As filed with the Securities and Exchange Commission on ~~May~~August 2729, ~~2016~~2017

Registration No. ~~333-~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

PROTEA BIOSCIENCES GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

2834

20-2903252

(State or Other Jurisdiction of

Incorporation or Organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

1311 Pineview Drive, Suite 501

Morgantown, West Virginia 26505

1-304-292-2226

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive offices)

Stephen Turner

Chief Executive Officer

Protea Biosciences Group, Inc.

1311 Pineview Drive, Suite 501

Morgantown, West Virginia 26505

1-304-292-2226

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Stephen A. Weiss, Esq. ~~Barrett~~Megan SJ. ~~DiPaolo~~Penick, Esq. CKR Law LLP ~~1330~~12100 ~~Avenue~~Wilshire ofBoulevard, ~~the~~Suite ~~Americas~~480 ~~New~~Los ~~York~~Angeles, ~~New~~California ~~York~~90025 ~~10019~~ Tel: (~~212~~310) ~~259~~312-~~7300~~1860 Fax: (~~212~~310) ~~259~~477-~~8200~~3481 ~~Richard~~Harvey ~~A. Friedman~~Kesner, Esq. ~~Stephen~~Avital ~~A. Cohen~~Perlman, Esq. Sichenzia Ross ~~Friedman~~ Ference Kesner LLP 61 Broadway, 32nd Floor New York, New York 10006 Telephone: (212) 930-9700 Facsimile: (212) 930-9725

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. x¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x Emerging growth company x

Title of Each Class of Securities to be Registered	~~Amount~~Proposed toMaximum beAggregate ~~Registered~~Offering Price (1)		~~Proposed Maximum Aggregate Offering Price~~	Amount of Registration Fee		~~Amount of Registration Fee~~
Common stock, par value $0.0001 per share	3,565,000 shares	(1)	$	19,607,500	(5)	$	1,974.48
Common stock, par value $0.0001 per share (2)(3)	$	17,250,000		$	2,000
Common stock offered for selling stockholders	530,119 shares	(2)		2,915,655	(3)		293.61
Common stock underlying representative’s common stock purchase warrants (2)(4)	$	1,155,000		$	134
Representative’s common stock purchase warrants	N/A	(4)
Total	$	18,405,000		$	2,134
Common stock issuable upon exercise of Representative’s purchase warrants	155,000 shares	(4)	$	1,065,625	(5)	$	107.31
Total	4,250,119 shares		$	23,588,780		$	2,375.40	(3)

(1) Gives retroactive effect to a 1-for-2550 reverse stock split to be effected prior to the effective date of this Registration Statement and assumes aan initial public offering price of $5.5000 per share. The proposed maximum aggregate offering price assumes an offering of 3,~~100~~000,000 shares of common stock for the account of the Registrant and the full exercise of the underwriters’ over-allotment option to purchase up to an additional ~~465~~450,000 shares, and is estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. Includes the offering price of additional shares that the underwriters have the option to purchase to cover over-allotments.

(2) Consists (after giving retroactive effect to the proposed 1-for-25 reverse stock split) of (a) 318,889 outstanding shares of the registrant’s common stock and (b) 211,230 shares of common stock issuable upon exercise of outstanding common stock purchase warrants. Commencing 90 days after the date of the prospectus forming part of this Registration Statement, the selling stockholders may sell such shares. Pursuant to Rule 416 ~~under the Securities Act of 1933~~, asthere ~~amended,~~are toalso ~~the~~being ~~extent~~registered ~~that~~ such ~~outstanding~~indeterminable ~~shares~~additional ~~and~~securities ~~warrants~~as ~~provide~~may ~~for~~be anissued ~~increase in amount issuable or exercisable~~ to prevent dilution ~~resulting~~as ~~from~~a result of stock splits, stock dividends, or similar transactions~~, this registration statement shall be deemed to cover such additional shares of common stock issuable in connection with any such provision~~.

(3) ~~Estimated~~Includes ~~solely~~shares ~~for~~which ~~the~~may ~~purpose~~be ofissued ~~calculating~~upon ~~the~~exercise ~~registration fee pursuant to Rule 457(c) under the Securities Act~~ of ~~1933,~~a as45-day ~~amended,~~option ~~based~~granted onto the ~~average~~underwriters ofto ~~the~~cover ~~high and low bid prices of the registrant’s common stock as reported by OTC Markets on May 26~~over-allotments, ~~2016.~~if ~~The~~any ~~shares~~(up ~~offered hereunder may be sold by the selling stockholders from time~~ to ~~time~~15% ~~in the open market, through privately negotiated transactions or a combination~~ of ~~these methods, at market prices prevailing at~~ the ~~time~~offering ~~of sale or at negotiated prices~~amount).

(4) WeEstimated ~~have~~solely ~~agreed~~for tothe ~~issue,~~purpose ~~upon closing~~ of ~~this~~calculating ~~offering, compensation warrants exercisable commencing on a date which is six months after~~ the ~~effective date of the~~ registration ~~statement~~fee ofpursuant ~~which~~to ~~this~~Rule ~~prospectus~~457(g) ~~forms~~under ~~a part and expiring five years following~~ the ~~effective~~Securities ~~date~~Act. ofThe ~~the~~warrants ~~registration~~are ~~statement~~exercisable ofat ~~which~~a ~~this~~per ~~prospectus~~share ~~forms~~exercise aprice ~~part~~equal ~~representing~~to 5110% of the ~~aggregate~~public ~~number of shares of common stock issued in the~~ offering ~~but not including the over-allotment option, or the “representative warrants,” to Laidlaw & Co~~price. ~~(UK)~~As ~~Ltd.,~~estimated assolely ~~Representative~~for of the ~~underwriters.~~purpose ~~Resales~~ of calculating the ~~representative~~registration ~~warrants~~fee ~~on a delayed or continuous basis~~ pursuant to Rule ~~415~~457(g) under the Securities Act ~~of 1933~~, ~~as amended (~~the ~~“Securities~~proposed ~~Act”)~~maximum ~~are~~aggregate ~~registered~~offering ~~hereby.~~price ~~Resales~~ of ~~common stock issuable upon exercise of~~ the ~~representative~~representatives’ warrants ~~are~~is ~~also~~equal ~~being~~to ~~similarly~~110% ~~registered~~of on$1,150,000 a(7% ~~delayed~~of ~~or continuous basis hereby~~$15,000,000). ~~See “Underwriting.”~~

(5) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, based on an estimated proposed maximum aggregate offering price of $5.50 for the common stock issuable upon exercise of the representative’s common stock purchase warrant. We have calculated the proposed maximum aggregate offering price of the common stock underlying the representative’s warrants by assuming that such warrants are exercisable to purchase shares of common stock at a price per share equal to 125% of the price per share sold in this offering.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectuses: one to be used in connection with a public offering of up to 3,100,000 shares of our common stock (excluding 465,000 shares of common stock which may be sold upon exercise of the underwriters’ over-allotment option) through the underwriters named on the cover page of this prospectus (the “Prospectus”) and one to be used in connection with the potential resale by certain selling stockholders of an aggregate of 530,119 shares of our common stock (the “Selling Security holder Prospectus”), consisting of (i) 318,889 shares of our common stock and (ii) 211,230 shares of our common stock issuable upon exercise of outstanding warrants held by certain of the selling stockholders. The Prospectus and Selling Security holder Prospectus will be identical in all respects except for the alternate pages for the Selling Security holder Prospectus included herein which are labeled “Alternate Page for Selling Security holder Prospectus.”

The Selling Security holder Prospectus is substantively identical to the Prospectus, except for the following principal points:

· they contain different outside and inside front covers;

· they contain different Offering sections in the Prospectus Summary section on page 3;

· they contain different Use of Proceeds sections on page 22;

· the Capitalization section on page 24 is deleted from the Selling Security holder Prospectus;

· a Selling Security holder section is included in the Selling Security holder Prospectus beginning on page 81;

· the Underwriting section from the Prospectus on page 70 is deleted from the Selling Security holder Prospectus and a Plan of Distribution is inserted in its place on page 84; and

· the Legal Matters section in the Selling Security holder Prospectus on page 86 deletes the reference to counsel for the underwriters;

The registrant has included in this Registration Statement, after the financial statements, a set of alternate pages to reflect the foregoing differences of the Selling Security holder Prospectus as compared to the Prospectus.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated ~~May~~August 2729, ~~2016~~2017

PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION

Protea Biosciences Group, Inc.

~~3,100,000 Shares~~ Shares of Common Stock

We are offering for sale a total of ~~3,100,000~~ shares of our common stock ~~for the account of our company~~, ~~the~~ ~~net~~$0.0001 ~~proceeds~~par ofvalue ~~which~~per ~~will be used primarily for working capital and to expand our business~~share.

WeOur ~~intend~~common tostock ~~list~~is ~~our~~currently ~~common~~quoted ~~stock~~ on ~~the~~ ~~Nasdaq~~the ~~Capital~~OTCQB ~~Markets~~ under the symbol “PRGB.” NoWe ~~assurance~~intend ~~can~~to beapply ~~given~~to ~~that~~have our ~~Nasdaq listing application will be approved. Our~~ common stock islisted ~~currently~~on ~~traded~~The onNASDAQ ~~the~~Capital Market ~~OTCQB~~under ~~marketplace~~the ofsymbol ~~OTC~~[PRGB]. ~~Markets~~On ~~Group~~August ~~Inc.~~22, ~~The~~2017 the last reported sale price of our common stock as reported on the OTCQB onwas $0.065. ~~May~~In ~~26,~~order ~~2016~~to ~~was~~obtain ~~$0.20,~~NASDAQ ~~which~~listing ~~after~~approval ~~giving~~we ~~effect~~intend to effect a 1reverse ~~for~~split 25of ~~reverse~~our common stock; ~~split~~the exact amount of ~~described~~which ~~below,~~shall ~~equates~~be determined by our board of directors immediately prior to ~~$4.25.~~the ~~However,~~date inof this prospectus. In this prospectus, we assume that the price per share in this offering, on a post-split basis, will be in the range of $4.5000 to $6.5000, and we have used the $5.00 per share (the midpoint of such range ~~($5.50~~) for the assumptions set forth herein.

WeInvesting ~~will~~in ~~effect~~our acommon ~~reverse~~ stock ~~split of~~involves ~~our~~a ~~outstanding~~high ~~shares~~degree of ~~common~~risk. ~~stock~~See ~~prior~~“Risk toFactors” orbeginning ~~upon~~on ~~the~~page ~~effective~~9 ~~date~~ of ~~the registration statement of which~~ this prospectus ~~forms~~ afor ~~part. However, following the stock split, our common stock may not trade at~~ a ~~price~~discussion ~~consistent~~of ~~with~~information ~~such reverse split.~~that Weshould ~~expect~~be toconsidered ~~affect~~in aconnection ~~one-for-25~~with ~~reverse~~an ~~split~~investment ofin our ~~outstanding shares of our~~ common stock~~, which reverse stock split was approved by our stockholders in December 2015~~.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 10 of this prospectus for a discussion of information that should be considered in connection with an investment in our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012, and we have elected to comply with certain reduced public company reporting requirements.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions (1)
Proceeds to us, before expenses	$	$

(1) ~~Does~~The ~~not~~underwriters ~~include~~will areceive ~~non-accountable~~compensation ~~expense~~in ~~allowance~~addition ~~equal~~ to ~~1% of~~ the ~~gross~~underwriting ~~proceeds~~discounts ofand ~~this offering payable to Laidlaw & Company (UK) Ltd~~commissions., ~~the representative of the underwriters.~~ See “Underwriting” for a ~~complete~~ description of compensation payable to the underwriters.

We have granted the underwriters a 45 day option, toexercisable by the underwriters, in whole or in part, to purchase up to ~~465,000~~an additional shares of common stock, at the public offering price, less underwriting discounts and commissions, solely to cover over -allotments, if any. If the ~~over-allotment~~underwriters ~~option~~exercise isthe ~~exercised~~option in full, the total ~~proceeds~~discount toand ~~us, after~~commissions ~~deducting~~will ~~underwriting~~be ~~discounts~~$ , and ~~commissions~~the ~~and~~total proceeds, before expenses, to us will be ~~approximately~~ $~~__________~~ .

The underwriters expect to deliver ~~the~~our ~~shares~~securities ~~against~~to ~~payment~~investors ~~therefor~~ on or about ~~________~~ , ~~2016~~2017.

Except as otherwise indicated, all share and per share amounts in this prospectus assume and give retroactive effect to a 1-for-50 reverse stock split of our outstanding shares of common stock, which will occur prior to or upon the effective date of this prospectus. However, based upon our pre-offering closing market price at August 22, 2017 of $0.065 per share, a 1-for-50 ratio of the reverse stock split may be insufficient in order to offer our shares of common stock within the price range referred to above and list our shares on the Nasdaq Capital Market or other national securities exchange. Accordingly, prior to the effective date of this registration statement of which this prospectus is a part, we may be required to obtain another approval from our stockholders to increase a reverse stock split ratio in excess of 1-for-50.

LAIDLAW & COMPANY (UK) LTD.

The date of this prospectus is _______, ~~2016~~2017

You should rely only on the information contained in this prospectus or any prospectus supplement or amendment. We have not authorized any other person to provide you with information that is different from, or adds to, that contained in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. ~~The selling stockholders are offering to sell and seeking offers to buy our common stock only in jurisdictions where offers and sales are permitted.~~ You should assume that the information contained in this ~~prospectus~~ prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. We We are not making an offer of any securities in any jurisdiction.

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	1
MARKET DATA	1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	1
PROSPECTUS SUMMARY	32
RISK FACTORS	109
USE OF PROCEEDS	2221
DIVIDEND POLICY	2321
CAPITALIZATION	2422
DILUTION	2523
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2725
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	3430
BUSINESS	3733
MANAGEMENT	5346
PRINCIPAL STOCKHOLDERS	5953
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	6256
DESCRIPTION OF SECURITIES	6359
SHARES ELIGIBLE FOR FUTURE SALE	6862
UNDERWRITING	7062
SELLING STOCKHOLDERS’ PLAN OF DISTRIBUTION
EXPERTS	68
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
LEGAL MATTERS AND INTERESTS OF NAMED EXPERTS	68
EXPERTS	77
WHERE YOU CAN FIND MORE INFORMATION	69
LEGAL MATTERS AND INTERESTS OF NAMED EXPERTS	77
WHERE YOU CAN FIND MORE INFORMATION	78

~~‘No~~Neither ~~dealer,~~we ~~salesperson~~nor orthe ~~other~~underwriters ~~person~~have is authorized anyone to ~~give~~provide ~~any~~you with information orthat tois ~~represent~~different ~~anything~~from ~~not~~that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. ~~You~~When ~~must~~you make a decision about whether to invest in our securities, you should not rely onupon any ~~unauthorized~~ information other than the information in this prospectus or ~~representations.~~in ~~This~~any free writing prospectus isthat anwe ~~offer~~may authorize to ~~sell~~be ~~only~~delivered ~~the~~or ~~shares~~made ~~offered~~available ~~hereby,~~to ~~but~~you. ~~only~~Neither ~~under circumstances~~the ~~and~~delivery inof ~~jurisdictions~~this ~~where~~prospectus itnor isthe ~~lawful~~sale of toour dosecurities ~~so.~~means ~~The~~that the information contained in this prospectus or any free writing prospectus is ~~current~~correct ~~only~~after asthe date of ~~its~~this ~~date~~prospectus or such free writing prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under which the offer or solicitation is unlawful.

For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. Our management estimates have not been verified by any independent source, and we have not independently verified any third-party information. In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors”. These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Special Note Regarding Forward-Looking Statements”.

ABOUT THIS PROSPECTUS

Throughout this prospectus, unless otherwise designated or the context suggests otherwise,

all references to the “Company,” the “registrant,” “Protea,” “we,” “our,” or “us” in this prospectus mean Protea Biosciences Group, Inc. and its consolidated subsidiaries;

· all shares, common stock, and per share data assumes and gives pro forma retroactive effect to a one-for-2550 reverse stock split of Protea’s outstanding capital stock that will be consummated ~~immediately~~ prior to the effective date of the registration statement of which this prospectus is a part;

· assumes a public offering price of our common stock (after giving effect to such reverse stock split) of $5.5000 per share, the mid-range of the estimated $4.5000 to $6.5000 initial offering price per share;

· “year” or “fiscal year” mean the year ending December ~~31st~~31;

all dollar or $ references when used in this prospectus refer to United States dollars.

MARKET DATA

Market data and certain industry data and forecasts used throughout this prospectus were obtained from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. We have not independently verified any of the data from third party sources, nor have we ascertained the underlying economic assumptions relied upon therein. Similarly, internal surveys, industry forecasts and market research, which we believe to be reliable based on our management’s knowledge of the industry, have not been independently verified. Forecasts are particularly likely to be inaccurate, especially over long periods of time. Statements as to our market position are based on the most currently available data. While we are not aware of any misstatements regarding the industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements.” Forward-looking statements reflect the current view about future events. When used in this prospectus, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements, include, but are not limited to, statements contained in this prospectus relating to our business strategy, our future operating results and liquidity and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward–looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation:

the results of clinical trials and the regulatory approval process;

our ability to raise capital to fund continuing operations;

market acceptance of any products that may be approved for commercialization;

our ability to protect our intellectual property rights;

the impact of any infringement actions or other litigation brought against us;

competition from other providers and products; our ability to develop and commercialize new and improved products and services;

changes in government regulation;

· our ability to complete capital raising transactions; and

· ~~and~~ other factors (including the risks contained in the section of this prospectus entitled “Risk Factors”) relating to our industry, our operations and results of operations.

Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

2 1

PROSPECTUS SUMMARY

This summary provides a brief overview of the key aspects of our business and our securities. The reader should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under “Risk Factors.” Some of the statements contained in this prospectus, including statements under “Summary” and “Risk Factors” as well as those noted in the documents incorporated herein by reference, are forward-looking statements and may involve a number of risks and uncertainties. Our actual results and future events may differ significantly based upon a number of factors. The reader should not put undue reliance on the forward-looking statements in this document, which speak only as of the date on the cover of this prospectus.

Except as otherwise indicated, all share and per share amounts in this prospectus assumes and gives retroactive effect to a 1-for-25 reverse stock split which will occur prior to the effectiveness of the registration statement of which this prospectus is a part. We have estimated that the initial ~~offering~~ offering price of our common stock will range between $4.5000 and $6.5000 per share and have assumed an initial offering price of $5.5000, ~~representing~~ representing the mid-point of such range. However, based on our current pre-offering closing market price at May 26, 2016 of $0.20 per share, in order to offer our shares of common stock within the price range referred to above and list our shares on the Nasdaq Capital Markets or other national securities exchange approved by our underwriters, prior to the effective date of the registration statement of which this prospectus is a part, we may be required to obtain stockholder approval to increase such reverse stock split to an amount in excess of 1-for-25.

Except as otherwise indicated, all share and per share amounts in this prospectus assumes and gives retroactive effect to a 1-for-50 reverse stock split of our outstanding shares of common stock, which will occur prior to or upon the effective date of this prospectus. Our Board of Directors has discretionary authority to determine the exact ratio of the reverse stock split (up to 1-for-50) based upon the market price of our common stock on the date of such determination and with such reverse stock split to be effective at such time and date, if at all, as determined by the Board in its sole discretion. On August 25, 2017, our Board of Directors authorized a 1-for-50 reverse stock split. However, based on our pre-offering closing market price at August 22, 2017 of $0.065 per share, a 1-for-50 ratio of the reverse stock split may be insufficient in order to offer our shares of common stock within the price range referred to above and list our shares on the Nasdaq Capital Market or other national securities exchange. Accordingly, prior to the effective date of this registration statement of which this prospectus is a part, we may be required to obtain another approval from our stockholders to increase a reverse stock split ratio in excess of 1-for-50.

About Our Business

~~Protea~~We isprovide anbioanalytical ~~emerging~~services ~~growth,~~that support the development of new pharmaceuticals and other products by providing detailed molecular information ~~company~~as ~~that~~requested ~~has~~by ~~developed~~our clients. aOur ~~revolutionary~~services ~~platform~~and technology, ~~which~~address ~~enables~~ the ~~direct~~molecular ~~analysis,~~information ~~mapping~~needs of immunotherapy and ~~display~~therapeutic protein drug development, ofwhich ~~biologically~~has ~~active~~been ~~molecules~~the insource ~~living~~of ~~cells~~all ~~and~~of ~~tissue~~our ~~samples~~historical revenues. ~~The~~We ~~technology~~can ~~platform~~provide ~~offers~~both ~~new,~~visual ~~unprecedented~~and ~~capabilities~~analytical evaluation of therapeutic ~~useful~~efficacy toand the analysis of drug target tissues and tumor microenvironments. Our clients include pharmaceutical, ~~diagnostic~~chemical and biotechnology companies, ~~clinical~~as ~~research~~well as academic and government laboratories, ~~agricultural~~both under contracts and ~~life~~on ~~science~~an ~~industries~~ad-hoc basis.

