lease

XML

Property and Equipment (Details 1) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Lab equipment	$ 5,775,541	$ 5,698,009
Computer equipment	538,705	552,423
Office equipment	191,248	191,248
Leasehold improvements	212,730	212,730
Property, Plant and Equipment, Gross	6,718,224	6,654,410
Accumulated depreciation	(4,412,479)	(4,188,285)
Property and equipment, net	$ 2,305,745	$ 2,466,125

XML

Property and Equipment (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Property, Plant and Equipment [Line Items]
Depreciation, Depletion and Amortization, Total	$ 149,015	$ 160,135	$ 306,359	$ 319,128

XML

Trade Accounts Receivable and Other Noncurrent Assets (Details Textual) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Other Assets, Noncurrent	$ 19,166	$ 19,041
Allowance for Doubtful Accounts Receivable	3,000	7,000
Deposits [Member]
Other Assets, Noncurrent	$ 19,166	$ 19,041

XML

Bank Line of Credit (Details Textual) - USD ($)	1 Months Ended	6 Months Ended
	Jun. 20, 2016	Jun. 30, 2017
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity (in dollars)		$ 3,000,000
Line of Credit Facility, Interest Rate Description		The interest rate is variable and equal to 0.75% plus prime with a minimum rate of 5.87% per annum.
Line of Credit Facility, Amount Outstanding (in dollars)		$ 3,000,000
Line of Credit [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Maturity Date	Jul. 12, 2018

XML

Obligations to Stockholders (Details Textual) - USD ($)			1 Months Ended		3 Months Ended		4 Months Ended	6 Months Ended		12 Months Ended
	Apr. 07, 2017	Mar. 14, 2017	Apr. 20, 2017	Mar. 20, 2015	Jun. 30, 2017	Mar. 31, 2015	Jul. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Dec. 31, 2014	Mar. 31, 2017	Oct. 31, 2016	Jun. 03, 2014
Loans Payable to Stockholders [Line Items]
Debt Instrument, Face Amount	$ 1,750,000
Repayments of Debt			$ 301,578					$ 501,577	$ 7,783
Accretion Expense					$ 25,458			$ 25,458
Convertible Debt			$ 375,000
Debt Conversion, Converted Instrument, Shares Issued			5,000,000							666,667
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					18,346,662			18,346,662
Warrants and Rights Outstanding														$ 101,177
Debt Conversion, Original Debt, Amount			$ 375,000					$ 1,680,719		$ 50,000
Debt Instrument, Convertible, Conversion Price			$ 0.075		$ 0.075			$ 0.075		$ 0.075
Due to Officers or Stockholders, Current					$ 1,662,144			$ 1,662,144		$ 3,087,956
Payments of Debt Issuance Costs								0	$ 302,707
Proceeds from Related Party Debt		$ 255,000
Advance Received From Stockholder								326,319		2,320,400
Interest Receivable					$ 92,319			$ 92,319
Conversion of Stock, Shares Converted								36,520,494
Shares Issued, Price Per Share					$ 0.075			$ 0.075					$ 0.075
Interest Payable					$ 19,911			$ 19,911				$ 15,047
Warrants Not Settleable in Cash, Fair Value Disclosure					305,500			305,500
Promissory Note Offset Fair Value					280,042			280,042
Interest Bearing Promissiory Note [Member]
Loans Payable to Stockholders [Line Items]
Debt Instrument, Face Amount					$ 194,556			$ 194,556
Eighteen Month Warrant [Member]
Loans Payable to Stockholders [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.09			$ 0.09
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					36,520,494			36,520,494
Five Year Warrant [Member]
Loans Payable to Stockholders [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.1125			$ 0.1125
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					36,520,494			36,520,494
Series A And B Warrants [Member]
Loans Payable to Stockholders [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right					1.5			1.5
Seven Year Warrant [Member]
Loans Payable to Stockholders [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.075			$ 0.075
Debt Conversion, Converted Instrument, Warrants or Options Issued								20,000,000
Interest Bearing Promissory Notes [Member]
Loans Payable to Stockholders [Line Items]
Long-term Debt, Gross					$ 200,000			$ 200,000
Senior Secured Convertible Note [Member]
Loans Payable to Stockholders [Line Items]
Debt Instrument, Face Amount	1,750,000
Convertible Debt	301,577.79
Debt Conversion, Original Debt, Amount	$ 62,030.86
Debt Instrument, Convertible, Conversion Price	$ 0.075
Proceeds from Related Party Debt	$ 500,000						$ 1,250,000
Debt Instrument, Periodic Payment, Principal	$ 62,030.86
Percentage of Equity Proceeds Agreed to Prepay the Loan	30.00%
Related Party Debt Mandatory Prepayment, Equity Offering Limit	$ 5,000,000
Related Party Debt, Prepayments of Loan by Equity Offering	$ 500,000
Warrants Expiration Terms	36 months
Debt Instrument, Term	36 months
Debt Instrument, Interest Rate Terms	interest at the rate of 15% per annum), or (b) 20% of the cash proceeds we receive from customers who request services from the Company using the new mass spectrometer equipment.
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger	85.00%
Loans Payable One [Member]
Loans Payable to Stockholders [Line Items]
Payments of Debt Issuance Costs						$ 31,455
Convertible One-year Promissory Note [Member]
Loans Payable to Stockholders [Line Items]
Debt Instrument, Interest Rate, Effective Percentage											10.00%
Director [Member]
Loans Payable to Stockholders [Line Items]
Proceeds from Related Party Debt								1,424,148
Summit Resources Inc [Member] | Notes And Warrants 2014 [Member]
Loans Payable to Stockholders [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.50							$ 0.80
Debt Instrument, Face Amount											$ 1,415,000
Repayments of Debt											250,000
Accretion Expense						$ 7,227		83,000			10,950
Due to Related Parties, Current											$ 1,415,000
Debt Conversion, Converted Instrument, Shares Issued				1,080,312
Class of Warrant or Right, Number of Securities Called by Warrants or Rights											1,415,000
Debt Instrument, Increase, Accrued Interest				$ 105,078
Debt Instrument, Convertible, Conversion Price				$ 0.25
Debt Conversion, Converted Instrument, Warrants or Options Issued				540,156
Due To Officers Or Stock holders Current Net Of Discount										917,000
Due to Officers or Stockholders, Current										$ 1,000,000
Summit Resources Inc [Member] | Maximum [Member] | Notes And Warrants 2014 [Member]
Loans Payable to Stockholders [Line Items]
Long-term Debt, Gross														1,500,000
Summit Resources Inc [Member] | Minimum [Member] | Notes And Warrants 2014 [Member]
Loans Payable to Stockholders [Line Items]
Long-term Debt, Gross														$ 900,000
Stockholders [Member]
Loans Payable to Stockholders [Line Items]
Proceeds from Related Party Debt								$ 1,942,185