~~“Molecular information”~~Protea ~~refers~~is toan ~~the~~emerging ~~generation~~growth, ~~and~~bioanalytical technology ~~bioinformatic~~company ~~processing~~that ofhas ~~very~~developed ~~large~~proprietary ~~data~~technology ~~sets,~~which ~~known~~enables ~~as “big data,” obtained by applying~~ the ~~Company’s~~rapid ~~technology~~and todirect ~~identify~~identification, mapping and ~~characterize~~display of the ~~proteins,~~molecules ~~metabolites,~~present ~~lipids~~in ~~and~~living ~~other~~cells ~~molecules which~~and ~~are~~tissue ~~the~~samples, ~~biologically~~thereby ~~active~~providing “molecular ~~products~~information” that is of ~~all~~value to ~~living~~the ~~cells~~pharmaceutical, diagnostic and life ~~forms~~science industries.

~~Our~~We are applying our proprietary technology isto ~~used~~create toa ~~improve~~new ~~pharmaceutical~~class ~~development~~of ~~and~~molecular ~~life~~tests ~~science~~for ~~research~~the ~~productivity~~improved diagnosis and ~~outcomes,~~management ~~and~~of tocancer. ~~extend~~We ~~and~~have ~~add~~established ~~value~~a collaborative toresearch ~~other~~initiative ~~technologies~~with ~~that~~The ~~are~~Yale ~~used~~University inSchool ~~research~~of ~~and~~Medicine ~~development~~that ~~(“R&D”),~~employs ~~such~~our astechnology ~~three-dimensional~~for ~~tissue~~the ~~models,~~definitive diagnosis of malignant ~~biomarker~~melanoma. ~~discovery,~~We ~~synthetic~~anticipate ~~biologicals~~the ~~and~~commercial ~~mass~~availability ~~spectrometry~~of our first cancer diagnostic test sometime in 2018. In ~~particular~~July 2017, ~~the~~we ~~Company~~entered into ~~believes~~a ~~that~~Collaborative ~~its~~Research ~~ability~~Agreement towith ~~rapidly provide~~the ~~comprehensive~~Massachusetts ~~molecular~~General ~~image-based~~Hospital ~~datasets~~(MGH) ~~addresses~~for athe ~~universal~~joint ~~need~~development of new medical diagnostic technology in the ~~pharmaceutical,~~fields ~~diagnostic~~of oncology and ~~clinical research~~wound ~~and~~healing. ~~life~~Additional ~~science~~collaborations ~~industries~~are in development.

~~Known~~We ashave ~~LAESI® (Laser~~completed ~~Ablation~~the ~~Electrospray~~development ~~Ionization),~~of ~~our~~a proprietary bioanalytical technology ~~platform~~that isenables ~~exclusively~~the rapid and direct analysis and visualization of molecules in cells. Known as LAESI®, under an exclusive licensed from The George Washington University ~~(“GWU”)~~. This Wetechnology is ~~have~~covered ~~subsequently~~under ~~completed~~twelve issued patents and has been the ~~development~~subject of ~~the~~over ~~first~~50 ~~fully~~peer-reviewed ~~automated~~publications. LAESI ~~instruments~~technology ~~and requisite~~couples ~~proprietary~~with ~~software~~“mass ~~suites~~spectrometers,” ~~used~~which ~~for~~are ~~LAESI~~instruments ~~data~~that ~~analysis~~detect, characterize, and ~~for~~identify ~~molecular~~molecules. ~~imaging~~LAESI –enables ~~the~~rapid speed ~~direct~~(providing ~~analysis~~data results in seconds to minutes vs. days) and ~~visualization~~ the generation of ~~molecules~~large inmolecular ~~cells~~datasets. Based on our tests and ~~tissue.~~actual usage of our LAESI® technology, ismore ~~currently~~than ~~the~~1,000 ~~subject~~molecules ofcan ~~eleven~~be ~~issued~~directly ~~patents~~identified ~~and~~in ~~over~~a ~~40 peer-reviewed~~single ~~publications~~analysis.

~~LAESI~~“Bioanalytics” isand ~~intended~~“molecular information” toas ~~meet~~referenced ~~the~~herein ~~broad~~refer ~~need of~~to the ~~biologist for the direct, unbiased~~ identification and characterization of ~~molecules in biological samples. By virtue of LAESI’s improved speed and~~ the ~~comprehensive~~proteins, ~~datasets it generates~~metabolites, ~~the~~lipids ~~Company~~and other isbiologically ~~pursuing~~active ~~its~~molecules ~~vision~~that ofare ~~what~~produced itby ~~believes will~~all beliving acells ~~new~~and ~~era~~life ~~of human molecular information~~forms, ~~where~~and the ~~molecular~~use ~~networks~~ of ~~human~~proprietary ~~disease~~machine ~~will be clearly elucidated, with~~learning ~~data~~algorithms ~~more~~(AI) ~~rapidly~~to ~~available,~~analyze ~~thereby~~these ~~accelerating~~very ~~pharmaceutical~~large ~~development~~data ~~and improving healthcare~~sets.

~~Our~~In ~~Business~~summary, ~~Strategy~~we are pursuing our vision of developing and ~~Products~~applying next generation bioanalytical technology to support a new era of medical research and ~~Services~~disease diagnosis, where the molecular networks of human cellular processes can be clearly defined, with data rapidly available, thereby accelerating pharmaceutical development, and revolutionizing cancer diagnosis and treatment.

Protea has applied its core technology to establish commercial leadership in the emerging field of mass spectrometry imaging (“MSI”) services. MSI is a revolutionary capability that for the first time enables the identification of all classes of biologically active molecules produced by cells and combines this with the ability to instantly spatially-display the molecules in tissue histology sections. MSI can be performed with no sample preparation and no labeling or antibody techniques, thereby integrating direct molecular identification with tissue pathology.2

~~The~~Our ~~Company~~Business intends to achieve its business objectives by leveraging its core MSI technology and associated bioanalytical mass spectrometry platforms to improve the availability, comprehensiveness and usefulness of molecular information to address the needs of pharmaceutical research, biomarker discovery, agriculture and other life science research markets.Strategy

~~The~~Protea ~~Company’s~~is ~~commercial~~developing ~~development~~two primary business areas, bioanalytical isservices ~~centered~~and bioanalytical diagnostics, which are described in ~~three~~more ~~business~~detail ~~lines:~~below.

·Bioanalytical ~~Molecular Information~~ Services – the Company believes that it is the commercial leader in providing multimodal MSI, combining LAESI, 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;

3 We provide bioanalytical services that support the development of new pharmaceuticals by providing detailed molecular information as requested by our clients. Employing our proprietary technology and methods, we can provide integrated proteomics, metabolomics, protein characterization and imaging solutions. Our mass spec imaging methods can identify biologically-active molecules produced by cells, then instantly spatially-display the molecules (both two- and three-dimensional) in tissue (histology) sections.

·We ~~LAESI~~continue ~~Instruments,~~to ~~Software~~develop ~~and~~new ~~Consumables~~bioanalytics technology –to weimprove ~~offer~~the ~~our~~availability, ~~proprietary LAESI DP-1000 instrument~~comprehensiveness, ~~software~~ and ~~bioanalytical~~usefulness ~~consumables~~of tomolecular ~~corporate~~information ~~and~~to ~~academic~~address ~~research~~the ~~laboratories;~~needs ~~and~~of our clients.

·We ~~Molecular~~are ~~Diagnostics~~growing ~~and Clinical Research – we apply~~ our ~~multimodal~~list ~~MSI~~of ~~technologies~~platform ~~and~~extending ~~workflows~~partnerships ~~in partnership with top-tier medical research institutions~~ to bundle ~~co-develop~~our ~~new,~~services ~~molecular~~with ~~diagnostic~~theirs ~~tests that the company believes can be used to improve the diagnosis~~ and ~~prognosis~~expand ofour ~~cancer~~total ~~and~~available ~~provide~~services ~~requisite~~market ~~information useful in predicting the outcome of cancer treatment~~opportunities. ~~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.~~

~~Molecular~~Bioanalytical ~~Information Services~~ Diagnostics

We ~~believe we~~ are ~~the~~creating ~~commercial~~a ~~leader in~~new ~~the~~class ~~offering~~ of ~~MSI~~bioanalytics-based molecular ~~services.~~tests ~~Our~~for ~~clients~~the ~~send~~improved ~~their~~diagnosis ~~tissue~~ and ~~biofluid~~management ~~samples directly to the Company’s laboratory, where samples are analyzed by the Company’s state~~ of ~~the art mass spectrometry instrumentation, scientific staff and bioinformatics capabilities~~cancer. We ~~combine~~believe our proprietary ~~LAESI~~bioanalytics ~~platform~~technology ~~with~~will ~~matrix-assisted laser desorption ionization (“MALDI”),~~provide ~~and~~more ~~liquid~~accurate ~~chromatography mass spectrometry (LCMS) workflows. Our clients include major pharmaceutical, biotechnology, chemical~~ and ~~medical~~unambiguous ~~device~~results ~~and~~for ~~consumer~~use ~~products~~in ~~companies,~~the ~~and~~diagnosis ~~both academic~~ and ~~government~~management ~~institutions~~of cancer. ~~The~~We ~~services~~employ ~~unit~~proprietary is“machine ~~operated~~learning ~~within~~algorithms” aon ~~Quality by Design environment~~tissue, ~~which~~targeting isdata ~~necessary~~generated tofrom ~~meet~~our ~~the~~proprietary ~~internal~~workflows ~~research~~to ~~and~~provide ~~development~~a ~~standards~~statistically ofsupportive ~~pharmaceutical~~diagnostic ~~and clinical research clients~~decision.

~~The~~Our ~~Company’s MSI~~test ~~services~~methodology ~~represent~~has abeen ~~revolutionary~~developed ~~capability that for the first time enables the identification of all classes of biologically-active molecules produced by cells,~~ and ~~combines~~now ~~this~~applied ~~with the ability~~ to ~~instantly spatially-display the molecules (both two- and three-dimensional)~~our ~~in tissue histology sections. MSI can be performed without sample preparation, labeling or antibody techniques, thereby integrating direct molecular identification with tissue pathology for the~~ first ~~time.~~cancer ~~Since the sample is not touched~~test, data is unbiased and more rapidly available. Providing molecular information that rapidly answers questions critical to the drug development process, such as, “is my drug actually getting inside the target cells,” “is my immune modulating agent changing the molecular output of the tumor cell,” or “how long did it take for the ~~drug~~differential todiagnosis ~~enter the target cells” as well as questions~~ of ~~drug~~malignant ~~concentration and duration~~melanoma.

WeTo ~~have,~~advance ~~in collaboration with industry leaders, developed advanced bioanalytical workflows for~~ the ~~characterization~~development of ~~protein~~a ~~biotherapeutics,~~broad ~~such~~range ~~as monoclonal antibodies, to address regulatory requirements for safety, efficacy, and bioactivity in manufacturing and storage~~ of ~~these~~new ~~products. To this end~~tests, we are ~~have~~developing ~~applied~~partnerships ~~proteomics~~with ~~and~~top ~~metabolomics~~tier ~~technologies~~medical ~~along~~research ~~with~~institutions ~~LAESI~~that ~~direct~~combine ~~analysis~~our toexpertise ~~aid~~with ~~in optimizing~~ the ~~expression~~institutions’ ~~systems~~medical ~~used~~knowledge ~~to produce monoclonal antibodies for drug discovery purposes. Key collaborations~~ and ~~partnerships have been formed to address the bioinformatics analysis required including statistical and pathway analysis~~resources.

In January 2014, the Company, as a subcontractor to GWU, was awarded a multi-year project with the Defense Advanced Research Projects Agency (“DARPA”). In addition to Protea, The Stanford Research Institute International and GE Global Research also collaborate on the project entitled, “New Tools for Comparative Systems Biology of Threat Agent Action Mechanisms.” A $15 million five year project, the goal of DARPA’s Rapid Threat Assessment (“RTA”) program is to develop new tools and methods to elucidate the mechanism of action of a threat agent, drug, biologic or chemical on living cells within 30 days from exposure. Uncovering the mechanism of action of such agents in 30 days, compared to the years currently required, could be key to the development of effective countermeasures. The molecular networks within living cells are vast and complex. Conventional approaches fail to capture the system-wide response of a living cell to a threat agent. The Company believes this technology will be applicable to preclinical drug research as well.

LAESI instruments, software and consumables

LAESI technology was invented in the laboratory of Professor Akos Vertes, Ph.D., Dept. of Chemistry, GWU, in 2007 and was exclusively-licensed to Protea in 2008. The LAESI DP-1000 instrument, the Company’s prototype embodiment of its proprietary LAESI technology, integrates with laboratory instruments known as mass spectrometers. LAESI employs a proprietary (patented) method that utilizes the water content in a sample (native or applied) to transition the sample into a gas state, where it can be analyzed by a mass spectrometer. LAESI accomplishes this without requiring the sample to be touched. By eliminating sample preparation, the biological sample can be analyzed without the possible contamination, bias or sample loss that occurs with current techniques, which require the introduction of chemicals or the destruction of the sample itself in order to enable analysis by mass spectrometry.

This technology enables the direct identification of proteins, lipids and metabolites in tissues, cells and biofluids such as serum and urine. Data is available in seconds to minutes, allowing rapid time to results and the capacity to analyze thousands of samples in a single work period. As an example, a researcher testing a new drug’s effects on living cells can analyze changes in the cells’ metabolism across a specific time course, thereby almost immediately obtaining data as to the activity of the new drug. The Company believes that LAESI technology has the potential to significantly improve the availability of molecular information in pharmaceutical research as well as many other fields including agriculture, pathology, biomarker discovery, biodefense and forensics.

LAESI instruments employ proprietary software developed by the Company that creates “molecular maps” - the ability to instantly display the distribution of molecules throughout tissue sample in both two- and three-dimensional imaging. The Company currently offers the LAESI Desktop Software and ProteaPlot software that facilitates operating the instrument and the storage and display of datasets in a user friendly, intuitive software environment. The ProteaPlot software includes tools for post-processing of LAESI-MS data, generation of molecular maps/images and mass spectral comparison for regions of interest. LAESI software displays the data obtained by mass spectrometry analysis combined with actual images of the tissue and cell samples. Thus, mass spectrometry data can be integrated with a sample’s tissue architecture.

We have developed and brought to market related, proprietary consumable products for use in molecular analysis including REDIchipsTM (Resonance-Enhanced Desorption Ionization - sample target plates with nanopost array surfaces for matrix-free laser desorption ionization of small molecules) and ProgentaTM (acid labile surfactants use to solubilize proteins for mass spectrometry analysis).

Molecular Diagnostics and Clinical Research

The Company is employing both its proprietary LAESI platform and MALDI methodologies to create comprehensive, tissue-based molecular profiles to improve the differential diagnosis of cancer. Our bioinformatics capability allows the integration of the Company’s MSI data files with related pathology, gene expression and demographic datasets, with the purpose of improving human disease state detection, assessment and management. The Company has entered into collaborative research partnerships with top tier academic centers to develop and validate new, proprietary, MSI–based cancer diagnostic tests.

We have established a collaborative research partnership with the Memorial Sloan-Kettering Cancer Center and the Dana-Farber Cancer Institute. The first target of the collaboration is early stage lung adenocarcinoma. The objectives of the collaboration are to demonstrate that different cancer cell sub-groups within a lung cancer will have different molecular profiles and will behave differently. The goal is to define these molecular differences and to identify the sub-group of cancer cells with the worst prognosis that are most likely to recur thereby enabling earlier treatment intervention, and to use these findings to achieve lung adenocarcinoma tumor cell “molecular profiling,” leading to more precise treatment selection and higher survivor rates.

We established a collaborative research initiative with The Yale University School of Medicine that employs our MSI technology to differentiate benign melanocytic nevi from malignant melanoma. We believe that our core MSI technology can identify unique protein expression profiles that can discriminate between benign melanocytic nevi and malignant melanoma.

To support our MSI–based diagnostic development, we developed new software known as “Histology Guided Mass Spec Imaging (HG-MSI)” that enables pathologists to combine traditional microscopy and histology with high resolution mass spectrometry molecular imaging. Clinicians can share, annotate and direct the analysis of specific tissue morphologies and cell subpopulations by MSI. Molecular profiling data are collected from discrete locations within a tissue section using a histology stained section as a guide. The digital tissue scans are visually analyzed by pathologists by logging onto a secure website portal and they then annotate specific cellular areas for further analysis.

We intend to expand our collaborations with major medical research centers to develop additional molecular profiles for the improved differential diagnosis and prognosis of cancer.

Recent Developments

We entered into a Memorandum of Understanding (the “MOU”) with Agilent Technologies, Inc. (NYSE: A) (“Agilent”), to develop new bioanalytical workflows in order to meet the emerging needs of the growing biopharmaceutical industry. Under the terms of the MOU, Protea, using Agilent instrumentation combined with its expertise, will develop workflows to improve the characterization of protein therapeutics including monoclonal antibodies and new methods for the field of metabolomics. We believe, along with Agilent, that the field of biotherapeutics is advancing rapidly and is in need of new, innovative solutions that identify changes in the metabolic profiles of cells due to disease processes and drug interactions.

We have announced new workflows to support the bioanalytical needs of immuno-oncology, an emerging frontier of cancer treatment that utilizes the body’s own immune system to fight diseases. Our new workflows help provide both visual and analytical certainty of therapeutic efficacy and apply the Company’s core MSI technology to the analysis of drug target tissues and tumor microenvironments.

We have commercialized a consumable product out of the DARPA research grant that is currently being sold to research laboratories performing small molecule analysis. This product called REDIchip (Resonance-Enhanced Desorption Ionization - sample target plates with nanopost array surfaces for matrix-free laser desorption ionization of small molecules) enables researchers to rapidly profile small molecules and metabolites utilizing a MALDI platform. This product does not require the addition of a traditional chemical matrix, but is able to detect and quantitate small molecules due to the highly structured nanopost array. These products are being used with researchers investigating metabolites and small molecule drugs, and they have potential applications within clinical mass spectrometry pain panel management operations.

Risk Factors

Our business is subject to a number of risks. You should be aware of these risks before making an investment decision. ~~These~~As such, these risks are discussed in more ~~fully~~ detail in the section of this prospectus ~~titled~~entitled “Risk Factors,” which begins on page 9 of this prospectus and includes the following sections:

We have a history of losses;

· We ~~will~~may be required to raise additional financing;

· We have a significant amount of indebtedness and have defaulted in the payment of many debt obligations;

We may be unable to protect our intellectual property;

Market acceptance of our products is still uncertain;

We face significant competition; and

· Investors in this offering will incur substantial dilution .

~~The~~Our Reverse Stock Split

On April 28, 2017, we obtained shareholder approval to increase the number of shares of our authorized common stock, $0.0001 par value per share, from 500,000,000 shares to 750,000,000 shares. In addition, and in order to seek to qualify the listing of our shares of common stock on the Nasdaq Capital ~~Markets~~Market or another national securities exchange, on ~~December~~ 1April 28, ~~2015~~2017, we obtained shareholder approval to seek discretionary authority to effect a reverse stock split of our issued and outstanding shares of common stock ~~within a range~~ of up ~~between (i) one-for-15~~ to ~~(ii)~~ one-for-2550, as determined at the discretion of our ~~board~~Board ~~of directors~~ to be in our best interests without further approval from our stockholders.

We intend to consummate a ~~one-for-25~~ reverse stock split immediately prior to the effective date of the registration statement of which this prospectus is a part. Thus far, the Company has obtained authorization from our stockholders to consummate a reverse stock split of up to 1:50 and our Board of Directors approved the 1:50 reverse stock split on August 25, 2017, with the effective date of the reverse stock split to be such time as the officers of the Company deem appropriate. For the reasons set forth below, prior to the effective date of this prospectus, we intend to seek stockholder approval to effectuate an additional increase in the authorized range of such reverse stock split from a minimum of 1:50 to a maximum of 1:125. No fractional shares of common stock ~~were~~will be issued in connection with the reverse stock split, and all such fractional interests will be rounded down to the nearest whole number. Issued and outstanding stock options, convertible notes and warrants will be split on the same basis and exercise prices will be adjusted accordingly.

Unless otherwise indicated, all information presented in this prospectus gives retroactive effect to such 1-for-2550 reverse stock split and all share price, per share, convertible note conversion prices and stock option and warrant exercise price data set forth in this prospectus has been adjusted to give effect to the ~~one~~1-for-2550 reverse stock split.

As of ~~May~~December 2631, 2016 and ~~December~~August 3121, 2017, ~~2015~~on a pre-split basis, we had issued and outstanding a total of (i) ~~133~~162,~~720~~471,~~519~~373 and ~~133~~398,~~146~~633,~~250~~940 shares of our common stock, respectively, and (ii) warrants to purchase a total of 76122,~~450~~475,~~269~~881 and 71221,~~342~~611,~~894~~629 shares of our common stock, respectively, at at certain exercise prices ranging from $0.25075 to $2.25 per share.

As a result of the proposed 1-for-25 reverse stock split, (i) all outstanding 133,720,519 shares of our common stock, prior to the consummation of such reverse stock split, will be reduced to 5,348,820 shares and (ii) all shares of our common stock issuable upon exercise of outstanding 76,450,269 warrants, prior to the consummation of the reverse stock split, will be reduced to 3~~,058,010 shares with a corresponding increase in the exercise prices of such warrants to prices ranging from $6.25 to $56.25 per share.~~

~~Notwithstanding the~~As ~~above,~~a ~~based~~result onof ~~our~~the ~~current~~proposed ~~pre~~1-~~offering~~for-50 ~~closing~~reverse stock ~~market~~split, ~~price~~we atwill ~~May~~have 26(i) 750,000,000 ~~2016~~shares of ~~$0.20~~common ~~per~~stock ~~share~~authorized, of inwhich ~~order~~(ii) toall ~~offer~~outstanding ~~our shares~~398,633,940 shares of our common stock, ~~within~~prior ato ~~price~~the ~~range~~consummation of ~~between~~such ~~$4.50~~reverse ~~and~~stock ~~$6.50~~split, ~~per~~will ~~share~~be ~~and~~reduced ~~meet~~to ~~the~~7,972,679 ~~requirements~~shares, to(iii) ~~list~~all 108,167,947 shares of our ~~shares~~common onstock ~~the~~issuable ~~Nasdaq Capital~~upon ~~Market~~conversion orof ~~other~~$6,107,068 ~~national~~principal ~~securities~~amount ~~exchange~~of ~~approved~~convertible bynotes ~~our~~and ~~underwriters~~debentures, would ~~prior~~be reduced to 2,163,364 shares with a corresponding increase in the ~~effective~~conversion ~~date~~price of ~~the~~such ~~registration~~convertible securities ranging ~~statement~~from of$0.50 ~~which~~to ~~this~~$25.00 ~~prospectus~~per isshare, aand ~~part~~(iv) all 221,661,629 weshares ~~may~~of beour ~~required~~common tostock ~~obtain~~issuable ~~stockholder~~upon ~~approval~~exercise of outstanding warrants, prior to ~~increase~~the ~~such~~consummation of the reverse stock split, towill anbe ~~amount~~reduced into ~~excess~~4,432,233 ofshares ~~1-for-25.~~with ~~There~~a ~~can~~corresponding beincrease noin ~~assurance~~the exercise ~~that~~prices of such ~~stockholder~~warrants ~~approval~~to ~~will~~prices beranging ~~obtained~~from $3.75 ~~See~~to ~~“Risk Factors’~~$112.50 ~~elsewhere~~per ~~in this prospectus~~share.

~~Additional~~Notwithstanding ~~information~~the ~~regarding~~above, based on our current ~~issued~~pre-offering closing market price on the OTCQB at August 22, 2017 of $0.065 per share, in order to offer our shares of common stock within a price range of between $4.00 and ~~outstanding~~$6.00 per share and meet the requirements to list our shares on the Nasdaq Capital Market or other national securities ~~may~~exchange, beprior ~~found~~to inthe effective date of the ~~section~~registration statement of which this prospectus is ~~titled~~a ~~“Description~~part, we will need to obtain another approval from our stockholders to complete a reverse split ratio in excess of ~~Securities~~1-for-50. We therefore will likely be required to seek approval from the holders of a majority of our outstanding shares of common stock to (i) effect a reverse split within a range of between 1-for-50 to 1-for-125, (ii) grant our Board discretionary authority to determine the exact ratio of the reverse stock split based upon the market price of our common stock on the date of such determination and (iii) cause such reverse stock split to be effective at such time and date, if at all, as determined by the Board in its sole discretion. There can be no assurance that such stockholder approval will be obtained. See the section entitled “Risk Factors” beginning on page 9 of this prospectus.

6 Additional information regarding our issued and outstanding securities may be found in the section of this prospectus entitled “Description of Securities.”

Recent Sales of Securities

Between November 2016 through March 2017, we received an aggregate of $2,095,430 in gross cash proceeds from 71 accredited investors in connection with the sale of approximately 209.54 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 thereto. The Units were offered at a price of $10,000 per Unit and consisted of up to (a) 2,667 shares of common stock, (b) 18-month warrants to purchase 2,667 shares of common stock at an exercise price of $4.50 per share (the “Class A Warrants”), and (c) five-year warrants to purchase 2,667 shares of common stock at an exercise price of $5.63 per share (the “Class B Warrants” and, together with the Class A Warrants, the “Investor Warrants”). The offering terminated on March 31, 2017, and we issued an aggregate of 552,115 shares of common stock at $3.75 per share, Class A Warrants to purchase 552,115 shares of common stock at an exercise price of $4.50 per share, and Class B Warrants to purchase 552,115 shares of common stock at an exercise price of $5.63 per share.

In connection with the Unit offering, the Company paid to Laidlaw & Company (UK) Ltd., as placement agent, an aggregate of $258,092 in cash compensation, representing fees and an expense allowance, and issued a warrant to the placement agent to purchase an aggregate of 149,274 shares of common stock, with an exercise price of $3.75 per share and a 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.

The sales of common stock from November 2016 through March 2017 (see above) at a unit price of $3.75 per share triggered the anti-dilution provisions contained in certain financial instruments we had previously issued between 2013 and 2016. As a result, to satisfy our obligations under such provisions, we were required to issue 1,714,500 additional shares of common stock, issue 504,887 Warrants to purchase shares of common stock, reduce the conversion rate of certain outstanding notes to $3.75 per share and reduce the exercise price of 989,191 outstanding warrants.

In April 2017, we received a loan of $500,000 from Summit Resources, Inc., an affiliate of one of our directors, under a 15% maximum $1,750,000 secured installment convertible note that matures in March 2020, and is convertible at the option of the holder into shares of our common stock at a price equal to the lower of 85% of the per share offering price in this prospectus or $0.075 ($3.75, as adjusted for the contemplated reverse stock split. In connection with such financing, we issued to the note holder a warrant to purchase 400,000 shares of our common stock at an exercise price equal to the conversion price of the 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 Andreas Wawrla. 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 to our common stock at a conversion price of $3.75 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 $3.75 per share.

In July 2017, the Company issued a $360,000 note to PPLL, LLC under a two-year advisory agreement that was entered into in connection with the Company’s collaboration and research agreement with MGH. The note is convertible into 720,000 shares of the Company’s common stock at any time after January 28, 2018 at the option of the holder and may be paid by the Company by the issuance of such shares of common stock in exchange for cancellation of the note. For further information, see “Certain Relationships and Related Transactions” on page 56 of this prospectus.

In August 2017, we received a loan agreement in the amount of $440,000 from Summit Resources under a maximum 10% $500,000 note payable on the earlier of (a) December 31, 2017, (b) our receipt of $2,500,000 or more from any subsequent private placement of securities consummated prior to December 31, 2017, or (c) the completion of the offering contemplated by this prospectus. In consideration of its making of the Loan, and in addition to interest and any other charges to be paid pursuant to this Note, the Borrower hereby grants to the Lender or its designees a seven (7) year warrant to purchase, for an initial exercise price of $3.75 per share, 1,200,000 shares of the common stock, $0.0001 par value per share.

In addition to the above financings, and in order to provide it with funds necessary to continue to operate its business, prior to the effective date of the registration statement of which this prospectus is a part, the Company intends to engage in one or more private placements of convertible notes and warrants to accredited investors and seek to raise up to $5,550,000 (the “Interim Financings”). However, as of August 25, 2017, on a pre-split basis, based on 398,633,940 outstanding shares of our common stock and up to 329,779,576 additional shares that would be issuable upon conversion of currently outstanding convertible notes and debentures and exercise of currently outstanding warrants, we would not have enough shares authorized under our certificate of incorporation to issue shares of common stock or reserve shares of common stock for subsequent issuance to prospective investors in such Interim Financings.

On August 25, 2017, we entered into an agreement with PPLL and Summit, who each agreed that until January 15, 2018, they

would not convert any convertible notes held by them or exercise any warrants issued to Summit unless and until the Company has, in addition to all shares of common stock issued and issuable to connection with the proposed Interim Financings, a sufficient number of shares of authorized common stock available to be issued to PPLL and Summit upon full conversion or exercise of their securities; and’

would waive the covenants of our Company to reserve up 139,333,333 shares of our common stock otherwise potentially issuable to PPLL and Summit.

In connection with such agreement, we committed that by no later than January 15, 2018, the Company would either consummate a reverse stock split or obtain stockholder approval to increase the 750,000,000 shares of common stock under our certificate of incorporation to provide for a sufficient number of authorized but unissued shares of common stock to accommodate the full conversion and exercise of all convertible notes and warrants held by PPLL and Summit. Failure to effectuate the reverse split or amendment to our certificate of incorporation would be an event of default under the notes.

There can be no assurance that we will be able to obtain any Interim Financing or that we will be able to provide an adequate number of shares of our common stock to comply with the terms of all of our outstanding convertible securities and warrants. See “Risk Factors” on page 9 of this prospectus.

Our Exchange Offers

As of August 21, 2017, we were in default on the payment of approximately $2,085,400 of outstanding notes and debentures.

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 with anti-dilution provisions. Such derivative liability directly impacts and reduces our stockholders’ equity, which could materially and adversely affect our ability 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 prospectus, an aggregate of $2,254,281 of the 2016 20% OID Debentures were exchanged for $2,366,995 of new 20% OID Debentures due September 30, 2017, and the parties to the exchange offer received an additional 49,779 shares of our common stock. The remaining $16,406 of our 20% original discount debentures that were not exchanged for new 20% OID Debentures are currently in default and there can be no assurance that the three holders of such defaulted debentures will agree to accept our exchange offer.

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 $4.50 per share for each of the 2,069,952 shares of Common Stock issued and issuable to them in the 2013 Offering (approximately 517,488 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 155,246 warrants) for one additional share of our common stock (the “2013 Exchange Offer”). As of the date of this prospectus, 116 of the purchasers of our securities in the 2013 offering accepted the exchange offer, resulting in the issuance of 123,251 additional shares of common stock and warrants to purchase 410,838 shares of common stock.

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 2,667 shares of common stock, plus 2,667 of 2016-17 Class A Warrants and 2,667 of 2016-17 Class B Warrants would be exchanged for 1,403,620 shares of Common Stock, representing (a) 561,448 shares of Common Stock, plus (ii) 842,172 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 prospectus, 70 of the purchasers of our securities in the 2016-17 offering accepted the exchange offer resulting in the issuance of 822,172 additional shares of common stock.

Entered into agreements with certain related parties, including members of our board of directors, to convert approximately $2,651,719 of our indebtedness and accrued interest of $92,319 owed to such individuals into 738,410 shares of our common stock and 738,410 Class A Warrants to purchase shares of our common stock at an exercise price of 4.50 per share, and 738,410 Class B Warrants to purchase shares of our common stock at an exercise price of $5.63 per share, all upon the same terms as the Units of equity securities offered in our 2016-17 Offering. In July 2017, these related parties accepted the terms of the 2016-2017 Exchange Offer referred to above, as a result of which they were issued an aggregate of 1,097,615 additional shares of common stock in lieu of their Class A Warrants and Class B Warrants. As of the date of this prospectus, the balance of the related party debt is $2,068,994.

As a result of the acceptances we received in the above exchange offers, we believe that we will be able to significantly reduce our derivative liability. In such connection, we intend to engage an outside consulting firm to calculate the amount of such derivative liability reduction based upon and following the issuance of our unaudited June 30, 2017 balance sheet.

Related Party Indebtedness

AsIn of2017, ~~the~~related ~~date of this prospectus~~parties, weincluding ~~are indebted to certain~~ members of our board of directors, orconverted ~~their~~a ~~affiliates~~total ~~for~~of ~~loans~~$2,646,719 ~~and~~principal ~~advances~~amount ~~made~~of tonotes ~~our~~we ~~Company~~owed ~~over~~to ~~the~~such ~~past five~~persons ~~years~~and inaccrued ~~the aggregate amount~~ interest of $292,~~676,500.~~319 Weinto ~~are~~units ~~currently in discussions with members~~ of our ~~Board~~securities consisting of ~~Directors~~(a)730,410 ~~including Stephen~~shares ~~Turner,~~of our ~~President~~common ~~and~~stock ~~CEO, to repay~~ (on a ~~pro-rata~~conversion ~~basis),~~price ~~out~~ of ~~the~~$3.75 ~~net~~per ~~proceeds~~share) plus of(b) ~~this~~an ~~offering~~eighteen-month ~~and~~warrant onto apurchase ~~date~~an ~~which shall~~additional be730,410 30shares ~~days following the listing~~ of ~~our~~ common stock onat ~~the Nasdaq Capital Markets,~~ an ~~aggregate~~exercise ofprice ~~$669,125, or 25%~~ of ~~the total of~~ $~~2,676,500 of related party advances from such persons~~4.50 ~~See~~per ~~“Use~~share and of(c) ~~Proceeds”.~~a ~~The~~five-year ~~balance~~warrant ~~of such indebtedness~~ to ~~our~~purchase ~~directors~~an ~~and~~additional ~~their~~730,410 ~~affiliates~~shares ~~would~~of becommon ~~evidenced~~stock byat ~~interest-bearing~~an ~~notes~~exercise ~~due~~price asof to$5.63 ~~principal~~per ~~and~~share ~~accrued interest over~~containing aidentical ~~one~~terms ~~year~~to ~~period.~~the ~~There~~units ~~can~~of beequity nosecurities ~~assurance~~which ~~that~~ we ~~will~~sold ~~be successful~~ in ~~completing~~our ~~the~~private ~~contemplated~~placement ~~agreements~~to orunaffiliated ~~the~~accredited ~~terms~~investors between ~~and~~November ~~conditions~~2016 ofand ~~any~~June ~~such~~30, ~~arrangements~~2017. In ~~Any~~July ~~such~~2017, ~~agreements~~these ~~may~~related beparties ~~subject~~accepted tothe ~~completion~~terms of ~~this~~the ~~offering. In~~2016-2017 ~~addition,~~Exchange Offer wereferred ~~agreed~~ to ~~issue~~above, toas ~~certain~~a result of ~~our~~which ~~directors,~~they ~~three~~were ~~year~~issued ~~warrants~~an toaggregate ~~purchase~~of ~~up to 120~~1,~~000~~097,615 additional shares of common stock ~~at an exercise price of $10.00 per share (after giving effect to the reverse stock split),~~ in ~~consideration~~lieu of their ~~extension~~Class ofA ~~their~~Warrants ~~personal guarantees of our bank line of credit. See “Certain Relationships~~ and ~~Related~~Class ~~Transactions”~~B ~~elsewhere in this prospectus~~Warrants.

On April 7, 2017, we received a loan of $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 previously advanced by Summit and an additional $1,250,000 will be advanced to us from April 2017 through August 2017. 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 400,000 shares of the Company’s common stock at an exercise price of $3.75 per share.

Of the loan proceeds, we intend to apply $1,250,000 to purchase two new mass spectrometers and the balance of the loan for working capital. The company is presently evaluating the different mass spectrometers on the market prior to making its purchase and is working with Summit to amend the note agreement to best reflect these plans. 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.

Commencing 30 days after installation of the state-of-the-art mass spectrometer 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 $3.75 per share (as adjusted by the contemplated the 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. Based on our initial per share offering price in this offering, the conversion price of the note will be $3.75 per share.

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 agreed to waive its security interest in our accounts receivable and inventory until such time as we retire a $301,578 obligation to an unaffiliated third party, subject to our agreement to reaffirm Summit’s senior priority lien and security interest on all of our assets and properties, other than the specific accounts receivable and related collateral granted to such third party. On June 28, 2017, we satisfied our obligation to the unaffiliated third party and the waiver is no longer applicable.

For further information, see “Certain Relationships and Related Transactions” elsewhere in this prospectus.

Organizational History

We were incorporated as SRKP 5, Inc., in Delaware on May 24, 2005. Prior to the Reverse Merger (as defined below) and split-off (as described below), our business was to provide software solutions to deliver geo-location targeted coupon advertising to mobile internet devices.

On September 2, 2011, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Protea Biosciences, Inc., a Delaware corporation (“PBI”), and we formed our wholly-owned subsidiary ~~formed~~ to complete the merger. Under the terms of the Merger Agreement, our subsidiary merged ~~with~~ with and into PBI, as a result of which PBI became our wholly owned subsidiary (the “Reverse Merger”). In the Reverse Merger, each share of PBI common stock was automatically converted into one share of our common stock, all shares of PBI common stock in treasury were canceled and we assumed all of PBI’s rights and obligations for outstanding convertible securities and warrants. Upon the Reverse Merger, we discontinued our prior business, and our business became the business of PBI and its subsidiaries.

Corporate Information

Our principal executive office is located at 1311 Pineview Drive, Suite 501, Morgantown, West Virginia 26505. Our telephone number is 1-304-292-2226. ~~Our~~and our web address is is http://proteabio.com. Information included on our website is not a part of this prospectus.

Implications of Being an Emerging Growth Company

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the earlier of (i) December 31, 2019, the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (ii) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under applicable SEC rules. We expect that we will remain an emerging growth company for the foreseeable future, but cannot retain our emerging growth company status indefinitely and will no longer qualify as an emerging growth company on or before December 31, 2019. We refer to the Jumpstart Our Business Startups Act of 2012 herein as the "JOBS Act," and references herein to "emerging growth company" have the meaning associated with it in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not emerging growth companies.

These exemptions available to us as a result of being an emerging growth company include:

· being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure; ~~· not being required to comply with the requirement of auditor attestation of our internal controls over financial reporting;~~

· not being required to comply with ~~any~~the requirement ~~that~~of ~~may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the~~ auditor's ~~report~~attestation ~~providing~~of ~~additional~~our ~~information~~internal ~~about~~controls ~~the~~over ~~audit and the~~ financial ~~statements~~reporting; · reduced disclosure obligations regarding executive compensation; and · not being required to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements;

reduced disclosure obligations regarding executive compensation; and

not being required to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

For as long as we continue to be an emerging growth company, we expect that we will take advantage of the reduced disclosure obligations available to us as a result of that classification. We have taken advantage of certain of those reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

An emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected to avail ourselves of this extended transition period and, as a result, we will not be required to adopt new or revised accounting standards on the dates on which adoption of such standards is required for other public reporting companies.

We are also a "smaller reporting company" as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and have elected to take advantage of certain of the scaled disclosure available for smaller reporting companies.

THE OFFERING

Common stock outstanding prior to the offering 57,~~348~~972,~~820~~679 shares (1)

Common stock offered by the Company		~~3,100,000~~ shares
Over-allotment option		The underwriters have an option for a period of 45 days to purchase up to ~~465,000~~ additional shares of our common stock to cover over-allotments, if any.
Use of proceeds		We estimate that the net proceeds to us from this offering will be approximately $1513,000,000 or approximately $1715,~~352~~000,~~900~~000 if the underwriters exercise their option to purchase additional shares in full, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds of this offering to ~~reduce~~fund ~~our~~research ~~indebtedness~~and bydevelopment ~~approximately~~of ~~$1,683,125~~new ~~(including~~products, ~~approximately~~for ~~$669,125~~development ~~owed to certain~~ of ~~our~~the ~~stockholders~~Melanoma ~~and~~Diagnostic ~~directors),~~Pilot toLab ~~fund research~~ and ~~development~~commercialization ~~of new products~~efforts, to increase our sales and marketing efforts, to build infrastructure, including hiring of additional personnel, to reduce certain indebtedness and accounts payable, and for working capital and other general corporate purposes. For additional information, please refer to the section entitled “Use of Proceeds’” on page 2221 of this prospectus.
Proposed Nasdaq Stock Market symbol:		PRGB. Our common stock is currently quoted on the OTCQB under the symbol “PRGB.”
Risk Factors		You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the “Risk Factors” section beginning on page 109 of this prospectus before deciding whether or not to invest in shares of our common stock.