XML

Other Current Liabilities (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Payables And Accruals [Line Items]
Accrued expenses	$ 227,849	$ 68,411
Accrued interest	299,278	264,507
Accrued warranties	35,000	45,000
Accrued payroll and benefits	191,944	119,619
Accrued sales tax	0	103
Unearned revenue	47,572	58,407
Other payables and accrued expenses	$ 801,643	$ 556,047

XML

Debt (Details) - USD ($)		Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		$ 6,997,392	$ 5,967,129
Less: current portion		(4,496,239)	(4,012,149)
Less: unamortized original issue discount		(172,222)	(22,001)
Less: unamortized debt issuance costs		(552,746)	(163,624)
Long-term portion		1,776,185	1,769,355
Unsecured Convertible Debentures [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		2,190,661	2,114,438
Note Payable To West Virginia Development Office [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		92,873	92,873
Note Payable To West Virginia Economic Development Authority, Series 1 [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total	[1]	143,312	143,312
Note Payable To West Virginia Infrastructure and Jobs Development Council, Series 1 [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total	[2]	139,229	139,229
Note Payable To West Virginia Economic Development Authority, Series 2 [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total	[1]	572,148	572,148
Note Payable To West Virginia Infrastructure and Jobs Development Council, Series 2 [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total	[2]	581,987	581,987
Note Payable To West Virginia Jobs Investment Trust Board, Series 1 [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		290,000	290,000
Note Payable To West Virginia Jobs Investment Trust Board, Series 2 [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		300,000	300,000
Note Payable to West Virginia Economic Development Authority, Series 3 [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total	[1]	168,362	168,362
Capital leases [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		846,318	928,530
September 10% OID Secured Promissory Note [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		0	480,000
September 2016 20% OID Note [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		164,063	156,250
June 2017 20% OID Note
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		1,200,000	0
CKR Convertible Note [Member]
Debt Instrument [Line Items]
Debt and Capital Lease Obligations, Total		$ 308,439	$ 0

[1] West Virginia Economic Development Authority

[2] West Virginia Infrastructure and Jobs Development Council

XML

Debt (Details 1) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Schedule of Capitalization, Long-term Debt [Line Items]
2017	$ 4,985,174
2018	622,198
2019	500,357
2020	495,353
2021 & Thereafter	394,310
Total	$ 6,997,392	$ 5,967,129