(1) Represents shares of our common stock outstanding as of ~~March~~August 3121, ~~2016.~~2017 ~~Does~~and does not include the following:

· ~~394~~255,~~203~~702 shares of common stock issuable upon the exercise of outstanding stock options, at a weighted average exercise price of $1724.2533 per share;

	·	3,008,720 shares of common stock issuable upon the exercise of outstanding warrants at a weighted average exercise price of $____ per share;
	·	120,000 shares of common stock issuable upon the exercise of warrants we intend to issue to certain of our directors at an exercise price of $10.00 per share;

4,227,933 shares of common stock issuable upon the exercise of outstanding warrants at a weighted average exercise price of $10.42 per share;

· 4020,~~242~~900 shares of common stock issuable upon conversion of $400,000 of convertible notes, 635,793 shares of common stock issuable upon conversion of $2,384,267 of convertible notes issued in the second and third quarter of 2016, 320,000 shares of common stock upon conversion of $1,200,000 of convertible 20% OID issued in 2017 and 466,667 shares of common stock upon conversion of $1,750,000 convertible promissory note;

· 49204,~~290~~299 shares of ~~our~~ common stock ~~underlying~~issuable upon the exercise of outstanding warrants issued to ~~the~~Laidlaw ~~representative~~& ofCo. ~~the~~(UK) ~~underwriters,~~Ltd. or its assigns in ~~their~~connection ~~capacity~~with acting as placement agent in ~~two~~ private placements ~~consummated~~of inour ~~the~~securities ~~fourth~~consisting ~~quarter~~of (i) warrants to purchase up to 14,820 shares of ~~2015~~common ~~and~~stock ~~the~~at ~~first~~$10.00 ~~quarter~~per share, (ii) warrants to purchase up to 9,825 shares of ~~2016~~common stock at exercise price of $10.00 per share, ~~respectively~~(iii) warrants to purchase up to 30,380 shares of common stock at an exercise price of $10.00 per share and (iv) warrants to purchase up to 149,274 shares of common stock at an exercise price of $3.75; and

· 720,000 shares of ~~our~~ common stock ~~underlying~~issuable ~~the~~to ~~warrants~~PPLL, toLLC bein ~~issued~~payment toof, ~~the~~or ~~representative~~upon conversion of, ~~the~~a ~~underwriters~~$360,000 innote ~~connection~~due ~~with~~June ~~this~~30, ~~offering~~2019 that was issued under a business advisory agreement entered into in July 2017.

Except as otherwise indicated, all information in this prospectus assumes and gives effect to: (a) a 1-for-50 reverse split of our common stock, which will occur prior to the effectiveness of the registration statement of which this prospectus is a part; and (b) no exercise by the underwriters of their option to purchase up to an additional 450,000 shares of our common stock.

~~· A 1-for-25 reverse split of our common stock, which will occur prior to the effectiveness of the registration statement of which this prospectus is a part.~~8

· no exercise by the underwriters of their option to purchase up to an additional 465,000 shares of our common stock.

· no exercise of the of the representative’s warrants described above.

RISK FACTORS

Our business is subject to many risks and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occur, our business and financial performance could be adversely affected, our actual results could differ materially from our expectations, and the price of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties not currently known to us or that we currently do not believe are material that may adversely affect our business and financial performance. You should carefully consider the risks described below, together with all other information included in this prospectus including our financial statements and related notes, before making an investment decision. The statements contained in this prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and investors in our securities may lose all or part of their investment.

Risks Related to Our Business

Our independent registered public accounting firm has issued a “going concern” opinion.

Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or obtain the necessary financing we need to meet our obligations and repay our liabilities arising from normal business operations when they come due. We plan to continue to provide for our capital requirements that are not met by income from our operations by issuing additional equity or debt securities. No assurance can be given that additional capital will be available when required or on terms acceptable to us. We also cannot give assurance that we will achieve sufficient revenues in the future to achieve profitability and cash flow positive operations. The outcome of these matters cannot be predicted at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our business plan or to generate positive operating results. We believe that that these matters, among others, raise substantial doubt about our ability to continue as a going concern.

We are an emerging growth company with a limited operating history and limited sales to date.

The Company is subject to all of the risks inherent in the establishment of an emerging growth company including the absence of an operating history and the risk that we may be unable to successfully develop, manufacture and sell our products. There can be no assurance that the Company will be able to execute its business plan, including without limitation the Company’s plans to develop, then manufacture, market and sell its technologies, products and services. The Company has engaged in limited manufacturing operations to date and although the Company believes that its plans to conduct manufacturing of its products internally will work, there is no assurance that this will be the case. The Company began to sell products and services in the fourth quarter of 2007 and sales to date are limited. There can be no assurance that the Company’s sales projections and marketing plans will be achieved as anticipated and planned. It is likely that losses will be incurred during the early stages of operations. The Company believes that its future success will depend on its ability to develop and introduce its instruments and services for mass spec molecular imaging, to meet a wide range of customer needs and achieve market acceptance. The Company cannot assure prospective investors that it will be able to successfully develop and market its products or that it will recover the initial investment that must be made to develop and market such products.

We have incurred net losses since inception.

We incurred a net loss of $111,~~085~~365,~~496~~977 for the ~~quarter~~six months ended ~~March~~June 3130, ~~2016~~2017, $915,~~574~~647,~~434~~922 for the year ended December 31, ~~2015~~2016 and $119,~~474~~574,~~770~~434 for the year ended December 31, ~~2014~~2015. AsThe ~~of March 31, 2016, the~~ Company has ana ~~accumulated~~net ~~deficit~~ loss of $80 106,~~683~~611,~~152~~507 since inception. Our independent registered public accountants issued an opinion on our audited financial statements as of and for the year ended December 31, ~~2015~~2016 that contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. WeOur ~~can~~ability ~~provide no~~to ~~assurance~~continue as toa ~~when,~~going orconcern ifis dependent upon raising capital from financing transactions. To stay in business, we will beneed ~~profitable~~to inraise ~~the~~additional ~~future.~~capital ~~Even~~through ifpublic or ~~the~~private ~~Company~~sales ~~achieves~~of ~~profitability~~our securities, itdebt ~~may~~financing ~~not~~or ~~be able~~short-term tobank ~~sustain~~loans, ~~such~~or ~~profitability~~a combination of the foregoing.

We ~~must~~are ~~raise~~in ~~additional~~default ~~working~~in payments of ~~capital~~approximately $2,085,400 of our outstanding notes and debentures.

AtAs ~~the~~of ~~present~~August ~~time~~21, 2017, approximately $2,068,994 of our ~~ability~~Loans Payable to ~~continue as~~Stockholders, aadvances ~~going~~from ~~concern~~related isparties ~~dependent~~and ~~upon~~all ~~raising~~$16,406 ~~capital~~of ~~from~~our ~~financing~~20% ~~transactions.~~original Toissued ~~stay~~discount in(“OID”) Convertible ~~business,~~Debentures wehave ~~will~~matured ~~need~~and toare ~~raise~~currently ~~additional working~~in ~~capital~~default. ~~through~~Although ~~public~~we orare ~~private~~attempting ~~sales~~to obtain extensions of ~~our~~the ~~equity~~maturity date ~~securities,~~of these debt ~~financing~~obligations, orthere ~~short-term~~is ~~bank~~no ~~loans,~~assurance orthat awe ~~combination of~~will ~~the~~be ~~foregoing~~successful in such endeavors. WeEven if we are ~~currently~~able into renegotiate the ~~process~~terms of ~~seeking~~such debt obligations and extend their maturity dates to ~~obtain~~September ~~additional~~30, ~~working~~2017, ~~capital~~there ~~through~~is ~~the~~no ~~private~~assurance ~~placement~~that we will have ofthe ~~additional~~funds ~~bridge~~available ~~notes~~by ~~and~~September ~~warrants.~~30, ~~Based~~2017 onto pay our ~~current~~obligations, ~~spending~~if ~~levels,~~required. ~~management~~In ~~estimates~~the event that ~~the~~all ~~Company~~or ~~will~~substantially ~~need~~all of such creditors do not agree upon an extension of our defaulted debt securities, or we are unable to ~~raise~~pay ~~approximately~~such $6debts by September 30,~~000~~ 2017,~~000~~ inassuming ~~additional~~we ~~working~~are ~~capital~~able to ~~maintain~~obtain extensions of the current ~~operations~~maturity ~~through~~dates, the ~~next~~holders ~~twelve~~of ~~calendar~~such notes and debentures could accelerate ~~months~~the indebtedness evidenced thereby in which event we may be forced to cease operations or be required to seek protection under the United States Bankruptcy Act.

There can be no assurance that we will be able to raise sufficient additional working capital financing to sustain our operations on acceptable terms, or at all. If such financing is not available on satisfactory terms or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities and our operations and our financial condition may be materially adversely affected. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt and could increase our expenses and require that our assets be provided as a security for such debt. Debt financing would also be required to be repaid regardless of our operating results. Equity financing, if obtained, could result in dilution to our then existing stockholders.9

10 We may be required to raise significant additional capital.

~~Issuance~~We ofhave ~~common~~been ~~stock~~operating at a loss since inception and our working capital requirements continue to ~~fund~~be significant. We have been supporting our business through the sale of debt and equity since inception. We will need additional funding for developing products and services, increasing our ~~operations~~sales and ormarketing ~~upon~~capabilities, technologies and assets, as well as for working capital requirements and other operating and general corporate purposes. Our working capital requirements depend and will continue to depend on numerous factors including the ~~conversion~~timing of revenues, the expense involved in development of ~~convertible~~our ~~debt~~products, orand capital improvements. If we are unable to generate sufficient revenue and cash flow from operations, we will need to seek additional equity ~~securities~~or debt financing to provide the capital required to maintain or ~~exercise~~expand our operations, which may have the effect of ~~outstanding~~diluting ~~warrants~~our ~~and~~existing ~~options~~stockholders or restricting our ability ~~may~~to ~~dilute~~run ~~your~~our ~~investment~~business.

We ~~have~~plan ~~been~~to ~~operating~~meet ~~at a loss since inception and~~ our working capital requirements by ~~continue~~raising toadditional befunds ~~significant.~~from ~~We have been supporting our business through~~ the sale of ~~debt and~~ equity ~~since~~or ~~inception.~~debt ~~We will need additional funding for developing products and services~~securities, ~~increasing~~the ~~our~~sale ~~sales and~~of ~~marketing~~certain ~~capabilities, technologies and~~ assets, ~~as well as for working capital requirements~~ and ~~other~~possibly ~~operating~~developing ~~and general~~ corporate ~~purposes. Our working capital requirements depend and will continue to depend on numerous factors including the timing~~ ~~of revenues, the expense involved in~~ development ofpartnerships ~~our products, and capital improvements. If we are unable~~ to ~~generate~~advance ~~sufficient revenue~~our ~~and~~molecular ~~cash~~information ~~flow~~technology ~~from~~development ~~operations,~~activities weby ~~will~~sharing ~~need to seek additional financing through~~ the ~~sale~~costs of ~~additional shares of common~~development ~~stock, warrants~~ and~~/or~~ ~~convertible~~commercialization ~~debt~~with ~~securities to provide the capital required to maintain or expand~~ our ~~operations, which may have the effect of diluting our existing stockholders or restricting our ability to run our business~~partners.

AsAlthough ofwe believe that the ~~date~~net proceeds of this ~~prospectus,~~offering ~~we have~~will ~~warrants~~be sufficient to ~~purchase~~enable anus ~~aggregate~~to ofdevelop 3our business,~~058,010~~ ~~shares~~increase ofour ~~common~~revenues ~~stock issued~~ and ~~outstanding,~~sustain asour ~~adjusted~~working capital requirements for the ~~reverse~~ ~~stock~~next ~~split. The~~18 ~~Company~~months, ~~also~~we ~~has~~may ~~reserved~~have anto ~~aggregate~~raise ofadditional ~~166,000~~capital ~~shares~~during ofsuch ~~common~~period ~~stock~~or ~~for issuance~~thereafter. ~~under~~We ~~its~~can ~~2002~~provide ~~Equity~~no assurance ~~Incentive~~as ~~Plan~~to ~~(the~~whether ~~“2002~~our ~~Plan”)~~capital ~~and~~raising ~~500,000~~efforts ~~shares~~will ofbe ~~common~~successful ~~stock~~or ~~have~~when, ~~been reserved~~or ~~for~~if, ~~issuance~~we ~~under~~will ~~the~~ever ~~Company’s~~be ~~2013~~profitable ~~Equity~~in ~~Incentive Plan (~~the ~~“2013 Plan”)~~future. Even Asif ofwe ~~the~~are ~~date~~able ~~of this prospectus, options~~ to ~~purchase~~achieve ~~an aggregate of 394~~profitability,~~203~~ ~~shares~~we ofmay ~~common~~not ~~stock~~be ~~have~~able ~~been~~to ~~granted~~sustain ~~and~~such ~~are outstanding under the 2002 Plan and the 2013 Plan, collectively~~profitability.

WeThere ~~have~~can ~~significant~~be ~~short-term~~no ~~indebtedness~~assurance that we will be able to raise sufficient additional capital on acceptable terms, or at all. If such financing is not available on satisfactory terms or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities and our operations and our financial condition may be materially adversely affected. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt and could increase our expenses and require that our assets be provided as a security for such debt. Debt financing would also be required to be repaid regardless of our operating results. Equity financing, if obtained, could result in additional dilution to our then existing stockholders.

As of March 31, 2016, we have total indebtedness of $9,674,962, which includes $8,061,542 that is due within twelve months. Of this short-term component, $3,000,000 is represented by a demand line of credit owed to United Bank West Virginia (United Bank), $2,626,500 is owed to certain members of the Company’s Board of Directors or their affiliates, $961,226 is represented by notes owed primarily to three governmental agencies of the State of West Virginia, $818,485 is represented by convertible notes issued in 2016, $389,671 is related to capitalized leases, and $264,661 is an overdraft with United Bank. We are currently in discussions with existing directors holding $2,626,500 of related party indebtedness to defer payment of an estimated $1,969,875 or 75% of the total amount owed to them. Although we have allocated an estimated $1,670,875 of the net proceeds of this offering to reduce our indebtedness (including approximately $656,625 owed to certain of our stockholders and directors) there can be no assurance that the maturity dates of the balance of our obligations owed to the existing directors and shareholders, United Bank and the governmental agencies of the State of West Virginia can or will be extended, if required, nor do we know the final terms and conditions of any extensions, if any. If such obligations are not extended, we will be required to apply additional net proceeds of this offering to further reduce our debt obligations. See “Use of Proceeds” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Certain Relationships and Related Transactions” elsewhere in this prospectus.

We depend on the pharmaceutical and biotechnology industries.

Over the past several years, some areas of our ~~businesses~~business have grown significantly as a result of an increase in the sales of our bioanalytical instrument platform known as “LAESI®” and the increase in pharmaceutical, academic and clinical research laboratory outsourcing of their clinical drug research support activities. We believe that due to the significant investment in facilities and personnel required to support drug development, pharmaceutical, academic and clinical research laboratories look to purchase our bioanalytical instrument platforms and solutions technology to meet and administer their drug research requirements. Our revenues depend greatly on the expenditures made by these pharmaceutical and academic/ or clinical research laboratory companies in research and development. In ~~some~~ some instances, companies in these industries are reliant on their ability to raise capital in order to fund their research and ~~development~~ development projects. Accordingly, economic factors and industry trends that affect our clients in these industries also affect our business. If companies in these industries were to reduce the number of research and development projects they conduct or outsource, ~~our~~ our business could be materially adversely affected.

Changes in government regulation or in practices relating to the pharmaceutical industry could change the need for the services we provide.

Governmental agencies throughout the world, but particularly in the United States, strictly regulate the drug development process. Changes in regulation, such as regulatory submissions to meet the internal research and development standards of pharmaceutical research, a relaxation in existing regulatory requirements, the introduction of simplified drug approval procedures or an increase in regulatory requirements that we may have difficulty satisfying or that make our services less competitive, could substantially change the demand for our services. Also, if the government increases efforts to contain drug costs and pharmaceutical companies profits from new drugs, our customers may spend less, or reduce their growth in spending on research and development.

We may be affected by health care reform.

In March 2010, the United States Congress enacted the Patient Protection and Affordable Care Act (“PPACA”) which is intended over time to expand health insurance coverage and impose health industry cost containment measures. PPACA legislation and the accompanying regulations may significantly impact the pharmaceutical and biotechnology industries as it is implemented over the next several years. In addition, the U.S. Congress, various state legislatures and European and Asian governments may consider various types of health care reform in order to control growing health care costs. We are unable to predict what legislative proposals will be adopted in the future, if any.

Implementation of health care reform legislation may have certain benefits but also may contain costs that could limit the profits that can be made from the development of new drugs. This could adversely affect research and development expenditures by pharmaceutical and biotechnology companies, which could in turn decrease the business opportunities available to us both in the United States and abroad. In addition, new laws or regulations may create a risk of liability, increase our costs or limit our service offerings.

11 Changes in healthcare law and implementing regulations, including government restrictions on pricing and reimbursement, as well as healthcare policy and other healthcare payor cost-containment initiatives, may negatively impact our ability to generate revenues.

The pricing and reimbursement environment for the pharmaceutical and biotechnology industries may change in the future and become more challenging due to, among other reasons, policies advanced by the current or any new presidential administration, federal agencies, new healthcare legislation passed by Congress or fiscal challenges faced by all levels of government health administration authorities. If pricing and regulatory changes pressure our customer base in the pharmaceutical and biotechnology industries our revenue generating ability may be adversely impacted.

A reduction in research and development budgets at pharmaceutical companies and clinical research institutions may adversely affect our business.

Our customers include researchers at pharmaceutical companies and academic/ or clinical research laboratory institutions. Our ability to continue to grow and win new business is dependent in large part upon the ability and willingness of the pharmaceutical and biotechnology industries to continue to spend on research and development and to outsource their product equipment and service needs. Fluctuations in the research and development budgets of these researchers and their organizations could have a significant effect on the demand for our products and services. Research and development budgets fluctuate due to changes in available resources, mergers of pharmaceutical companies and spending priorities and institutional budgetary policies of academic/ or clinical research organizations. Our business could be adversely affected by ~~any~~ any significant decrease in life sciences research and development expenditures by pharmaceutical and academic/ or clinical research companies. Similarly, economic factors and industry trends that affect our clients in these industries also affect our business.

We rely on a limited number of key customers, the importance of which may vary dramatically from year to year, and a loss of one or more of these key customers may adversely affect our operating results.

ASix ~~small number of~~ customers ~~have~~ accounted ~~for~~ ~~a substantial portion of our revenues in 2015. Five customers accounted~~ for approximately 52 53% of our gross revenue in fiscal ~~2015~~ 2016 and five customers accounted for approximately 4252% of our gross revenues in fiscal ~~2014~~2015. One large pharmaceutical company (our largest customer) accounted for 2022% of our gross revenue in ~~2015~~2016, and this customer will not continue to be a significant contributor to revenue in ~~2016~~2017 due to management changes within the customer laboratory. The loss of a significant amount of business from one of our major customers would materially and adversely affect our results of operations until such time, if ever, as we are able to replace the lost business. Significant clients or projects in any one period may not continue to be significant clients or projects in other periods. In any given year, there is a possibility that a single pharmaceutical, academic or ~~academic/~~ clinical research laboratory company may account for 5% or more of our gross revenue or that our business may be dependent on one or more large projects. To the extent that we are dependent on any single customer, we are subject to the risks faced by that customer to the extent that such risks impede the customer's ability to stay in business and make timely payments to us.

We may bear financial risk if we underprice our contracts or overrun cost estimates.

Since some of our contracts are structured as fixed price or fee-for-service, we bear the financial risk if we initially underprice our contracts or otherwise overrun our cost estimates. Such underpricing or significant cost overruns could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

A default in our credit facility could materially and adversely affect our operating results and our financial condition.