XML

Debt (Details Textual) - USD ($)	1 Months Ended							6 Months Ended		12 Months Ended
	Nov. 30, 2017	Jun. 30, 2017	Jun. 28, 2017	Apr. 20, 2017	Jan. 17, 2017	Apr. 30, 2012	Mar. 31, 2012	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Apr. 21, 2017	Apr. 07, 2017	Mar. 31, 2017	Jan. 31, 2017
Debt Instrument [Line Items]
Debt Instrument, Convertible, Conversion Price		$ 0.075		$ 0.075				$ 0.075		$ 0.075
Debt Instrument, Face Amount												$ 1,750,000
Debt Conversion, Converted Instrument, Shares Issued				5,000,000						666,667
Warrants Not Settleable in Cash, Fair Value Disclosure		$ 305,500						$ 305,500
Debt Conversion, Original Debt, Amount				$ 375,000				1,680,719		$ 50,000
Interest Payable		$ 19,911						19,911					$ 15,047
Convertible Debt				375,000
Repayments of Debt				$ 301,578				501,577	$ 7,783
Proceeds from Issuance of Debt								$ 688,000
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners		5.00%						5.00%
Proceeds from Issuance of Common Stock								$ 554,258	$ 0
Convertible Note [Member]
Debt Instrument [Line Items]
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger								85.00%
Debt Conversion, Converted Instrument, Amount								$ 308,439
Debt Conversion, Converted Instrument, Expiration or Due Date								Sep. 30, 2017
Maximum [Member]
Debt Instrument [Line Items]
Duration of Lease								60 months
Minimum [Member]
Debt Instrument [Line Items]
Duration of Lease								20 months
Notes Payable to West Virginia Development Office [Member]
Debt Instrument [Line Items]
Notes Payable														$ 92,873
Convertible Promissory Note Payable to West Virginia Jobs Investment Trust Board, Series 1 [Member]
Debt Instrument [Line Items]
Duration of Debt Instrument						3 months	18 months
Long-term Debt, Gross (in dollars)							$ 290,000
Debt Instrument, Face Amount		$ 290,000						$ 290,000
Convertible Promissory Note Payable to West Virginia Jobs Investment Trust Board, Series 2 [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross (in dollars)						$ 400,000
Debt Instrument, Face Amount		$ 300,000						300,000
Capital Leases [Member]
Debt Instrument [Line Items]
Leases Secured Equipment cost								$ 1,868,809
Capital Leases [Member] | Maximum [Member]
Debt Instrument [Line Items]
Imputed Interest Rate		9.45%						9.45%
Capital Leases [Member] | Minimum [Member]
Debt Instrument [Line Items]
Imputed Interest Rate		5.04%						5.04%
Convertible Promissory Notes with WVJITB [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment					$ 50,000
Warrants Not Settleable in Cash, Fair Value Disclosure		$ 15,028						$ 15,028
Debt Conversion, Converted Instrument, Warrants or Options Issued					750,000
Loan Modification Fee					$ 5,000
Common Stock Exercise Price					$ 0.10
Convertible Promissory Notes with WVJITB [Member] | Warrant [Member]
Debt Instrument [Line Items]
Warrants Not Settleable in Cash, Fair Value Disclosure		$ 30,825						$ 30,825
Convertible Debentures and September 2016 OID Note [Member]
Debt Instrument [Line Items]
Debt Conversion, Converted Instrument, Shares Issued								1,764,755
Debt Conversion, Original Debt, Amount								$ 2,270,688
Debt Instrument Original Issue Discount Percentage		20.00%						20.00%
Debt Conversion, Converted Instrument, Amount								$ 1,764,755
Debt Instrument, Interest Rate, Effective Percentage		100.00%						100.00%
Debt Instrument, Debt Default, Amount		$ 589,969						$ 589,969
Debt Conversion, Description								exchange their debentures for a new 20% OID convertible debenture due September 30, 2017, plus one share of our Common Stock for each $1.00
Interest Payable		113,534						$ 113,534
Convertible Debt		301,578						301,578			$ 301,578
Senior Secured Convertable Note [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment			$ 311,305
Debt Instrument, Periodic Payment, Principal			301,578
Debt Instrument, Periodic Payment, Interest			$ 9,727
June 2017 20 OID Note [Member]
Debt Instrument [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.075
Debt Instrument, Face Amount		$ 1,200,000						$ 1,200,000
Debt Instrument Original Issue Discount Percentage		20.00%						20.00%
Proceeds from Issuance of Debt		$ 1,000,000
Debt Instrument, Maturity Date	Nov. 30, 2017
Proceeds from Issuance of Common Stock	$ 5,000,000
Warrant Expiration Period	3 years

XML

Common Stock (Details) - USD ($)		1 Months Ended		6 Months Ended
		Feb. 28, 2017	Jan. 31, 2017	Jun. 30, 2017	Jun. 30, 2016
Class of Stock [Line Items]
Issuance of stock, Shares issued (in shares)		750,000	2,000,000
Issuance of stock, Gross Proceeds (in dollars)				$ 554,258	$ 0
Beginning Balance			$ 16,247	16,247
Issuance of stock for services				356,350
Ending Balance				$ 39,454
Common Stock [Member]
Class of Stock [Line Items]
Balance (in shares)			162,471,373	162,471,373
Issuance of stock, Shares issued (in shares)				5,416,667
Balance (in shares)	[1]			394,538,316
Price Per Share, Beginning Balance (in dollars per share)				Various
Gross Proceeds, Beginning Balance (in dollars)			$ 59,801,216	$ 59,801,216
Gross Proceeds, Ending Balance (in dollars)				60,489,216
Beginning Balance			16,247	16,247
Issuance of stock for services				542
Ending Balance				39,454
Additional Paid in Capital, Beginning Balance (in dollars)			$ 62,440,674	62,440,674
Additional Paid in Capital, Ending Balance (in dollars)				$ 74,346,208
Issuance of stock 1 [Member] | Common Stock [Member]
Class of Stock [Line Items]
Issuance of stock, Shares issued (in shares)	[2]			9,173,330
Issuance of stock, Par Value (in dollars per share)	[2]			$ 0.075
Issuance of stock, Gross Proceeds (in dollars)	[2]			$ 688,000
Issuance of stock for services	[2]			917
Issuance of stock, Additional Paid in Capital (in dollars)	[2]			$ 687,083
Issuance of stock 2 [Member] | Common Stock [Member]
Class of Stock [Line Items]
Issuance of stock, Shares issued (in shares)	[3]			103,508,126
Issuance of stock, Price Per Share (in dollars per share)	[3]			0.075
Issuance of stock, Gross Proceeds (in dollars)	[3]			$ 0
Issuance of stock for services	[3]			10,351
Issuance of stock, Additional Paid in Capital (in dollars)	[3]			$ 7,752,758
Issuance of stock 3 [Member] | Common Stock [Member]
Class of Stock [Line Items]
Issuance of stock, Shares issued (in shares)	[4]			5,416,667
Issuance of stock, Price Per Share (in dollars per share)	[4]			various
Issuance of stock, Gross Proceeds (in dollars)	[4]			$ 0
Issuance of stock for services	[4]			542
Issuance of stock, Additional Paid in Capital (in dollars)	[4]			$ 355,808
Issuance of stock 4 [Member] | Common Stock [Member]
Class of Stock [Line Items]
Issuance of stock, Shares issued (in shares)	[5]			5,000,000
Issuance of stock, Par Value (in dollars per share)	[5]			$ 0.075
Issuance of stock, Gross Proceeds (in dollars)	[5]			$ 0
Issuance of stock for services	[5]			500
Issuance of stock, Additional Paid in Capital (in dollars)	[5]			$ 374,500
Issuance of stock 5 [Member] | Common Stock [Member]
Class of Stock [Line Items]
Issuance of stock, Shares issued (in shares)	[6]			36,520,495
Issuance of stock, Par Value (in dollars per share)	[6]			$ 0.075
Issuance of stock, Gross Proceeds (in dollars)	[6]			$ 0
Issuance of stock for services	[6]			3,652
Issuance of stock, Additional Paid in Capital (in dollars)	[6]			$ 2,735,385
Issuance Of Stock 6 [Member] | Common Stock [Member]
Class of Stock [Line Items]
Issuance of stock, Shares issued (in shares)	[7]			72,448,325
Issuance of stock, Par Value (in dollars per share)	[7]			$ 0.075
Issuance of stock, Gross Proceeds (in dollars)	[7]			$ 0
Issuance of stock for services	[7]			7,245
Issuance of stock, Additional Paid in Capital (in dollars)	[7]			$ 0

[1] Includes 8,889,503 shares that contain an anti-dilution provision

[2] Shares issued in conjunction with the 2016/17 Offering and contains no anti-dilution provisions

[3] Shares issued in conjunction with exchange offers

[4] Shares issued in conjunction with certain Consultant Agreements

[5] Shares issued in conjunction with short-term convertible note

[6] Shares issued for conversion of debt and interests. Shares do not contain anti-dilution provisions

[7] Shares issued in conjunction with trigger of anti-dilution provision, previously recognized in 2016