The Company has an outstanding line of credit with United Bank. This credit facility requires us to adhere to certain contractual covenants. If there were an event of default under our credit facility that was not cured or waived, the lenders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. ~~Although the outstanding balance of this line of credit is currently payable on demand, the amount due and the status of the payment terms have been unchanged since the first quarter of 2014.~~ We cannot assure that our assets or cash flow would be sufficient to fully repay borrowings under the credit facility, either upon ~~the~~maturity ~~bank’s demand~~ or if accelerated, upon an event of default, or that we would be able to refinance or restructure the payments becoming due on the credit facility. Please see Note 3 toBank ~~the~~Line ~~Consolidated~~of ~~Financial~~Credit in ~~Statements~~Part IV, ~~“Bank~~Financial ~~Line~~Statement ofFootnotes ~~Credit,”~~in this prospectus for additional detail regarding our credit facility.

We might incur expenses to develop products that are never successfully commercialized.

We have incurred and expect to continue to incur research and development and other expenses in connection with our products business. The potential products to which we devote resources might never be successfully developed or commercialized by us for numerous reasons including:

· inability to develop products that address our customers’ needs; · competitive products with superior performance; · patent conflicts or unenforceable intellectual property rights; · demand for the particular product; · other factors that could make the product uneconomical; and · termination of pre-existing license agreements.

competitive products with superior performance;

patent conflicts or unenforceable intellectual property rights;

demand for the particular product;

other factors that could make the product uneconomical; and

termination of pre-existing license agreements.

Incurring expenses for a potential product that is not successfully developed and/or commercialized could have a material adverse effect on our business, financial condition, prospects and stock price.

12 11

Our business uses biological and hazardous materials, which could injure people or violate laws, resulting in liability that could adversely impact our financial condition and business.

Our activities involve the controlled use of potentially harmful biological materials as well as hazardous materials and chemicals. We cannot completely eliminate the risk of accidental contamination or injury from the use, storage, handling or disposal of these materials. In the event of contamination or injury, we could be held liable for damages that result and any liability could exceed our insurance coverage and ability to pay. Any contamination or injury could also damage our reputation, which is critical to obtaining new business. In addition, we are subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. The cost of compliance with these laws and regulations is significant and if changes are made to impose additional requirements, these costs could increase and have an adverse impact on our financial condition and results of operations.

Hardware or software failures, delays in the operations of our computer and communications systems or the failure to implement system enhancements could harm our business.

Our success depends on the efficient and uninterrupted operation of our computer and communications systems. A failure of our network or data gathering procedures could impede the processing of data, delivery of databases and services, client orders and day-to-day management of our business and could result in the corruption or loss of data. While all of our operations have disaster recovery plans in place, they might not adequately protect us. Despite any precautions we take, damage from fire, floods, hurricanes, power loss, telecommunications failures, computer viruses, break-ins and similar events at our computer facilities could result in interruptions in the flow of data to our servers and from our servers to our clients. In addition, any failure by our computer environment to provide our required data communications capacity could result in interruptions in our service. In the event of a delay in the delivery of data, we could be required to transfer our data collection operations to an alternative provider of server hosting services. Such a transfer could result in delays in our ability to deliver our products and services to our clients. Additionally, significant delays in the planned delivery of system enhancements, improvements and inadequate performance of the systems once they are completed could damage our reputation and harm our business. Finally, long-term disruptions in the infrastructure caused by events such as natural disasters, the outbreak of war, the escalation of hostilities and acts of terrorism, particularly involving cities in which we have offices, could adversely affect our businesses. Although we carry property and business interruption insurance, our coverage might not be adequate to compensate us for all losses that may occur.

We rely on third parties for important services.

We depend on third parties to provide us with services critical to our business. The failure of any of these third parties to adequately provide the needed services including, without limitation, licensed intellectual property rights, could have a material adverse effect on our business.

We license a significant portion of our intellectual property from third parties~~; if the Company fails to remain in compliance with these agreements the Company’s business may be adversely affected~~.

The Company has entered into a number of technology license agreements with various universities for the exclusive use of a significant portion of the patent-based intellectual property that the Company uses. Generally, the license agreements ~~imposes~~impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty and other obligations on us. If we fail to comply with our obligations under these agreements, or if we file for bankruptcy, we may be required to make certain payments to the licensor, we may lose the exclusivity of our license, or the licensor may have the right to terminate the license, in which event we would not be able to develop or market products covered by the license. Additionally, the milestone and other payments associated with these licenses could materially and adversely affect our business, financial condition and results of operations. While the Company is currently in compliance with the respective terms of these agreements, if there are one or more breaches thereunder, such as the failure to pay the applicable royalties, and one or more of these agreements are terminated, the Company will not be able to use such technology and the Company’s business may be adversely affected.

Additionally, the milestone and other payments associated with these licenses could materially and adversely affect our business, financial condition and results of operations. While the Company is currently in compliance with the respective terms of these agreements, if there are one or more breaches thereunder, such as the failure to pay the applicable royalties, and one or more of these agreements are terminated, the Company will not be able to use such technology and the Company’s business may be adversely affected.

In some cases, patent prosecution of our licensed technology may be controlled solely by the licensor. If our licensors fail to obtain and maintain patent or other protection for the proprietary intellectual property we in-license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing products using the intellectual property. In certain cases, we may control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. Disputes may arise regarding intellectual property subject to a licensing agreement, including, but not limited to:

the scope of rights granted under the license agreement and other interpretation-related issues;

the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

the sublicensing of patent and other rights;

our diligence obligations under the license agreement and what activities satisfy those diligence obligations;

the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and

the priority of invention of patented technology.

If disputes over intellectual property and other rights that we have in-licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected drug candidates. If we fail to comply with any such obligations to our licensor, such licensor may terminate their licenses to us, in which case we would not be able to market products covered by these licenses. The loss of any of our current licensing arrangements and potentially other licenses that we enter into in the future, would have a material adverse effect on our business.

We may be unable to obtain or maintain patent or other intellectual property protection for any products or processes that we may develop.

The Company faces risks and uncertainties related to intellectual property rights. The Company may be unable to obtain or maintain its patents or other intellectual property protection for any products or processes that it may develop; third parties may obtain patents covering the manufacture, use or sale of these products or processes which may prevent the Company from commercializing its technology; or any patents that the Company may obtain may not prevent other companies from competing with it by designing their products or conducting their activities so as to avoid the coverage of the Company’s patents.

Since patent applications in the U.S. are maintained in secrecy for at least portions of their pendency periods (published on U.S. patent issuance or, if earlier, 18 months from the earliest filing date for most applications) and since other publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain that we are the first to make the inventions to be covered by our patent applications. The patent position of biopharmaceutical firms generally is highly uncertain and involves complex legal and factual questions. The U.S. Patent and Trademark Office has not established a consistent policy regarding the breadth of claims that it will allow in biotechnology patents.

Proceedings to obtain, enforce or defend patents and to defend against charges of infringement are time consuming and expensive activities, and it is possible that the Company could become involved in such proceedings. Unfavorable outcomes in these proceedings could limit the Company’s activities and any patent rights that the Company may obtain, which could adversely affect its business or financial condition. Even if such proceedings ultimately are determined to be without merit, they can be expensive and distracting for the Company’s operations and personnel.

In addition, the Company’s success will depend in part on the ability of the Company to preserve its trade secrets. The Company cannot ensure investors that the obligations to maintain the confidentiality of trade secrets or proprietary information will not wrongfully be breached by employees, consultants, advisors or others or that the Company’s trade secrets or proprietary know how will not otherwise become known or be independently developed by competitors in such a manner that the Company has no legal recourse.

We may infringe the intellectual property rights of others, which may prevent or delay our development efforts and prevent us from commercializing or increase the costs of commercializing our products.

Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third parties. For example, there could be issued patents of which we are not aware that our current or potential future product candidates infringe. There also could be patents that we believe we do not infringe, but that we may ultimately be found to infringe.

Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our drug candidates or potential products infringe. For example, pending applications may exist that claim or can be amended to claim subject matter that our product candidates or potential products infringe. Competitors may file continuing patent applications claiming priority to already issued patents in the form of continuation, divisional, or continuation-in-part applications, in order to maintain the pendency of a patent family and attempt to cover our product candidates.

Third parties may assert that we are employing their proprietary technology without authorization and may sue us for patent or other intellectual property infringement. These lawsuits are costly and could adversely affect our business, financial condition and results of operations and divert the attention of managerial and scientific personnel. If we are sued for patent infringement, we would need to demonstrate that our drug candidates, potential products or methods either do not infringe the claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. Proving invalidity is difficult. For example, in the U.S., proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on us. In addition, we may not have sufficient resources to bring these actions to a successful conclusion. If a court holds that any third-party patents are valid, enforceable and cover our products or their use, the holders of any of these patents may be able to block our ability to commercialize our products unless we acquire or obtain a license under the applicable patents or until the patents expire.

We may not be able to enter into licensing arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative technology could result in delays in the introduction of our products or lead to prohibition of the manufacture or sale of products by us. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, in any such proceeding or litigation, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our drug candidates or force us to cease some of our business operations, which could materially and adversely affect our business, financial condition and results of operations. Any claims by third parties that we have misappropriated their confidential information or trade secrets could have a similar material and adverse effect on our business, financial condition and results of operations. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

Any claims or lawsuits relating to infringement of intellectual property rights brought by or against us will be costly and time consuming and may adversely affect our business, financial condition and results of operations.

We may be required to initiate litigation to enforce or defend our licensed and owned intellectual property. These lawsuits can be very time consuming and costly. There is a substantial amount of litigation involving patent and other intellectual property rights in the biopharmaceutical industry generally. Such litigation or proceedings could substantially increase our operating expenses and reduce the resources available for development activities or any future sales, marketing or distribution activities.

In any infringement litigation, any award of monetary damages we receive may not be commercially valuable. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are resolved. Further, any claims we assert against a perceived infringer could provoke these parties to assert counterclaims against us alleging that we have infringed their patents. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

In addition, our licensed patents and patent applications, and patents and patent applications that we may own or license in the future, could face other challenges, such as interference proceedings, opposition proceedings, re-examination proceedings and other forms of post-grant review. Any of these challenges, if successful, could result in the invalidation of, or in a narrowing of the scope of, any of our licensed patents and patent applications and patents and patent applications that we may own or license in the future subject to challenge. Any of these challenges, regardless of their success, would likely be time consuming and expensive to defend and resolve and would divert our management and scientific personnel’s time and attention.

In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the market price of our common stock.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on drug candidates throughout the world would be prohibitively expensive. Competitors may use our licensed and owned technologies in jurisdictions where we have not licensed or obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may obtain or license patent protection, but where patent enforcement is not as strong as that in the U.S. These products may compete with our products in jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our licensed patents and future patents we may own, or marketing of competing products in violation of our proprietary rights generally. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the U.S. As a result, we may encounter significant problems in protecting and defending our licensed and owned intellectual property both in the U.S. and abroad. Proceedings to enforce our future patent rights, if any, in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

We are in a highly competitive market.

The Company is engaged in the highly competitive field of biotechnology. Competition from numerous existing biotechnology companies and others entering the proteomics field is intense and expected to increase. Many of these companies are larger, more established and recognized in the marketplace, and/or have substantially greater financial and business resources than the Company. Moreover, competitors who are able to develop and to commence commercial sales of their products before the Company may enjoy a significant competitive advantage. Likewise, innovations by competitors could cause the Company’s products or services to become obsolete or less attractive in the marketplace, adversely affecting sales and/or sales projections. The Company cannot assure investors that its technology will enable it to compete successfully in the future.

We may expand our business through acquisitions.

We occasionally review acquisition candidates. Factors which may affect our ability to grow successfully through acquisitions include:

inability to obtain financing;

difficulties and expenses in connection with integrating the acquired companies and achieving the expected benefits;

diversion of management’s attention from current operations;

the possibility that we may be adversely affected by risk factors facing the acquired companies;

· acquisitions could be dilutive to earnings, or in the event of acquisitions made through the issuance of our common stock to the shareholders of the acquired company, dilutive to the percentage of ownership of our existing stockholders;13

acquisitions could be dilutive to earnings, or in the event of acquisitions made through the issuance of our Common Stock to the shareholders of the acquired company, dilutive to the percentage of ownership of our existing stockholders;

potential losses resulting from undiscovered liabilities of acquired companies not covered by the indemnification we may obtain from the seller; and

loss of key employees of the acquired companies.

We are dependent on certain key personnel.

The success of the Company is dependent to a significant degree upon the skill and experience of its founders and other key personnel including Stephen Turner, ~~Matthew~~David Halverson, Matthew Powell, ~~Greg~~Haddon ~~Kilby~~Goodman, and others. The loss of the services of any of these individuals would adversely affect the Company’s business. Although the Company has obtained key man life insurance policies on Mr. Turner, its ~~President and~~ CEO, there is no assurance ~~that~~ that policy proceeds would cover all potential costs or operational challenges that would result from the loss of services from Mr. Turner and in any event, such policy would not cover the lives or loss of these other individuals. The Company cannot assure ~~prospective~~ prospective investors that it would be able to find adequate replacements for these key individuals. In addition, the Company believes ~~that~~ that its future success will depend in large part upon its continued ability to attract and retain highly skilled employees, who ~~are~~ are in great demand.

We are developing products in a rapidly evolving field and there are no assurances that the results of our research and development efforts will not be rendered obsolete by the research efforts and technological activities of others.

The bioanalytics field in which the Company is developing products is rapidly evolving. The Company cannot assure prospective investors that any results of the Company’s research and development efforts will not be rendered obsolete by the research efforts and technological activities of others, including the efforts and activities of governments, major research facilities and large multinational corporations. While the Company believes that its initial efforts to develop its bioanalytics technology platform have been successful thus far, there can be no assurance that the Company will be able to successfully expand its operations in the future, to commercialize, market and sell products and services at projected levels, or to fully develop the technology in a timely and successful manner.

To date, we have obtained no revenues from the diagnostic sector.

As of the date of filing this prospectus, we have not yet earned any revenues from the diagnostics sector of our business. While we are hopeful that we will earn revenues at some point in the near future, and while we believe that our initial efforts to develop our bioanalytics technology platform have been successful thus far, we cannot offer any assurance that we will be able to successfully commercialize, market and sell our products or that we will definitely achieve any revenues from such efforts.

There is no assurance that the Company’s manufacturing plans will be successful.

The Company employs internal and contract manufacturing. There is no assurance that the Company’s manufacturing plans will be successful. While the Company has a quality assurance program for its products, there nonetheless is inherent in any manufacturing process the risk of product defects or manufacturing problems that could result in potential liability for product liability risks.

Sale of European Subsidiary

As described in greater detail in the “Business” and “Certain Relationships and Related Transactions” sections below, on December 12, 2014 the Company completed the sale of 100% of the issued and outstanding capital stock of ProteaBio Europe SAS (“Protea Europe”), a wholly-owned subsidiary of Protea Biosciences, Inc., the Company’s wholly owned subsidiary, to AzurRx BioPharma, Inc. (“AzurRx”) pursuant to the terms and conditions of a stock purchase and sale agreement, dated as of May 21, 2014. Effective upon the closing of the Protea Europe sale, Thijs Spoor, a former director of the Company, was appointed to serve as a director and the Executive Chairman of AzurRx. While the Board did not establish a special committee to evaluate the fairness of this related party transaction or obtain a fairness opinion, our Board nevertheless believes that the terms of the transaction are no less favorable to the Company and its shareholders than such terms that would have been obtained from an unaffiliated third party.

In connection with the consummation of the Protea Europe sales, we received (i) $300,000, inclusive of the forgiveness of a $100,000 Company note, (ii) 100 shares of Series A Preferred Stock of AzurRx that is convertible into 33% of the issued and outstanding common stock of AzurRx and the right to receive certain other contingent consideration to be paid upon the satisfaction of certain events. While the Protea Europe sale agreement contemplates certain contingent payments to us, there can be no assurance that we will ever recoup our $4.0 million investment in Protea Europe.

In November 2015, we converted 29 shares of Series A Preferred Stock of AzurRx into 707,416 shares of common stock of AzurRx. Subsequently, we sold such shares of common stock of AzurRx and received gross proceeds of $910,000 as of December 31, 2015.

In the first quarter of 2016, the Company notified AzurRx of its intent to convert 71 of its Series A convertible Preferred Stock, $0.0001 par value per share, into shares of AzurRx common stock, $0.0001 par value per share, pursuant to the terms and conditions of the Certificate of Designations. The conversion rate was 24,393 shares of Common Stock per share of Series A Preferred Stock. The Company received 1,731,949 shares of AzurRx common stock upon conversion.

In addition, in the first quarter of 2016, the Company sold 1,016,941 shares of its AzurRx Common Stock and received aggregate proceeds of $637,100 from the sale.

In the second quarter of 2016, the Company sold 550,000 shares of AzurRx Common Stock generating net proceeds of $675,000. After this sale, the Company held 265,757 shares AzurRx Common Stock representing a 3.60% ownership interest in AzurRx, on a fully-diluted basis.

Unfavorable general economic conditions may materially adversely affect our business.

While it is difficult for us to predict the impact of general economic conditions on our business, these conditions could reduce customer demand for some of our products or services which could cause our revenue to decline. Also, our customers that are especially reliant on the credit and capital markets may not be able to obtain adequate access to credit or equity funding, which could affect their ability to make timely payments to us. Moreover, we rely on obtaining additional capital and/or additional funding to provide working capital to support our operations. We regularly evaluate alternative financing sources. Further changes in the commercial capital markets or in the financial stability of our investors and creditors may impact the ability of our investors and creditors to provide additional financing. In addition, the financial condition of our credit facility providers, which is beyond our control, may adversely change. Any decrease in our access to borrowings under our credit facility, tightening of lending standards and other changes to our sources of liquidity could adversely impact our ability to obtain the financing we need to continue operating the business in our current manner. For these reasons, among others, if the economic conditions stagnate or decline, our operating results and financial condition could be adversely affected.

Risks Relating to Ownership of Our Securities

There is no active public trading market for our ~~common~~Common ~~stock~~Stock and we cannot assure you that an active trading market will develop in the near future.

Our ~~common~~Common ~~stock~~Stock is quoted under the symbol “PRGB” in the over-the-counter markets, including the OTCQB tier of the OTC Markets Group, Inc.; however, it is not listed on any stock exchange and there is currently very limited trading in our securities. ~~Although~~We ~~we intend upon completion of this offering to list our common stock for trading on The Nasdaq Stock Market, we~~ cannot assure you that an active trading market for our ~~common~~Common ~~stock~~Stock will develop in the future due to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. There may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales. We cannot give you any assurance that an active public trading market for our ~~common~~Common ~~stock~~Stock will develop or be sustained. You may not be able to liquidate your shares quickly or at the market price if trading in our ~~common~~Common ~~stock~~Stock is not active.

Our share price could be volatile and our trading volume may fluctuate substantially.

The market price of our ~~common~~Common ~~stock~~Stock may experience volatility. Many factors could have a significant impact on the future price of our ~~common~~Common ~~stock~~Stock including:

our failure to successfully implement our business objectives;

compliance with ongoing regulatory requirements;

market acceptance of our products;

technological innovations, new commercial products or drug discovery efforts and clinical activities by us or our competitors;

changes in government regulations;

general economic conditions and other external factors;

actual or anticipated fluctuations in our quarterly financial and operating results;

· the degree of trading liquidity in our ~~common~~Common ~~stock~~Stock; and

our ability to meet the minimum standards required for remaining listed on the OTC Markets.

17 These factors also include ones beyond our control such as market conditions within our industry and changes in the pharmaceutical and biotechnology industries. In addition, in recent years, the stock market has experienced significant price and volume fluctuations. The stock market, and in particular the market for pharmaceutical and biotechnology company stocks, has also experienced significant decreases in value in the past. This volatility and valuation decline has affected the market prices of securities issued by many companies, often for reasons unrelated to their operating performance, and might adversely affect the price of our Common Stock.

These factors also include ones beyond our control such as market conditions within our industry and changes in the pharmaceutical and biotechnology industries. In addition, in recent years, the stock market has experienced significant price and volume fluctuations. The stock market, and in particular the market for pharmaceutical and biotechnology company stocks, has also experienced significant decreases in value in the past. This volatility and valuation decline has affected the market prices of securities issued by many companies, often for reasons unrelated to their operating performance, and might adversely affect the price of our common stock.

We have established Preferred Stock which can be designated by the Company’s Board of Directors without shareholder approval.