XML

Common Stock (Details Textual) - USD ($)		1 Months Ended					3 Months Ended	6 Months Ended		12 Months Ended
	Mar. 08, 2017	May 31, 2017	Apr. 20, 2017	Feb. 28, 2017	Jan. 31, 2017	Oct. 31, 2016	Mar. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Apr. 25, 2017	Mar. 02, 2017
Class of Stock [Line Items]
Shares Authorized Total								510,000,000			760,000,000
Common Stock, Shares Authorized					750,000,000			750,000,000		750,000,000	750,000,000
Preferred Stock, Shares Authorized								10,000,000		10,000,000	10,000,000
Debt Conversion, Original Debt, Amount			$ 375,000					$ 1,680,719		$ 50,000
Common Stock, Par or Stated Value Per Share								$ 0.0001		$ 0.0001	$ 0.0001	$ 0.0001
Preferred Stock, Par or Stated Value Per Share								$ 0.0001		$ 0.0001	$ 0.0001
Proceeds from Issuance of Common Stock								$ 554,258	$ 0
Stock Issued During Period, Shares, New Issues						9,173,331	9,173,332
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								18,346,662
Payments of Stock Issuance Costs						$ 88,040
Interest Percentage On Delay Payments						18.00%
Expected Number Of Shares To Be Issued								1,567,653		1,567,653
Debt Instrument, Convertible, Conversion Price			$ 0.075					$ 0.075		$ 0.075
Class of Warrant or Right, Outstanding								49,459,532		49,459,532
Debt Conversion, Converted Instrument, Shares Issued			5,000,000							666,667
Stock Issued During Period, Shares, Issued For Services				750,000	2,000,000
Stock Issued During Period, Value, Issued For Services								$ 356,350
Warrant To Purchase Common Stock								25,244,336		25,244,336
Interest Payable							$ 15,047	$ 19,911
Shares Issued, Price Per Share						$ 0.075		$ 0.075
Payment for Certain Consultants								$ 50,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount								261,188,100	103,624,925
Stock to be Issued upon Execution of Consulting Agreement				500,000
Derivative Liability								$ 1,752,222		$ 3,097,921
Exercise of Class of Warrants or Right, Additional Common Stock Issued										1,000,000
Convertible Debentures and September 2016 OID Note [Member]
Class of Stock [Line Items]
Debt Conversion, Original Debt, Amount								$ 2,270,688
Debt Conversion, Description								exchange their debentures for a new 20% OID convertible debenture due September 30, 2017, plus one share of our Common Stock for each $1.00
Debt Conversion, Converted Instrument, Shares Issued								1,764,755
Debt Conversion, Converted Instrument, Amount								$ 1,764,755
Interest Payable								$ 113,534
Debt Instrument Original Issue Discount Percentage								20.00%
Stockholder Notes One [Member]
Class of Stock [Line Items]
Debt Instrument, Convertible, Conversion Price								$ 0.075
Debt Conversion, Converted Instrument, Shares Issued								36,520,494
Debt Conversion, Converted Instrument, Amount								$ 2,320,400
Interest Payable								92,319
Stockholder Notes Two [Member]
Class of Stock [Line Items]
Debt Conversion, Converted Instrument, Amount								$ 326,319
Consulting Service [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Issued For Services								750,000
Consulting Agreement [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Issued For Services		250,000						250,000		250,000
Stock Issued During Period, Value, Issued For Services				$ 100,000
One Time Retainer Payment For Service	$ 10,000
Class of Warrant or Right, Description								In June 2017, the consultant was offered an opportunity to exchange every two warrants for 1.5 shares of common stock.
Consulting Agreement [Member] | Issue One [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Issued For Services								250,000		250,000
Consulting Agreement [Member] | Issue Two [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Issued For Services								250,000		250,000
Consulting Agreement [Member] | Issue Three [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Issued For Services								250,000		250,000
Exchange Agreements [Member]
Class of Stock [Line Items]
Debt Conversion, Original Debt, Amount								$ 1,680,719
Debt Conversion, Description								exchange their debentures for a new 20% original issued discount convertible debenture due September 30, 2017, plus one share of our Common Stock for each $1.00 outstanding principal amount of the new 20% OID convertible debenture issued to them. As proposed, the contemplated restated 20% OID convertible debenture would be in face amount equal to 100% of the outstanding principal of and accrued interest on the earlier convertible debentures
Debt Conversion, Converted Instrument, Shares Issued								1,856,196
Debt Conversion, Converted Instrument, Amount								$ 1,764,755
Debt Instrument Original Issue Discount Percentage								20.00%
Minimum [Member]
Class of Stock [Line Items]
Partial Liquidated Damages Percentage						1.00%
Derivative Liability										$ 3,100,000
Maximum [Member]
Class of Stock [Line Items]
Partial Liquidated Damages Percentage						6.00%
Class B Warrnats [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						9,173,331		1.5
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 0.1125
Class A Warrnats [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						9,173,331		1.5
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 0.09
Class of Warrant or Right,Exercise Price One [Member] | Stockholder Notes One [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								36,520,494
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.09
Class of Warrant or Right,Exercise Price Two [Member] | Stockholder Notes Two [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								36,520,494
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.1125
Class of Warrant or Right,Exercise Price Three [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								666,667
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.09
Class of Warrant or Right,Exercise Price Four [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								666,667
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.1125
Series A And B Warrant [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								54,680,744
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right		1.5
Stock Issued During Period, Shares, Warrant Exercised		1.5
2016-17 offering[Member]
Class of Stock [Line Items]
Common Stock and Warrant Conversion,Description								Accordingly, each $10,000 Unit that represented 13,333.33 shares of common stock, plus 13,333.33 of 2016-17 Class A Warrants and 13,333.33 of 2016-17 Class B Warrants would be exchanged for 70,180,982 shares of Common Stock, representing (a) 28,072,393 shares of Common Stock, plus (ii) 42,108,589 additional shares of common stock issued in lieu of the 2016-17 Class A Warrants and 2016-17 Class B Warrants.
Conversion of Common Stock and Warrants, Additional Common Stock Issued								38,608,616
Exercise of Class of Warrants or Right, Additional Common Stock Issued								1,000,000
Investor [Member]
Class of Stock [Line Items]
Proceeds from Issuance of Common Stock								$ 688,000
Number Of Units Sold								68.80
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right								18,346,662
Placement Agent [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right								2,222,000
Anti-Dilution Triggering Event [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Other								72,448,325
Common Stock [Member]
Class of Stock [Line Items]
Preferred Stock, Shares Authorized								750,000,000				500,000,000
Common Stock, Par or Stated Value Per Share								$ 0.0001
Stock Issued During Period, Shares, New Issues								9,173,330
Stock Issued During Period, Shares, Issued For Services								5,416,667
Stock Issued During Period, Value, Issued For Services								$ 542
Common Stock, Conversion Price								$ 0.075
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount								8,889,503
Stock Issued During Period, Shares, Other								72,448,325
Common Stock [Member] | Consulting Agreement [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Issued For Services		1,200,000
Private Placement Memorandum [Member]
Class of Stock [Line Items]
Sale of Stock, Description of Transaction								the Company is offering, through a placement agent, a maximum of 500 Units of securities at a purchaseprice of $10,000 per Unit for up to $5,000,000 in gross proceeds (the Offering). Each Unit consists of up to (a) 133,333.33 shares of Common Stock, par value $0.0001 (the Common Stock), (b) 18 month warrants to purchase 133,333.33 shares of Common Stock at an exercise price of $0.09 per share (the Class A Warrants), and (c) five year warrants to purchase 133,333.33 shares of Common Stock at an exercise price of $0.1125 per share (the Class B Warrants and together with the Class A Warrants, the Investor Warrants). If all 500 Units are sold, the Company will issue an aggregate of 66,666,667 shares of its Common Stock and Investor Warrants to purchase up to 133,333,334 shares of Common Stock. The Offering terminated on March 31, 2017.
Private Placement [Member] | Placement Agent [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						2,222,000
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 0.075
2013 offering[Member]
Class of Stock [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.09
Class of Warrant or Right, Outstanding								25,874,399
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right								20,541,895
Stock Issued During Period, Shares, Warrant Exercised								103,497,609
Common Stock and Warrants,Issued,Number								6,162,570
2013 offering[Member] | 2013 B Warrants[Member]
Class of Stock [Line Items]
Class of Warrant or Right, Outstanding								7,762,321
2016 And 17 Unit Offering[Member] | Consulting Agreement [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Issued For Services							250,000