The Company has authorized 10,000,000 shares of Preferred Stock, of which none are issued and outstanding. The shares of Preferred Stock of the Company may be issued from time to time in one or more series, each of which shall have a distinctive designation or title as shall be determined by the Board of Directors of the Company prior to the issuance of any shares thereof. The Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as adopted by the Board of Directors. In each such case, we will not need any further action or vote by our stockholders. One of the effects of undesignated Preferred Stock may be to enable the Board of Directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of Preferred Stock pursuant to the Board of ~~Director's~~Directors’ authority described above may adversely affect the rights of holders of ~~common~~Common ~~stock~~Stock. For example, Preferred Stock issued by us may rank senior to the ~~common~~Common ~~stock~~Stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of ~~common~~Common ~~stock~~Stock. Accordingly, the issuance of shares of Preferred Stock may discourage bids for the ~~common~~Common ~~stock~~Stock at a premium or may otherwise adversely affect the market price of the ~~common~~Common ~~stock~~Stock.

~~Stockholders~~Sales ~~holding aggregate~~ of ~~1,074,839 shares~~securities ofthat ~~our Common Stock, including our directors, officers and certain key employees,~~ are currently subject to a market standoff ~~agreement which~~provisions ~~provides~~would ~~that~~cause ~~the~~our ~~purchaser will not sell, assign or otherwise transfer or dispose of any common~~ stock, ~~warrants~~price ~~or other securities of the Company if so requested by an underwriter for a period not~~ to ~~exceed 180 days~~decrease. If our securities are locked up at the request of any underwriter, the price of our common stock could decline if there are substantial sales of our common stock following the “lock-up” period, particularly sales by our directors, executive officers and significant stockholders, or if there is a large number of shares of our common stock available for sale.

Stockholders holding aggregate of 1,751,126 shares of our Common Stock, including our directors, officers and certain key employees, are subject to a market standoff agreement which provides that the purchaser will not sell, assign or otherwise transfer or dispose of any Common Stock, warrants or other securities of the Company until September 30, 2017. The price of our Common Stock could decline if there are substantial sales of our Common Stock following the “lock-up” period, particularly sales by our directors, executive officers and significant stockholders, or if there is a large number of shares of our Common Stock available for sale.

Our Certificate of Incorporation provides our directors with limited liability.

Our Certificate of Incorporation states that our directors shall not be personally liable to us or any stockholder for monetary damages for breach of fiduciary duty as a director, except for any matter in respect of which such director shall be liable under Section 174 of the Delaware General Corporation Law (the “DGCL”) or shall be liable because the director (1i) shall have breached his duty of loyalty to us or our stockholders, (2ii) shall have acted not in good faith or in a manner involving intentional misconduct or a knowing violation of law or, in failing to act, shall have acted not in good faith or in a manner involving intentional misconduct or a knowing violation of law, or (3iii) shall have derived an improper personal benefit. Article Seven further states that the liability of our directors shall be eliminated or limited to the fullest extent permitted by the DGCL, as it may be amended. These provisions may discourage stockholders from bringing suit against a director for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by stockholders on our behalf against a director.

Certain provisions of our Certificate of Incorporation and Delaware law make it more difficult for a third party to acquire us and make a takeover more difficult to complete, even if such a transaction were in the stockholders’ interest.

Our Certificate of Incorporation and the DGCL contain provisions that may have the effect of making it more difficult or delaying attempts by others to obtain control of the Company, even when these attempts may be in the best interests of our stockholders.

We also are subject to the anti-takeover provisions of the DGCL, which prohibit us from engaging in a “business combination” with an “interested stockholder” unless the business combination is approved in a prescribed manner and prohibit the voting of shares held by persons acquiring certain numbers of shares without obtaining requisite approval. This statute has the effect of making it more difficult to effect a change in control of a Delaware company.

Our financial controls and procedures may not be sufficient to ensure timely and reliable reporting of financial information, which, as a public company, could materially harm our stock price.

As a public reporting company, we require significant financial resources to maintain our public reporting status. We cannot assure you we will be able to maintain adequate resources to ensure that we will not have any future material weakness in our system of internal controls. The effectiveness of our controls and procedures may in the future be limited by a variety of factors including:

faulty human judgment and simple errors, omissions or mistakes;

fraudulent action of an individual or collusion of two or more people;

inappropriate management override of procedures; and

the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial information.

18Our internal control over financial reporting is a process designed 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 in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Our internal control over financial reporting is a process designed 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 in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Despite these controls, because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies like us face additional limitations. Smaller reporting companies employ fewer individuals and can find it difficult to employ resources for complicated transactions and effective risk management. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2015~~2016 based on the criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. 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 December 31, ~~2015~~2016. The ineffectiveness of our disclosure controls and procedures was due to the following material weaknesses our internal control over financial reporting, which are common to many small companies: (1i) lack of sufficient personnel commensurate with the Company’s reporting requirements; (2ii) the Company did not consistently establish appropriate authorities and responsibilities in pursuit of the Company’s financial reporting objectives; and (3iii) insufficient written documentation or training of internal control policies and procedures which provide staff with guidance or framework for accounting and disclosing financial transactions.

If we fail to have effective controls and procedures for financial reporting in place, we could be unable to provide timely and accurate financial information and be subject to investigation by the Securities and Exchange Commission (the “SEC”) and civil or criminal sanctions.

We must implement additional and expensive procedures and controls in order to grow our business and organization and to satisfy new reporting requirements, which will increase our costs and require additional management resources.

As a public reporting company, we are required to comply with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the related rules and regulations of the SEC, including the requirements that we maintain disclosure controls and procedures and adequate internal control over financial reporting. In the future, if our securities are listed on a national exchange, we may also be required to comply with marketplace rules and heightened corporate governance standards. Compliance with the Sarbanes-Oxley Act and other SEC and national exchange requirements will increase our costs and require additional management resources. We recently have begun upgrading our procedures and controls and will need to continue to implement additional procedures and controls as we grow our business and organization and to satisfy new reporting requirements. If we are unable to complete the required assessment as to the adequacy of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act or if we fail to maintain internal control over financial reporting, our ability to produce timely, accurate and reliable periodic financial statements could be impaired.

If we do not maintain adequate internal control over financial reporting, investors could lose confidence in the accuracy of our periodic reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Additionally, our ability to obtain additional financing could be impaired or a lack of investor confidence in the reliability and accuracy of our public reporting could cause our stock price to decline.

We do not presently have effective internal controls; if we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our business and adversely impact the trading price of our common stock.

We are required to establish and maintain internal controls over financial reporting, disclosure controls, and to comply with other requirements of the Sarbanes-Oxley Act and the rules promulgated by the SEC thereunder. At present, we do not presently have effective internal controls in place and our management, including our Chief Executive Officer, cannot guarantee that our internal controls and disclosure controls that we have in place will prevent all possible errors or all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be relative to their costs. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

We are an “emerging growth company” under the JOBS Act of 2012 and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Common Stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we 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 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our Common Stock less attractive because we may rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.

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 that is held by non-affiliates exceeds $700 million as of the last day of our most recently completed second fiscal quarter.

Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders.

Our officers, directors and principal stockholders collectively beneficially own approximately 2035.83% of our outstanding ~~common~~Common ~~stock~~Stock. As a result, these stockholders, if they act together, will be able to control the management and affairs of our ~~company~~Company and most matters requiring stockholder approval, including ~~the~~ the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of of delaying or preventing a change in control and might adversely affect the market price of our ~~common~~Common ~~stock~~Stock. This concentration of ownership may not be in the best interests of our other stockholders.

We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.

We have never paid cash dividends on our ~~common~~Common ~~stock~~Stock and do not anticipate paying cash dividends on our ~~common~~Common ~~stock~~Stock in the foreseeable future. We currently intend to retain any future earnings to support the development of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our Board of Directors after taking into account various factors, including, but not limited to, our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. In addition, our ability to pay dividends on our ~~common~~Common ~~stock~~Stock may be limited by Delaware state law. Accordingly, investors must rely on sales of their ~~common~~Common ~~stock~~Stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our ~~common~~Common ~~stock~~Stock.

Risks Related to Our Reverse Stock Split

The recent decline in the market price for our common stock may adversely impact our proposed 1-for-2550 reverse stock split and the offering of our common stock, and we may be required to seek shareholder approval for an additional reverse stock split prior to listing our shares on the Nasdaq Capital Market and consummating this offering.

Between April 2014 and ~~March~~August 3121, ~~2016~~2017, the market price of our common stock has declined from a high of $2.10 per share to as low as $0.1104 per share and closed on ~~May~~August 2622, ~~2016~~2017 at $0.20065 per share. In order to qualify to list our shares on the Nasdaq Capital ~~Markets~~Market we will need to maintain a minimum $4.00 per share market price. ~~Accordingly~~On March 2, 2017, we obtained stockholder approval to effectuate a reverse stock split in the range of 1-for-15 and 1-for-50. While our Board of Directors has since approved effectuating a 1-for-50 reverse stock split at such time as the officers’ of the Company deem necessary, as our common stock’s trading price remains low, we have deemed it in the Company’s best interest to seek stockholder approval for a reverse split in excess of 1-for-50. Accordingly, in order to offer our shares of common stock for sale within the anticipated price range of between $4.5000 and $6.5000 per share, unless the current market price of our common stock increases prior to the effective date of the registration statement of which this prospectus is a part, we ~~may~~will beseek ~~required~~approval tofrom ~~obtain~~our ~~stockholder~~stockholders ~~approval~~ to increase such reverse stock split to an amount in excess of 1-for-50. If required, we will seek this approval from majority holders of our common stock to effect a reverse split in a range of between 1-for-2550 to 1-for-125, ~~which~~grant ~~increase~~our ~~could~~Board of Directors discretionary authority to determine the exact ratio of the reverse stock split within such range, based upon the market price of our common stock on the date of such determination and with such reverse stock split to be ~~significant~~effective at such time and date, if at all, as determined by the Board of Directors in its sole discretion. ~~There~~This potential increase in a reverse split ratio is significant, and there can be no assurance that such stockholder approval will be obtained. If we docannot ~~not~~ obtain ~~such~~this ~~stockholder~~ approval, iffrom ~~required~~our stockholders at that time, we will not be able to comply ~~list~~with ~~our~~the ~~common~~minimum ~~stock~~bid price requirement on the Nasdaq Capital ~~market~~Market or other national securities exchange, ~~acceptable~~will not be able to list our ~~underwrites~~common stock on any of these national securities, and therefore ~~may~~, be required to abandon this offering.

Even if the reverse stock split achieves the requisite increase in the market price of our common stock, we cannot assure you that we will be able to continue to comply with the minimum bid price requirement of the Nasdaq Capital Market.

Even if the reverse stock split achieves the requisite ~~increase~~reverse stock split ratio in the market price of our common stock to be in compliance with the minimum bid price of the Nasdaq Capital Market, there can be no assurance that the market price of our common stock following the reverse stock split will remain at the level required for continuing compliance with that requirement. It is not uncommon for the market price of a company's common stock to decline in the period following a reverse stock split. If the market price of our common stock declines following the effectuation of a reverse stock split, the percentage decline may be greater than would occur in the absence of a reverse stock split. In any event, other factors unrelated to the number of shares of our common stock outstanding, such as negative financial or operational results, could adversely affect the future market price of our common stock and jeopardize our ability to ~~meet or~~ maintain the Nasdaq Capital Market's minimum bid price requirement. In addition to specific listing and maintenance standards, the Nasdaq Capital Market has broad discretionary authority over the initial and continued listing of securities, which it could exercise with respect to the listing of our common stock.

Even if the reverse stock split increases the market price of our common stock, there can be no assurance that we will be able to comply with other continued listing standards of the Nasdaq Capital Market.

Even if the market price of our common stock increases sufficiently so that we comply with the minimum bid price requirement, we cannot assure you that we will be able to comply with the other standards that we are required to meet in order to maintain a listing of our common stock on the Nasdaq Capital Market. Our failure to meet these requirements may result in our common stock being delisted from the Nasdaq Capital Market, irrespective of our compliance with the minimum bid price requirement.

The reverse stock split may decrease the liquidity of the shares of our common stock.

The liquidity of the shares of our common stock may be affected adversely by the reverse stock split given the reduced number of shares that will be outstanding following the reverse stock split, especially if the market price of our common stock does not increase as a result of the reverse stock split. In addition, the reverse stock split may increase the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.

Following the reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.

Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that the reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our common stock may not necessarily improve.

Risks Relating to this Offering

We have significant discretion over the use of the gross proceeds.

The maximum gross proceeds to us from the sale of our common stock will be $1715,000,000 ($1917,~~352~~250,~~900~~000 if the over-allotment is exercised). Substantially all of the remaining net proceeds of this Offering will be used for working capital and general corporate purposes. The proceeds shall be used to repay indebtedness, carry out our business plan, pay salaries to our employees and satisfy our expenses, foreseeable and unforeseeable. As is the case with any business, it should be expected that certain expenses unforeseeable to management at this juncture will arise in the future. You will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the net proceeds are being used appropriately. It is possible that the net proceeds will be invested in a way that does not yield a favorable, or any, return for us. The failure of our management to use such funds effectively could have a material adverse effect on our business, financial condition, operating results and cash flow. Investors are urged to consult with their attorneys, accountants and personal investment advisors prior to making any decision to invest in the Company.

Purchasers in this offering will likely experience immediate and substantial dilution in the book value of their investment.

Because the prices per share at which shares of our common stock are sold in this offering may be substantially higher than the book value per share of our common stock, you may suffer immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering. As of June 30, 2017, our net tangible book value was a deficit of ($11,806,081) or (1.48) per share. After giving effect to the sale of 3,~~100~~000,000 shares of common stock in this offering at the anticipated offering price of $5.50 00 per share, and after deducting estimated offering expenses payable by us, our net tangible book value as of ~~March~~June 3130, ~~2016~~2017 would have been $5,~~807~~380,~~007~~572, or approximately $0.6946 per share of our common stock. This represents an immediate increase in as adjusted pro forma, net tangible book value per share of $21.4195 to the existing stockholders and an immediate ~~dilution~~substantial dilution in as adjusted pro forma net tangible book value per share of $4.8154 to new investors who purchase our common stock in the offering. See the section entitled “Dilution” for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.

A substantial number of shares of our common stock may be sold inafter completion of this offering, which could cause the price of our common stock to decline.

As of the date of this prospectus, an aggregate of 7,972,679 shares of our common stock are issued and outstanding. In this offering, we will sell ~~3,100,000~~________ shares, or approximately 39 ___% of the total number of shares of our common stock to be outstanding stock after ~~giving~~ giving effect to completion of this offering. In addition, as many as an additional 34,~~816~~014,~~750~~493 shares may be issued upon ~~exercise~~ exercise of our outstanding warrants and options and conversion of our outstanding convertible notes and debentures (including warrants issuable to the Representative of the underwriters). The sale in this offering and any future sales of a substantial number of shares of our common stock in the public market (in, or the perception that such sales may occur, could adversely affect the price of our common stock. We cannot predict the effect, if any, that market sales of those shares of common stock or the availability of those shares of common stock for sale will have on the market price of our common stock.

If our stockholders sell, or the market perceives that our stockholders intend to sell for various reasons, including the ending of restriction on resale or the expiration of lock-up agreements such as those entered into in connection with this offering, substantial amounts of our common stock in the public market, including shares issued upon the exercise of outstanding options or warrants, the market price of our common stock could fall. Sales of a substantial number of shares of our common stock may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. We may become involved in securities class action litigation that could divert management's attention and harm our business.

The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the common stock of biotechnology and biopharmaceutical companies. These broad market fluctuations may cause the market price of our common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years. We may become involved in this type of litigation in the future. Litigation often is expensive and diverts management's attention and resources, which could adversely affect our business.

An investment in the Company’s common stock is speculative and there can be no assurance of any return on any such investment.

An investment in the Company’s common stock is speculative and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.

If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.

The trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

IN ADDITION TO THE ABOVE RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS PROSPECTUS, POTENTIAL INVESTORS SHOULD KEEP IN MIND THAT OTHER POSSIBLE RISKS MAY ADVERSELY IMPACT THE COMPANY’S BUSINESS OPERATIONS AND THE VALUE OF THE COMPANY’S SECURITIES.

21 20

EXPLANATORY NOTE REGARDING REVERSE STOCK SPLIT

In order to seek to qualify the listing of our shares of common stock on The Nasdaq Capital Market or another national securities exchange, on December 1, 2015, we obtained shareholder approval to seek discretionary authority to effect a reverse stock split of our issued and outstanding shares of common stock within a range of between (i) one-for-15 to (ii) one-for-25, as determined at the discretion of our board of directors to be in our best interests without further approval from our stockholders.

We intend to consummate a one-for-25 reverse stock split immediately prior to the effective date of the registration statement of which this prospectus is a part. No fractional shares of common stock were issued in connection with the reverse stock split, and all such fractional interests will be rounded down to the nearest whole number. Issued and outstanding stock options, convertible notes and warrants will be split on the same basis and exercise prices will be adjusted accordingly.

Unless otherwise indicated, all information presented in this prospectus gives retroactive effect to such 1-for-25 reverse stock split and all share price, per share, convertible note conversion prices and stock option and warrant exercise price data set forth in this prospectus has been adjusted to give effect to the one-for-25 reverse stock split.

As of May 26, 2016 and December 31, 2015 we had issued and outstanding a total of (i) 133,720,519 and 133,146,250 shares of our common stock, respectively, and (ii) warrants to purchase a total of 76,450,269 and 71,342,894 shares of our common stock, respectively, at certain exercise prices ranging from $0.25 to $2.25 per share.

As a result of the anticipated 1-for-25 reverse stock split, (i) all outstanding 133,720,519 shares of our common stock, prior to the consummation of such reverse stock split, will be reduced to 5,348,820 shares and (ii) all shares of our common stock issuable upon exercise of outstanding 76,450,269 warrants, prior to the consummation of the reverse stock split, will be reduced to 3,058,010 shares with a corresponding increase in the exercise prices of such warrants to prices ranging from $6.25 to $56.25 per share.

On May 26, 2016 the market price for our common stock was $0.20 per share. In order to qualify to list our shares on the Nasdaq Capital Markets we will need to maintain a minimum $4.00 per share market price. Accordingly, in order to offer our shares of common stock for sale within the anticipated price range of between $4.50 and $6.50 per share, unless the current market price of our common stock increases, prior to the effective date of the registration statement of which this prospectus is a part, we may be required to obtain stockholder approval to increase such reverse stock split to an amount in excess of 1-for-25, which increase could be significant. There can be no assurance that such stockholder approval will be obtained. Additional information regarding our issued and outstanding securities may be found in the section of this prospectus titled “Description of Securities.”

USE OF PROCEEDS

The net proceeds from the sale of our common stock, after deducting the underwriters’ commissions and estimated offering expenses payable by us, will be approximately $1513,000,000 or approximately $1715,~~352~~000,~~900~~000 if the underwriters’ over-allotment option is exercised in full, based on an assumed public offering price of $5.5000 per share (after giving effect to the proposed reverse split), such net proceeds will be applied, approximately, as follows:

· approximately $12,~~014~~500,000 will be used to ~~retire~~increase our ~~notes~~sales ~~issued~~and inmarketing ~~2016~~efforts;

· approximately $~~669~~2,~~125~~000,000 will be used to ~~reduce~~development ~~other~~of ~~outstanding~~the ~~indebtedness~~Melanoma toDiagnostic ~~affiliates~~Pilot ~~(1)~~Lab and commercialization efforts;

· approximately, $31,~~200~~500,000 will be used tofor ~~increase~~research ~~our~~and ~~sales~~development ~~and~~of ~~marketing~~new ~~efforts~~diagnostic products;

· approximately $31,~~400~~800,000 ~~will~~to bebuild ~~used~~infrastructure, ~~for~~including ~~research~~hiring ~~and development~~ of ~~new~~additional ~~products~~personnel;

· approximately $2,~~900~~500,000 to ~~build~~retire ~~infrastructure,~~certain ~~including~~indebtedness ~~hiring~~and ofreduce ~~additional~~accounts ~~personnel~~payable; and

· the balance of approximately $32,~~816~~700,~~875~~000 for working capital and other general corporate purposes.

(1) Consists of an estimated 25% reduction in the total of $2,676,500 of debt obligations and advances to certain members of our board of directors and their affiliates. At present, such indebtedness is not evidenced by notes, but is due on demand. We anticipate paying such $669,125 amount commencing 30 days after our common stock begins trading on the Nasdaq Capital Market. We are currently in discussions with these board members regarding the repayment of the $2,007,375 balance owed to such persons through the establishment of six percent (6%) interest-bearing notes due as to principal and accrued interest on a date which shall be one year following the date of this prospectus. There can be no assurance that we will be successful in completing the contemplated agreements or the terms and conditions of any such arrangements. Any such agreements may be subject to completion of this offering. See “Certain Relationships and Related Transactions” elsewhere in this prospectus.