XML

Stock Options and Stock-Based Compensation (Details) - Employee Stock Option [Member] - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Outstanding	10,780,086
Shares, Granted	2,435,000
Shares, Exercised	0
Shares, Cancelled or expired	(480,000)
Shares, Outstanding	12,735,086	10,780,086
Shares Exercisable	7,271,024	5,680,899
Weighted average exercise price, Outstanding	$ 0.57
Weighted average exercise price, Granted	0.13
Weighted average exercise price, Exercised	0
Weighted average exercise price, Cancelled or expired	0.56
Weighted average exercise price, Outstanding	0.48	$ 0.57
Weighted average exercise price, Exercisable	$ 0.67	$ 0.84
Weighted ave. remaining contractual life (years), Outstanding	7 years 4 months 28 days	7 years 3 months 18 days
Weighted ave. remaining contractual life (years), Exercisable	6 years 4 months 2 days	5 years 8 months 12 days

XML

Stock Options and Stock-Based Compensation (Details 1)	6 Months Ended
	Jun. 30, 2017 $ / shares shares
Exercise Price 0.11 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 0.11
Options Outstanding (in shares)	1,100,000
Options Exercisable (in shares)	1,100,000
Exercise Price 0.12 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 0.12
Options Outstanding (in shares)	350,000
Options Exercisable (in shares)	65,625
Exercise Price 0.15 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 0.15
Options Outstanding (in shares)	3,985,000
Options Exercisable (in shares)	531,875
Exercise Price 0.25 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 0.25
Options Outstanding (in shares)	1,573,336
Options Exercisable (in shares)	904,586
Exercise Price 0.48 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 0.48
Options Outstanding (in shares)	150,000
Options Exercisable (in shares)	65,625
Exercise Price 0.50 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 0.50
Options Outstanding (in shares)	79,000
Options Exercisable (in shares)	79,000
Exercise Price 0.53 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 0.53
Options Outstanding (in shares)	325,000
Options Exercisable (in shares)	162,500
Exercise Price 0.55 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 0.55
Options Outstanding (in shares)	3,312,000
Options Exercisable (in shares)	2,501,063
Exercise Price 1.50 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 1.50
Options Outstanding (in shares)	1,646,000
Options Exercisable (in shares)	1,646,000
Exercise Price 2.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 2.00
Options Outstanding (in shares)	214,750
Options Exercisable (in shares)	214,750
Exercise Price 0.11 - 2.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price, Lower Limit (in dollars per share) | $ / shares	$ 0.11
Options Outstanding, Exercise Price, Upper Limit (in dollars per share) | $ / shares	$ 2.00
Options Outstanding (in shares)	12,735,086
Options Outstanding, Weighted Average Remaining Contractual Life (in years)	7 years 4 months 28 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 0.48
Options Exercisable (in shares)	7,271,024
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 0.67

XML

Stock Options and Stock-Based Compensation (Details 2)	6 Months Ended
	Jun. 30, 2017 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Non-vested, Beginning Balance | shares	5,340,687
Shares, Granted | shares	2,435,000
Shares, Forfeited | shares	(480,000)
Shares, Vested | shares	(1,831,625)
Shares, Non-vested, Ending Balance | shares	5,464,062
Weighted average grant-date fair value, Non-vested, Beginning Balance | $ / shares	$ 0.12
Weighted average grant-date fair value, Granted | $ / shares	0.13
Weighted average grant-date fair value, Forfeited | $ / shares	0.56
Weighted average grant-date fair value, Vested | $ / shares	0.05
Weighted average grant-date fair value, Non-vested, Ending Balance | $ / shares	$ 0.21

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Stock Options and Stock-Based Compensation (Details 3) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 124,876	$ 122,223
Selling, General and Administrative Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	118,840	113,741
Research and Development Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 6,036	$ 8,482

XML

Stock Options and Stock-Based Compensation (Details 4)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average risk-free interest rate	2.06%	0.00%
Volatility factor	66.32%	0.00%
Weighted average expected life (in years)	7 years	0 years
Dividend rate	0.00%	0.00%