Our expected use of the net proceeds from this offering represents our current intentions based upon our present plans and business condition. As of the date of this prospectus, we cannot predict with complete certainty all of the particular uses for the net proceeds to be received upon the completion of this offering or the actual amounts that we will spend on the uses set forth above. The costs and timing of development activities are highly uncertain, subject to substantial risks and can often change. Due to the many variables inherent to the development of our drug candidates, we cannot currently predict the stage of development we expect the net proceeds of this offering to achieve for our clinical trials, preclinical studies and drug candidates.

Our management will have broad discretion in the application of the net proceeds in the category of other working capital and general corporate purposes. For example, if we identify opportunities that we believe are in the best interests of our stockholders, we may use a portion of the net proceeds from this offering to acquire, invest in or license complementary products, technologies or businesses, although we have no current understandings, agreements or commitments to do so. In addition, the amounts and timing of our actual expenditures will depend upon numerous factors, including the results of our research and development efforts, the timing and success of preclinical studies, our ongoing clinical trials or clinical trials we may commence in the future and the timing of regulatory submissions. Depending on the outcome of these activities and other unforeseen events, our plans and priorities may change and we may apply the net proceeds of this offering toward different uses and in different proportions than we currently anticipate.

Pending use of the proceeds from this offering as described above, we intend to invest the net proceeds of this offering in short-term, interest-bearing, investment-grade securities or certificates of deposit.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock and we currently do not anticipate paying any cash dividends for the foreseeable future. Instead, we anticipate that all of our earnings on our common stock will be used to provide working capital, to support our operations, and to finance the growth and development of our business, or investment in, businesses, technologies or products that complement our existing business. Any future determination relating to dividend policy will be made at the discretion of our Board and will depend on a number of factors, including, but not limited to, our future earnings, capital requirements, financial condition, future prospects, applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits and other factors our Board might deem relevant.

23 21

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of ~~March~~June 3130, ~~2016~~2017, on:

· an actual basis, after giving effect to our one-for-2550 reverse stock split; and

· on a pro forma as adjusted basis giving effect to the foregoing and the sale of ~~3,100,000~~ shares of common stock by us in this offering at the estimated initial public offering price of $5.5000 per share after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

	March 31, 2016
	June 30, 2017
	Actual			As ~~adjusted~~Adjusted
Cash and cash equivalents*	$	—82,652		$	1413,~~987~~882,~~100~~652
Indebtedness due within one year	$	1,811,381		$	0
Indebtedness due within one year (1)(2)	$	9,158,383		$	6,517,403
Total long term debt - net of current portion	$	1,613,420		$	1,613,420
Total long term debt - net of current portion (A)(B)	$	1,776,185		$	1,776,185
Stockholders’ equity:
Common stock, $0.0001 par value, 250,000,000 shares authorized, 5,348,820 actual shares and 8,448,820 as adjusted shares outstanding (1)		534			773
Common stock, $0.0001 par value, 750,000,000 shares authorized, 4,196,971 actual shares and 7,843,479 as adjusted shares outstanding (1)		789			1,155
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 shares outstanding		-			-
Additional paid-in capital		7194,~~502~~804,~~299~~489			86111,~~489~~245,~~199~~104
Accumulated deficit		(80106,~~683~~611,~~152~~507	)		(80105,~~683~~865,~~152~~834	)
Accumulated other comprehensive (loss) income		~~187~~148			~~187~~148
Total stockholders' equity (deficit)		(911,~~180~~806,~~132~~081	)		5,~~807~~380,~~007~~572
Total capitalization	$	(7788,~~566,712~~861	)	$	727,~~420~~556,~~427~~812

*Excludes(1) In the second and third quarters of 2016, the Company issued convertible promissory notes that had a ~~bank~~total ~~overdraft~~outstanding balance of $~~264~~2,~~661~~ 332,541 as of June 30, 2017, received a $3,000,000 bank line of credit that isbecomes ~~presented~~due asin July 2018, received related parties advances totaling $1,662,144 and issued a ~~current~~note ~~liability~~to onCKR Law LLP, the Company’s ~~consolidated~~legal ~~balance~~counsel, ~~sheet~~in the amount of $308,439 (the “CKR Note”).

(A2) ~~$1.00~~As ~~increase in the assumed public offering price of $5.50 per share would decrease the as~~ adjusted ~~number of shares of common stock issued and outstanding by approximately 464~~,~~615~~ ~~and~~indebtedness agives ~~$1.00~~effect ~~decrease~~to in the ~~assumed~~automatic ~~public~~conversion ~~offering~~into ~~price~~our ~~of $5.50 per~~ common ~~share,~~stock ~~which was the minimum anticipated offering price based on an assumed share price~~ of ~~$0.22~~OID ~~pre-split,~~Notes ~~would increase the adjusted number~~ of ~~shares issued and outstanding by approximately 677,778. A 100,000 share increase (decrease) in the number of shares offered by us at the assumed public offering price of~~ $~~5.50 per common share would increase (decrease) the as adjusted amount of each of cash~~2, ~~cash equivalents and short-term investments~~332,541 ~~additional paid-in capital, total stockholders' equity~~ and total capitalization by approximately $485,000, after deducting estimated placement agent's fees and estimated offering expenses payable by us. The as adjusted information discussed above is illustrative only and will adjust based on the ~~actual~~CKR ~~public~~Note ~~offering price and other terms~~ of ~~this offering determined at pricing.~~ $308,439

(BA) ~~The~~$1.00 increase in the assumed public offering price of $5.00 per share would decrease the as adjusted number of shares of ~~our~~ common stock ~~prior~~issued toand outstanding by approximately 500,000 and toa be$1.00 ~~outstanding~~decrease ~~immediately~~in ~~after~~the ~~this~~assumed public offering isprice of $5.00 per common share, which was the minimum anticipated offering price based on 5an assumed share price of $0.10 pre-split,~~348~~ would increase the adjusted number of shares issued and outstanding by approximately 750,~~820~~000. A 100,000 share increase (decrease) in the number of shares offered by us at the assumed public offering price of ~~our~~$5.00 per common ~~stock~~share ~~outstanding~~ would increase (decrease) the as adjusted amount of ~~May~~each 26of cash, ~~2016~~cash equivalents and short-term investments, additional paid-in capital, total stockholders' equity and total capitalization by approximately $460,000, after deducting estimated placement agent's fees and estimated offering expenses payable by us. The as adjusted information discussed above is illustrative only and will adjust based on the actual public offering price and other terms of this offering determined at pricing.

(B) The number of shares of our common stock prior to and to be outstanding immediately after this offering is based on 7,972,679 shares of our common stock outstanding as of August 21, 2017.

The actual and as adjusted number of shares of our common stock outstanding, above excludes:

· ~~666~~333,000 shares of common stock issuable upon exercise of options granted under the 2002 Equity incentive plan and the 2013 Equity Incentive Plan of which ~~394~~146,~~203~~420 shares have vested to date, and ~~271~~32,~~796~~593 additional shares we reserved for issuance under such plans.

· 34,~~128~~227,~~720~~933 shares of common stock issuable upon exercise of outstanding warrants with an exercise prices ranging from $63.2575 to $56112.2550 per share.

· 49204,~~290~~299 shares of common stock issuable upon the exercise of outstanding warrants issued to Laidlaw & Co. (UK) Ltd. or its assigns in connection with acting as placement agent in private placements of our securities ~~consummated~~consisting inof ~~2015~~(i) warrants to purchase up to 14,820 shares of common stock at $10.00 per share, (ii) warrants to purchase up to 9,825 shares of common stock at exercise price of $10.00 per share, (iii) warrants to purchase up to 30,380 shares of common stock at an exercise price of $10.00 per share and ~~the~~(iv) ~~first~~warrants ~~quarter~~to purchase up to 149,274 shares of ~~2016~~common stock at an exercise price of $3.75.

~~· 40,242 shares of common stock issuable upon conversion of $400,000 of convertible notes.~~22

· ~~465~~20,900 shares of common stock issuable upon conversion of $400,000 of convertible notes as at June 30, 2016, 635,792 shares of common stock issuable upon ~~the~~conversion ~~full~~of ~~exercise~~$2,383,824 of ~~the~~convertible ~~underwriters’~~notes ~~over-allotment~~issued ~~option~~in 2nd & 3rd Quarters of 2016, 320,000 shares of common stock issuable upon conversion of $1,200,000 of convertible 20% OID issued in 2017 and 466,667 shares of common stock upon conversion of $1,750,000 convertible promissory note.

· ~~up to 155~~720,000 shares of common stock issuable to PPLL, LLC in payment of, or upon ~~exercise~~conversion of, ~~the~~a ~~warrants~~$360,000 tonote bedue ~~issued~~June to30, ~~the~~2019 ~~representative~~that ofwas ~~the~~issued ~~underwriters~~under ina ~~connection~~business ~~with~~advisory ~~this~~agreement ~~offering.~~entered into in July 2017

DILUTION

Purchasers of our common stock in this offering will experience an immediate and substantial dilution in the as adjusted net tangible book value of their shares of common stock. Dilution in as adjusted net tangible book value represents the difference between the public offering price per share and the as adjusted net tangible book value per share of our common stock immediately after the offering.

The historical net tangible book value of our common stock as of ~~March~~June 3130, ~~2016~~2017 was a deficit of $(911,~~180~~806,~~132~~081) or $(1.7248) per share. Historical net tangible book value per share of our common stock represents our total tangible assets (total assets less intangible assets) less total liabilities divided by the number of shares of common stock outstanding as of that date. On a pro forma basis, after giving effect to the sale of 3,~~100~~000,000 shares in this offering at an assumed initial public offering price of $5.5000 per share for net proceeds of $1513,000,000, as if such offering had occurred at the end of the ~~March~~June 3130, ~~2016~~2017, our pro forma net tangible book value as of ~~March~~June 3130, ~~2016~~2017 would have been approximately $5,~~807~~380,~~007~~572, or approximately $0.6946 per share of our common stock. This represents an immediate increase in as adjusted pro forma, net tangible book value per share of $21.4195 to the existing stockholders and an immediate dilution in as adjusted pro forma net tangible book value per share of $4.8154 to new investors who purchase shares in the offering. The following table illustrates this per share dilution to new investors:

Assumed public offering price per share				$	5.5000
Historical net tangible book value per share as of March 31, 2016	$	(1.72	)
Historical net tangible book value per share as of June 30, 2017	$	(1.48	)
Pro forma net tangible book value (deficit) per share as of March 31, 2016		0.69
Pro forma net tangible book value (deficit) per share as of June 30, 2017		0.46
Increase in as adjusted pro forma net tangible book value per share attributable to the offering		21.4195
Dilution in net tangible book value per share to new investors				$	4.8154

If the underwriters exercise their option to purchase additional shares in full, the as adjusted net tangible book value per share after giving effect to the offering would be $0.9263 per share. This represents an increase in as adjusted net tangible book value of $2.6411 per share to existing stockholders and dilution in as adjusted net tangible book value of $4.5837 per share to new investors.

A $1.00 increase in the assumed public offering price of $5.5000 per share of common stock would increase our as adjusted net tangible book value by $3,~~100~~000,000 to approximately $10.0571 per share, and dilution per share to new investors to approximately $4.4529 per share, assuming that the number of shares of common stock offered by us remains the same. A $1.00 decrease in in the assumed public offering price of $5.5000 per share of common stock would decrease our as adjusted net tangible book value by $3,~~100~~000,000 to approximately $0.3251 per share and dilution per share to new investors by approximately $54.1849.

~~Sales~~If ofthe ~~530,119 shares of common stock~~underwriters’ byoption ~~the~~to ~~selling~~purchase ~~stockholders~~additional inshares ~~the~~to ~~offering~~cover ~~covered~~over-allotments byis aexercised ~~separate~~in ~~prospectus~~full, ~~will~~our ~~reduce the number of shares of common stock held by~~ existing stockholders towould ~~4,842,010,~~own or approximately 61 70% ~~of the total shares of common stock outstanding after this offering,~~ and ~~will~~our ~~increase the 3,100,000 shares held by~~ new investors towould own approximately 3930% of the total number of shares of our common stock outstanding ~~after~~ after this offering.

IfThe ~~the~~above ~~underwriters’ option~~table ~~to purchase additional shares to cover over-allotments is exercised in full, our existing stockholders would own approximately 60%~~ and ~~our new investors would own approximately 40% of the total number of shares of our common stock outstanding after~~ ~~this~~discussion ~~offering,~~exclude ~~and before sales of any of~~ the ~~530,119 shares by the selling stockholders.~~following:

~~The~~· ~~above~~333,000 ~~table~~shares of common stock issuable upon exercise of options granted under the 2002 Equity incentive plan and ~~discussion~~the ~~exclude:~~2013 Equity Incentive Plan of which 146,420 shares have vested to date, and 32,593 additional shares reserved for issuance under such plans.

· ~~666~~4,~~000~~227,933 shares of common stock issuable upon exercise of ~~options~~outstanding ~~granted~~warrants ~~under~~with ~~the~~an ~~2002~~exercise ~~Equity~~prices ~~incentive~~ranging ~~plan~~from ~~and~~$3.75 ~~the 2013 Equity Incentive Plan of which 394,203 shares have vested~~ to ~~date,~~$112.50 ~~and~~per ~~271,796 additional shares reserved for issuance under such plans~~share.

· 3204,~~128,720~~299 shares of common stock issuable upon the exercise of outstanding warrants issued to Laidlaw & Co. (UK) Ltd. or its assigns in connection with anacting ~~exercise~~as ~~prices~~placement ~~ranging~~agent ~~from~~in private placements of our securities consisting of (i) warrants to purchase up to 14,820 shares of common stock at $610.2500 per share, (ii) warrants to purchase up to 9,825 shares of common stock at exercise price of $5610.2500 per share, (iii) warrants to purchase up to 30,380 shares of common stock at an exercise price of $10.00 per share and (iv) warrants to purchase up to 149,274 shares of common stock at an exercise price of $3.75.

· 49,290 shares of common stock issuable to Laidlaw & Co. (UK) Ltd. or its assigns in connection with acting as placement agent in private placements of our securities consummated in 2015 and the first quarter of 2016.23

· 4020,~~242~~900 shares of common stock issuable upon conversion of $400,000 of convertible notes as at June 30, 2016, 635,793 shares of common stock issuable upon conversion of $2,383,824 of convertible notes issued in 2nd & 3rd Quarters of 2016, 320,000 shares of common stock issuable upon conversion of $1,200,000 of convertible 20% OID issued in 2017 and 466,667 shares of common stock upon conversion of $1,750,000 convertible promissory note.

· ~~465~~720,000 shares of common stock issuable ~~upon~~to ~~the~~PPLL, ~~full~~LLC ~~exercise~~in payment of, ~~the~~or ~~underwriters’~~upon ~~over-allotment~~conversion ~~option.~~of, a $360,000 note due June 30, 2019 that was issued under a business advisory agreement entered into in July 2017

· ~~up to 155~~450,000 shares of common stock issuable upon ~~exercise of~~ the ~~warrants~~full toexercise ~~be issued to the representative~~ of the underwriters’ inover-allotment ~~connection with this offering~~option.

To the extent that outstanding options or warrants are exercised and outstanding convertible notes are converted into common stock, you will experience further dilution. In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities may result in further dilution to our stockholders.

25 The following table summarizes, on an as adjusted basis as of August 21, 2017 the differences between the number of shares of common stock purchased from us, the total consideration and the average price per share paid by existing stockholders and by investors participating in this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses, at an assumed public offering price of $5.00 as shown on the cover page of this prospectus.

The following table summarizes, on an as adjusted basis as of March 31, 2016 the differences between the number of shares of common stock purchased from us, the total consideration and the average price per share paid by existing stockholders and by investors participating in this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses, at an assumed public offering price of $5.50 as shown on the cover page of this prospectus.

	Shares Purchased				Total Consideration					Average Price
	Number		%		Amount		%			Per Share
Existing stockholders		7,972,679		72.7	$	60,489,219		80			7.59
New investors from this offering		3,000,000		27.3	$	15,000,000		20			5.00
Total		10,972,679		100.0	$	75,489,219		100.0	%		6.88

	Shares Purchased				Total Consideration					Average Price
	Number		%		Amount		%			Per Share
Existing stockholders		5,348,820		63.3	$	71,324,887		80.7	%	$	13.33
New investors from this offering		3,100,000		36.7		17,050,000		19.3	%		5.50
Total		8,448,820		100.0	$	88,374,887		100.0	%

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statement Notice

Certain statements made in this prospectus 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 Protea Biosciences Group, Inc. (“we,” “us,” “our,” “Protea” or 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 prospectus 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.

Protea is an emerging growth, molecular information company that has developed a revolutionary platform technology, which 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.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.

~~Our~~For ~~technology is~~a ~~used~~comprehensive todiscussion ~~improve~~of ~~pharmaceutical~~the ~~development~~Company’s business, ~~and~~its ~~life science research productivity and outcomes~~strategy, ~~and~~products ~~to extend~~ and ~~add value to other technologies that are used in research and development (“R&D”)~~services, ~~such~~competitive asenvironment ~~three-dimensional tissue models, biomarker discovery, synthetic biologicals~~ and ~~mass~~related ~~spectrometry.~~information Inplease ~~particular,~~see the ~~Company~~Business ~~believes that its ability to rapidly~~section ~~provide comprehensive molecular image-based datasets addresses a universal need~~ of ~~the~~this ~~pharmaceutical, diagnostic and clinical research and life science industries~~prospectus.

~~Known~~RESULTS asOF LAESI® (Laser Ablation Electrospray Ionization), our technology platform is exclusively licensed from The George Washington University (“GWU”). We have subsequently completed the development of the first fully automated LAESI instruments and requisite proprietary software suites, used for LAESI data analysis and for molecular imaging – the direct analysis and visualization of molecules in cells and tissue. LAESI technology is currently the subject of eleven issued patents and over 40 peer-reviewed publications.OPERATIONS

~~LAESI~~Three isMonths ~~intended~~Ended toJune ~~meet the broad need of the biologist for the direct~~30, ~~unbiased~~2017 ~~identification and characterization of molecules in biological samples. By virtue of~~Compared ~~LAESI’s~~to ~~improved speed and~~ the ~~comprehensive~~Three ~~datasets~~Months itEnded ~~generates,~~June ~~the Company is pursuing its vision of what it believes will be a new era of human molecular information~~30, ~~where the molecular networks of human disease will be clearly elucidated, with data more rapidly available, thereby accelerating pharmaceutical development and improving healthcare.~~2016

~~Our~~The ~~Business~~Company ~~Strategy~~recorded ~~and~~a ~~Products~~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 4 Fair Value of Financial Assets and ~~Services~~Liabilities – Derivative Financial Instruments to our Unaudited Financial Statements for the Quarter Ended June 30, 2017 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.

~~Protea~~Gross ~~has~~revenue ~~applied~~for ~~its~~the ~~core~~three ~~technology~~months ended toJune ~~establish~~30, ~~commercial~~2017 ~~leadership~~decreased inby 44% over the ~~emerging~~gross ~~field~~revenue recognized for the three months ended June 30, 2016. Traditionally the second quarter of ~~mass~~the ~~spectrometry~~year ~~imaging~~trends ~~(“MSI”)~~higher ~~services~~than the first quarter due to the nature of the business. ~~MSI~~However, isa major customer changed from outsourcing to insourcing which has led to a ~~revolutionary~~decrease in revenue, along with a turnover in our sales force. Revenue from molecular ~~capability~~information ~~that~~services ~~for~~decreased by 48%. The revenue component reflects a decrease the ~~first~~number ~~time~~of ~~enables~~services projects completed in the quarter ~~identification~~offset by the actual dollar amount of ~~all~~the ~~classes~~service projects. At the end of ~~biologically-active~~the ~~molecules~~three ~~produced~~months byended ~~cells~~June 30, 2017, there was ~~and~~a ~~combines~~back ~~this~~log ~~with~~of ~~the~~projects ~~ability~~due to ~~instantly~~customers ~~spatially-display~~that ~~the~~were ~~molecules~~unable into ~~tissue~~provide ~~histology~~samples ~~sections~~to process. ~~MSI~~This ~~can~~is bea ~~performed with~~continuation noof ~~sample~~the ~~preparation,~~back ~~and~~log known noas ~~labeling~~of orthe ~~antibody~~three ~~techniques~~months ending March 31, ~~thereby~~2017. ~~integrating~~Molecular ~~direct~~information ~~molecular~~service ~~identification~~customers ~~with~~include ~~tissue~~pharmaceutical, biotechnology, ~~pathology~~chemical and medical device companies.