XML

Stock Options and Stock-Based Compensation (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2012	Dec. 31, 2002
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	$ 0
Share-based Compensation Arrangement by Share-based Payment Award Estimated Fair Value of Stock Price (in dollars per share)	$ 0.09
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value (in dollars)	$ 124,877	$ 122,223
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 0.13
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Expected Term	2 years 3 months
Share Based Compensation Arrangement By Share Based Payment Award Options Nonvested And Expected To Vest Fair Value	$ 498,247
Common Stock, Capital Shares Reserved for Future Issuance	12,500,000
Equity Incentive Plan 2002 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)			4,150,000	450,000
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 0.05	$ 0

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Warrants (Details) - Warrant [Member] - $ / shares	6 Months Ended		12 Months Ended
	Jun. 30, 2017		Dec. 31, 2016
Class of Warrant or Right [Line Items]
Shares, Outstanding at December 31, 2016	122,475,881
Shares, Granted	198,812,592
Shares, Exercised	0
Shares, Cancelled or expired	(139,539,344)
Shares, Outstanding at June 30, 2017	181,749,129	[1]	122,475,881
Weighted Average Exercise Price, Outstanding at December, 2016	$ 0.43
Weighted Average Exercise Price, Granted	0.04
Weighted Average Exercise Price, Cancelled or expired	0.14
Weighted Average Exercise Price,Shares, Outstanding at June 30, 2017	$ 0.24		$ 0.43
Weighted Average Remaining Contractual Life (in years), Outstanding	3 years 7 months 20 days		2 years 1 month 17 days
Weighted Average Remaining Contractual Life (in years), Granted	2 years 10 months 17 days

[1] includes 71,942,807 warrants that contain an anti-dilution provision

XML

Warrants (Details 1) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Class of Warrant or Right [Line Items]
Warrants Outstanding (in shares)	49,459,532	49,459,532
Warrant [Member]
Class of Warrant or Right [Line Items]
Warrants Outstanding (in shares)	181,749,129
Warrants Outstanding, Weighted Average Remaining Contractual Life (in years)	3 years 7 months 20 days	2 years 1 month 17 days
Warrant Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 0.24	$ 0.43
Warrant [Member] | Exercise Price 0.075
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.075
Warrants Outstanding (in shares)	82,702,683
Warrant [Member] | Exercise Price 0.090
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.090
Warrants Outstanding (in shares)	22,875,228
Warrant [Member] | Exercise Price 0.100
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.100
Warrants Outstanding (in shares)	1,810,000
Warrant [Member] | Exercise Price 0.110
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.110
Warrants Outstanding (in shares)	1,250,000
Warrant [Member] | Exercise Price 0.1125
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.1125
Warrants Outstanding (in shares)	2,333,333
Warrant [Member] | Exercise Price 0.190
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.190
Warrants Outstanding (in shares)	4,654,145
Warrant [Member] | Exercise Price 0.240
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.240
Warrants Outstanding (in shares)	7,500,000
Warrant [Member] | Exercise Price 0.270
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.270
Warrants Outstanding (in shares)	14,831,098
Warrant [Member] | Exercise Price 0.280
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.280
Warrants Outstanding (in shares)	2,845,000
Warrant [Member] | Exercise Price 0.325
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.325
Warrants Outstanding (in shares)	1,685,625
Warrant [Member] | Exercise Price 0.400
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.400
Warrants Outstanding (in shares)	1,040,000
Warrant [Member] | Exercise Price 0.450
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.450
Warrants Outstanding (in shares)	1,730,000
Warrant [Member] | Exercise Price 0.500
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.500
Warrants Outstanding (in shares)	7,153,097
Warrant [Member] | Exercise Price 0.740
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.740
Warrants Outstanding (in shares)	7,309,395
Warrant [Member] | Exercise Price 0.800
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.800
Warrants Outstanding (in shares)	1,415,000
Warrant [Member] | Exercise Price 1.100
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 1.100
Warrants Outstanding (in shares)	11,773,275
Warrant [Member] | Exercise Price 1.120
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 1.120
Warrants Outstanding (in shares)	263,750
Warrant [Member] | Exercise Price 2.200
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 2.200
Warrants Outstanding (in shares)	70,000
Warrant [Member] | Exercise Price 2.250
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 2.250
Warrants Outstanding (in shares)	137,500
Warrant [Member] | Exercise Price 0.075-2.25
Class of Warrant or Right [Line Items]
Warrants Outstanding (in shares)	181,749,129
Warrants Outstanding, Weighted Average Remaining Contractual Life (in years)	3 years 7 months 20 days
Warrant Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 0.24
Warrant [Member] | Exercise Price 0.075-2.25 | Maximum [Member]
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	2.250
Warrant [Member] | Exercise Price 0.075-2.25 | Minimum [Member]
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	0.075
Warrant [Member] | Exercise Price 0.080 [Member]
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.080
Warrants Outstanding (in shares)	5,618,750
Warrant [Member] | Exercise Price 0.200 [Member]
Class of Warrant or Right [Line Items]
Warrant Outstanding Exercise Price (in dollars per share)	$ 0.200
Warrants Outstanding (in shares)	2,751,250

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Warrants (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Class of Warrant or Right [Line Items]
Warrants Outstanding (in shares)	49,459,532		49,459,532
Interest Expense, Other	$ 42,563
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	261,188,100	103,624,925
Number Of Warrants Exchanged	138,306,056
Anti-Dilution [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	21,700,003
Related Party [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	114,040,998
Placement Agent [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	2,222,000
Investor [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	18,346,662
Consultant [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	3,053,334
Wawrla [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	13,333,334
West Virginia Jobs Investment Trust Board [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	750,000
Warrant [Member]
Class of Warrant or Right [Line Items]
Warrants Outstanding (in shares)	181,749,129
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	71,942,807
Exchange Offer [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	25,366,271

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Commitments and Contingencies (Details Textual) - USD ($)	1 Months Ended			6 Months Ended
	Jun. 30, 2017	Apr. 30, 2017	Dec. 31, 2016	Jun. 30, 2017	Jun. 30, 2016	Jan. 31, 2017	May 31, 2016
Loss Contingencies [Line Items]
Accrued warranties	$ 35,000		$ 45,000	$ 35,000
Loss Contingency, Estimate of Possible Loss			213,032
Loss Contingency, Loss in Period	130,455
Interest Expense [Member]
Loss Contingencies [Line Items]
Loss Contingency, Loss in Period	19,305
Fee Expenses [Member]
Loss Contingencies [Line Items]
Loss Contingency, Loss in Period	74,359
MPR [Member]
Loss Contingencies [Line Items]
Litigation Settlement, Amount Awarded to Other Party			161,889.16
Settlement Liabilities, Current						$ 111,889.16
First Payment [Member] | MPR [Member]
Loss Contingencies [Line Items]
Payments for Legal Settlements			25,000
Second Payment [Member] | MPR [Member]
Loss Contingencies [Line Items]
Payments for Legal Settlements			$ 25,000
Minimum [Member]
Loss Contingencies [Line Items]
Loss Contingency, Loss in Period	93,664
George Washington University [Member]
Loss Contingencies [Line Items]
Royalty Expenses				2,199	$ 4,538
Accrued Royalties, Current	0			0
Accounts Payable, Current	$ 50,800			50,800
Royalties and Interest Expenses				$ 110,374
Yale University [Member]
Loss Contingencies [Line Items]
Reduce Royalties Percentage After Net Sales of Licensed Products		2.50%
Minimum Royalties Year One		$ 10,000
Minimum Royalties Year Two		15,000
Minimum Royalties Year Three		20,000
Accrued Royalty							$ 5,000
Licence Maintenance Royalty Expenses		2,500
Licence Maintenance Royalty Expenses, After Current Year		5,000
Royalty Pay On First Sale Of Licence Product		5,000
Royalty On Approval For Commercial Sale With a Government Regulatory		7,500
Royalty On First Sale On Approval With a Government Regulatory		10,000
Minimum Royalty Year Four		30,000
Minimum Royalty Year Five		40,000
Minimum Royalty Year Six		$ 50,000

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Supplemental Cash Flow Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Equipment acquired under capital leases	$ 124,503	$ 567,888
Issuance of common stock upon conversion of accrued interest	0	41,393
Issuance of common stock upon conversion of related party debt and interest	2,739,037	0
Issuance costs for short-term debt	0	5,000
Issuance of common stock for short-term convertible note	375,000	0
Anti-dilution warrants to be issued	0	6,878
Fair value of warrant committed to placement agent	$ 0	$ 5,436

XML

Supplemental Cash Flow Information (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Interest Paid	$ 233,226	$ 122,354

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Evaluation of Subsequent Events (Details Textual) - USD ($)			1 Months Ended				3 Months Ended	12 Months Ended
	Aug. 11, 2017	Mar. 14, 2017	Apr. 20, 2017	Feb. 28, 2017	Jan. 31, 2017	Oct. 31, 2016	Mar. 31, 2017	Dec. 31, 2016	Jun. 30, 2017
Subsequent Event [Line Items]
Proceeds from Related Party Debt		$ 255,000
Stock Issued During Period, Shares, New Issues						9,173,331	9,173,332
Stock Issued During Period, Shares, Issued For Services				750,000	2,000,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights									18,346,662
Debt Conversion, Converted Instrument, Shares Issued			5,000,000					666,667
Subsequent Event [Member]
Subsequent Event [Line Items]
Proceeds from Related Party Debt	$ 406,850
Subsequent Event [Member] | Warrnats Two [Member]
Subsequent Event [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.075
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	60,000,000
Subsequent Event [Member] | Consultant [Member]
Subsequent Event [Line Items]
Stock Issued During Period, Shares, Issued For Services	2,000,000
Subsequent Event [Member] | Vendor [Member]
Subsequent Event [Line Items]
Stock Issued During Period, Shares, New Issues	250,000
Subsequent Event [Member] | Convertible Promissory Note [Member]
Subsequent Event [Line Items]
Debt Instrument, Maturity Date	Jun. 30, 2019
Debt Instrument, Interest Rate, Stated Percentage	4.00%
Debt Conversion, Converted Instrument, Shares Issued	36,000,000
Contractual Obligation	$ 360,000