~~The~~In ~~Company~~the ~~intends~~three tomonths ~~achieve~~ending ~~its~~June ~~business~~30, 2017, ~~objectives~~we bydid ~~leveraging~~not ~~its~~sell ~~core~~any ~~MSI~~LAESI® ~~technology~~devices and ~~associated~~didn’t ~~bioanalytical~~sell ~~mass~~any ~~spectrometry~~devices ~~platforms~~during tothe ~~improve~~three ~~the~~months ~~availability~~ended June 30, 2016. The revenue ~~comprehensiveness~~for ~~and~~LAESI ~~usefulness~~Instrument ofPlatform ~~molecular~~has ~~information~~increased by 242% quarter-over-quarter. This is due to ~~address~~income from warranty plans and spare parts for the ~~needs~~units ofhas ~~pharmaceutical~~increased ~~research,~~compared ~~biomarker~~to ~~discovery, agriculture~~the ~~and~~three ~~other~~months ~~life~~ending ~~science~~June ~~research~~30, ~~markets~~2016.

~~The~~Revenue ~~Company’s~~from ~~commercial~~research ~~development~~products decreased isby ~~centered~~41%. inThe ~~three~~decrease ~~business~~reflects ~~lines:~~fewer bulk sales from one significant customer, items on backorder thus missing sales opportunities and from discontinuing certain products.

·For ~~Molecular Information Services –~~ the ~~Company~~three ~~believes~~months ~~that~~ended itJune is30, 2017 versus the ~~commercial~~three ~~leader~~months inended ~~providing~~June ~~multimodal MSI services~~30, ~~combining LAESI~~2016, ~~MALDI,~~cost ~~and~~of ~~optical~~revenue ~~microscopy.~~as ~~Our~~presented ~~proprietary~~in ~~services enable~~ the ~~identification~~Statement ~~and quantitation~~ of ~~both~~Operations ~~small molecules (e.g., lipids~~ and ~~metabolites)~~Comprehensive ~~and~~Loss decreased ~~large~~by ~~molecules~~$100,087 ~~(e.g.~~or ~~proteins)~~20% ~~and~~primarily ~~our~~as ~~services~~a ~~portfolio,~~result ~~inclusive~~ of ~~MSI, proteomics, metabolomics, lipidomics and bioinformatics is unique in~~ the ~~industry.~~Company ~~Our~~not ~~clients~~having ~~include~~significant ~~major~~ongoing ~~pharmaceutical~~revenue ~~chemical~~generating ~~and biotechnology companies;~~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 this prospectus for additional information regarding the Company’s short and long-term debt and advances and loans from stockholders.

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 this prospectus.

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 our Notes to Unaudited Consolidated Financial Statements for the Quarter Ended June 30, 2017.

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 our Notes to Unaudited Consolidated Financial Statements for the Quarter Ended June 30, 2017 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.

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 this prospectus for additional information.

Fiscal Year Ended December 31, 2016 Compared to the Fiscal Year Ended December 31, 2015

The Company recorded a net loss for the year ended December 31, 2016 of $15,647,922. This result is an increase of $6,073,488 over the net loss of $9,574,434 recorded for the year ended December 31, 2015. This increase is due primarily to an increase in the estimated fair value of the anti-dilutive provisions included in certain of the Company’s outstanding financial instruments of $7,970,851 and an increase in interest expense of $351,110, offset by an increase in revenues of $584,993, a decrease in total operating expenses of $1,061,931 (cost of revenue, SG&A and R&D expenses) and gains increase totaling $592,100 resulting from the Company’s sales of AzurRx Common Stock.

Gross revenue for the year ended December 31, 2016 increased by 31% over the gross revenue recognized for the year ended December 31, 2015. Revenue from molecular information services increased by 91%. The increase reflects increases in both the number of customers for whom we performed services and the number of services projects completed in the period.

We recorded revenue from the sale of four LAESI® devices in the year ended December 31, 2015. However, we sold only two of these devices in the year ended December 31, 2016. As a result, the revenues from this component decreased 44% versus the year ended December 31, 2015. The lack of a sale in the recent completed quarter is more reflective of the Company changing focus of revenue to Lab Services more than the sale of LAESI instruments.

Revenue from research products increased by 6%. This increase primarily reflects an increase in revenue from the sales of consumables.

Selling, general and administrative (“SG&A”) expenses recognized during the year ended December 31, 2016 were $5,631,978, which was 19% less than the SG&A expenses of $6,923,228 for the year ended December 31, 2015. The change reflects both the Company’s adoption of a new methodology to estimate cost of revenue for molecular information services during the three months ended June 30, 2016, September 30, 2016 and December 31, 2016 and efforts to reduce personnel costs, outside services, consulting expenses, and other activity recorded as SG&A expenses, in particular during the year ended December 31, 2015.

For the year ended December 31, 2016 compared to the year ended December 31, 2015, R&D expenses decreased 55% primarily due to a decrease in costs associated with the development of the LAESI® instrument platform and Nanopost Array (“NAPA”) technologies. As mentioned above, both of these products are now considered commercial products. 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 $101,808 for the year ended December 31, 2016 versus $141,484 for the year ended December 31, 2015. 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.

The gains from sales of investment of $1,502,100 recorded during the year ended December 31, 2016 reflects the sale of 1,706,941 shares of AzurRx Common Stock, including 1,016,941, 550,000 and 140,000 shares in the first, second and third quarter of 2016, respectively. 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.

For the year ended December 31, 2016 interest expense was $1,968,138 versus $1,617,028 for the year ended December 31, 2015, an increase of 22%, 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 and the fair value of warrants issued in conjunction with certain debt issuances. As of December 31, 2016, total interest-bearing indebtedness was $10,329,070 versus $7,166,752 as of December 31, 2015. Although there were no debt conversion inducement costs recognized in the year ended December 31, 2016 the Company recognized debt conversion inducement costs of $60,419 in the comparable period in 2015 for the fair value of warrants issued to Summit Resources, Inc. (“Summit”) related to the conversion of certain amounts due to Summit into Common Stock.

·The ~~LAESI~~Company ~~Instruments~~recorded an expense of $9,602,437 for ~~Software~~the ~~and~~net ~~Consumables~~increase –in wethe ~~offer~~fair ~~our~~value ~~proprietary~~of ~~LAESI~~derivative DPliabilities during the year ended December 31, 2016. These derivative liabilities are certain anti-~~1000~~dilution ~~instrument~~provisions contained in various financial instruments issued by the Company, ~~software~~in particular convertible notes and ~~bioanalytical~~warrants. ~~consumables~~There have been no changes in the assumptions underlying the calculation of estimated fair value of these liabilities in 2016, except for a decrease in the estimated unit price at which a future capital raise is modeled, now $0.075 per share of Common Stock which triggered anti-dilution. The triggering of anti-dilution caused the derivative expense to ~~corporate~~increase ~~and~~$7,970,851 over ~~academic~~2015. ~~research~~The ~~laboratories;~~amount ~~and~~recorded of $1,631,586 for the year ended December 31, 2015 reflects an increase in the estimated fair value of anti-dilution provisions contained in certain of the Company’s outstanding financial instruments.

·The ~~Molecular~~Company ~~Diagnostics~~did ~~and~~not ~~Clinical~~recognize ~~Research~~a –provision for weincome ~~apply~~taxes ~~our~~for ~~multimodal~~the ~~MSI~~year ~~technologies~~ended ~~and~~December ~~workflows~~31, 2016 or for the year ended December 31, 2015. The Company has evaluated its income tax position in ~~partnership~~accordance with ~~top-tier~~the ~~medical~~Financial ~~research~~Accounting ~~institutions~~Standards toBoard’s ~~co-develop~~Accounting ~~new~~Standards ~~molecular~~Codification ~~diagnostic~~Topic ~~tests~~740, Income Taxes, and determined that ~~the~~a ~~company~~full ~~believes~~valuation ~~can~~allowance beagainst ~~used~~its todeferred ~~improve~~tax ~~the~~asset ~~diagnosis~~was ~~and~~appropriate ~~prognosis~~as of ~~cancer~~December 31, 2016 and December ~~provide~~31, ~~requisite~~2015, ~~information~~the ~~useful~~two inbalance ~~predicting~~sheet dates included in the ~~outcome~~Consolidated ofBalance ~~cancer~~Sheets ~~treatment.~~included ~~Our~~in ~~current~~this ~~test~~report. ~~development~~As ~~programs~~of ~~target~~December 31, 2016, the ~~differential~~Company ~~diagnosis~~had ~~and~~a ~~prognosis~~deferred tax asset of ~~malignant~~$31,104,000 ~~melanoma~~million ~~and~~with ~~the~~a ~~molecular~~full, ~~profiling~~offsetting ofvaluation ~~subpopulations~~allowance. Net operating loss (“NOL”) carryforwards totaled approximately $76,531,000 million as of ~~cells~~December 31, 2016. These NOLs begin to expire in ~~lung~~2021 ~~adenocarcinoma~~for both federal and state income tax purposes.

Molecular Information Services

We believe we are the commercial leader in the offering of MSI services. Our clients send their tissue and biofluid samples directly to the Company’s laboratory where samples are analyzed by the Company’s state of the art mass spectrometry instrumentation, scientific staff and bioinformatics capabilities. We combine our proprietary LAESI platform with matrix-assisted laser desorption ionization (“MALDI”) workflows. Our clients include major pharmaceutical, biotechnology, chemical and medical device and consumer products companies. The services unit is operated within a “Quality by Design” environment, which is necessary to meet the internal research and development standards of pharmaceutical and clinical research clients.

The Company’s MSI services represent a revolutionary capability that for the first time enables the identification of all classes of biologically-active molecules produced by cells and combines this with the ability to instantly spatially-display the molecules (both two- and three-dimensional) in tissue histology sections. MSI can be performed without sample preparation, labeling or antibody techniques, thereby integrating direct molecular identification with tissue pathology for the first time. Since the sample is not touched, data is unbiased and more rapidly available, providing molecular information that rapidly answers questions critical to the drug development process, such as, “is my drug actually getting inside the target cells,” “is my immune modulating agent changing the molecular output of the tumor cell,” or “how long did it take for the drug to enter the target cells” as well as questions of drug concentration and duration.

We have developed workflows specifically for the characterization of therapeutic antibodies to provide both visual and analytical certainty of therapeutic efficacy and validation of therapeutic design. Once target tissues are imaged, data analysis can include quantitation of the dosed therapeutic, distribution analysis and other bioinformatics workflows, including statistical and pathway analysis.

LAESI instruments, software and consumables

LAESI technology was invented in the laboratory of Professor Akos Vertes, Ph.D., Dept. of Chemistry, GWU, in 2007 and was exclusively licensed to Protea in 2008. The LAESI DP-1000 instrument, the Company’s prototype embodiment of its proprietary LAESI technology, integrates with laboratory instruments known as mass spectrometers. LAESI employs a proprietary (patented) method that utilizes the water content in a sample (native or applied) to transition the sample into a gas state, where it can be analyzed by a mass spectrometer. LAESI accomplishes this without requiring the sample to be touched. By eliminating sample preparation, the biological sample can be analyzed without the possible contamination, bias or sample loss that occurs with current techniques, which require the introduction of chemicals, or the destruction of the sample itself, in order to enable analysis by mass spectrometry.

LAESI instruments employ proprietary software developed by the Company that creates “molecular maps” - the ability to instantly display the distribution of molecules throughout tissue sample in both two- and three-dimensional imaging. The Company currently offers the LAESI Desktop Software and ProteaPlot software that facilitates operating the instrument and the storage and display of datasets in a user friendly, intuitive software environment. The LAESI and ProteaPlot software includes tools for post-processing of LAESI-MS data, generation of molecular maps/images and mass spectral comparison for regions of interest. LAESI software display the data obtained by mass spectrometry analysis combined with actual images of the tissue and cell samples. Thus, mass spectrometry data can be integrated with a sample’s tissue architecture.

Molecular Diagnostics and Clinical Research

The Company is employing both its proprietary LAESI platform and MALDI methodologies to create comprehensive, tissue-based molecular profiles to improve the differential diagnosis of cancer. Our bioinformatics capability allows the integration of the Company’s MSI data files with related pathology, gene expression and demographic datasets with the purpose of improving human disease state detection, assessment and management. The Company has entered into collaborative research partnerships with top tier academic centers to develop and validate new, proprietary, MSI-based cancer diagnostic tests.

We have established a collaborative research initiative with The Yale University School of Medicine, the laboratory of Rozzitsa Lasova, MD, Associate Professor of Dermatology and Pathology, that employs the company’s MSI technology to differentiate melanoma from spitz nevi cells. The Company believes that its core MSI technology can identify unique protein expression profiles that can discriminate between benign melanocytic nevi and malignant melanoma.

We intend to expand our collaborations with major medical research centers to develop additional molecular profiles for the improved differential diagnosis and prognosis of cancer.

Recent Developments

We entered into a Memorandum of Understanding (the “MOU”) with Agilent Technologies, Inc. (NYSE: A) (“Agilent”), to develop new bioanalytical workflows in order to meet the emerging needs of the growing biopharmaceutical industry. Under the terms of the MOU, Protea, using Agilent instrumentation combined with its expertise, will develop workflows to improve the characterization of protein therapeutics including monoclonal antibodies, and new methods for the field of metabolomics. We believe, along with Agilent, that the field of biotherapeutics is advancing rapidly and is in need of new, innovative solutions that identify changes in the metabolic profiles of cells due to disease processes and drug interactions.

We intend prior to completion of this offering to consummate a one-for-25 reverse stock split. No fractional shares of common stock were issued in connection with the reverse stock split, and all such fractional interests will be rounded down to the nearest whole number. Issued and outstanding stock options, convertible notes and warrants will be split on the same basis and exercise prices will be adjusted accordingly.

Reverse Stock Split

In an attempt to implement our strategy to list our common stock of the Nasdaq Capital Markets, on December 1, 2015, our stockholders approved and authorized our board of directors to consummate a reverse stock split of our issued and outstanding common stock at a ratio of not less than 1-for-15 and not more than 1-for-25, with the exact reverse stock split ratio to be determined by the board in its sole discretion based upon the market price of the Company’s common stock on the date of such determination and with such reverse stock split to be effective at such time and date, if at all, as determined by the board in its sole discretion. Prior to the effective date of this offering, the board of directors intends to effect a 1-for-25 reverse stock split. As a result of our one-for-25 reverse stock split, (i) all outstanding 133,720,519 shares of our common stock, prior to the consummation of the reverse stock split, will be reduced to 5,348,820 shares and (ii) all shares of our common stock issuable upon exercise of outstanding 76,450,269 warrants, prior to the consummation of the reverse stock split, will be reduced to 3,058,010 shares with a corresponding increase in the exercise prices of such warrants to prices ranging from $6.25 to $56.25 per share.

Between April 2014 and March 31, 2016, the market price of our common stock has declined from a high of $2.10 per share to as low as $0.11 per share and closed on May 26, 2016 at $0.20 per share. In order to qualify to list our shares on the Nasdaq Capital Markets we will need to maintain a minimum $4.00 per share market price. Accordingly, in order to offer our shares of common stock for sale within the anticipated price range of between $4.50 and $6.50 per share, unless the current market price of our common stock increases, prior to the effective date of the registration statement of which this prospectus is a part, we may be required to obtain stockholder approval to increase such reverse stock split to an amount in excess of 1-for-25, which increase could be significant.

Additional information regarding our issued and outstanding securities may be found in the section of this prospectus titled “Description of Securities.”

Recent Financings

In May 2015, the Company received an aggregate of $2,000,000 in gross cash proceeds from one accredited investor in connection with the sale of original issue discount unsecured short-term convertible debenture due November 22, 2015. The Company issued (a) the notes with a total principal amount of $2,500,000 that bears interest at a rate of 10% per annum, and (b) a three-year warrant to purchase up to 300,000 shares of common stock of the Company at an exercise price of $8.13 per share. As of December 30, 2015, the debenture was converted in whole, into 424,222 shares of common stock at a conversion price of $6.25 per share. The Company received net proceeds of $1,690,655 from the sale of the notes and warrants. Prior to conversion, the outstanding balance was $2,500,000.

In August 2015, the Company commenced a private placement offering of up to $4,500,000 (including a $500,000 over-allotment option) of its equity securities (the “Fall 2015 Offering”). The Fall 2015 Offering consisted of up to 45 units of its equity securities; each unit consisting of 16,000 shares of common stock at a purchase price of $6.25 per share, and 8,000 three-year warrants to purchase common stock at an exercise price of $9.38 per share. As of December 31, 2015, a total of 14.23 units were sold and the Company received gross proceeds of $1,422,500. The Fall 2015 Offering of such units was concluded on December 22, 2015.

Laidlaw & Company (UK) Ltd, also served as placement agent for the Company in connection with the May 2015 and Fall 2015 private placements, and received compensation aggregating $155,700 plus warrants to purchase 29,640 shares of common stock of the Company at the same exercise prices as the warrants sold in each of the above private offerings.

In March 2016, we sold $655,000 principal amount of original issue discount unsecured notes due six months from funding and providing an estimated 23% yield to maturity (which we refer to as the “March 2016 Bridge Note”) to one accredited investor, pursuant to which we received an aggregate gross proceeds of $500,000. The March 2016 Bridge Note does not accrue additional interest and includes legal fees of $5,000, which was added to the principal amount. We also issued to the investor an aggregate of 4,347 shares of our common stock and five year warrants to purchase up to 65,500 additional shares of common stock at an exercise price of $18.75, subject to adjustment in certain events as provided therein.

If we fail to pay the March 2016 Bridge Note on or before its maturity date or otherwise commit an event of default, as defined in the March 2016 Bridge Note, the holder may convert the outstanding principal amount of the March 2016 Bridge Note into our common stock at a conversion price initially equal to 70% of the lowest closing bid price for the common stock in the twenty trading days immediately preceding the conversion, subject to adjustment in certain events as provided therein.

In connection with our sale of the March 2016 Bridge Note, we paid to Laidlaw & Company (UK) Ltd., who acted as the placement agent, an aggregate of approximately $60,000 in cash compensation, representing fees and an expense allowance. In addition, we issued to the placement agent (or its designees) a five-year warrant to purchase an aggregate of approximately 19,650 shares of our common stock at an exercise price of $6.25 per share.

In order to provide us with sufficient interim working capital to sustain our operations pending completion of this offering, the Company has engaged Laidlaw & Company (UK) Ltd. to assist us in the private placement and sale of additional bridge notes and warrants. There can be no assurance that the Company will be able to obtain such interim financing.

In May 2016, the Company received an aggregate of $359,000 in gross cash proceeds from seven accredited investors in connection with the sale of original issue discount unsecured short-term convertible notes due November 20, 2016. The Company issued (a) the notes with a total principal amount of $448,750 that bears interest at a rate of 10% per annum, and (b) a three-year warrant to purchase up to 43,080 shares of common stock of the Company at an exercise price of $8.13 per share.

In May 2016, the Company entered into an addendum with WVJITB to extend the maturity date for two outstanding convertible promissory notes to September 30, 2016 from March 31, 2016. This addendum, effective March 31, 2016, includes the Company to grant WVJITB a five-year warrant for the purchase of 23,600 shares of the Company’s Common Stock at an exercise price of to be determined by the Board of Directors.

Results of Operations

Three Months Ended March 31, 2016 Compared to the Three Months Ended March 31, 2015

The Company recorded a net loss for the three months ended March 31, 2016 of $1,085,544. This result marked a substantial improvement over the net loss of $2,967,498 recorded for the three months ended March 31, 2015. The change reflects an increase in gross revenue, a related increase in cost of revenue, decreases in sales, general and administrative (“SG&A”) and research and development (“R&D”) expenses, and an increase in other income.

Gross revenue for the three months ended March 31, 2016 increased by 22% over the gross revenue recognized for the three months ended March 31, 2015, including increases in all three revenue components. Revenue from molecular information services increased by 27%. The increase reflects increases in both the number of customers for whom we performed services and the number of services projects completed in the quarter. Molecular information service customers include pharmaceutical, biotechnology, chemical and medical device companies.

We recorded revenue from the sale of one LAESI® device in both the three months ended March 31, 2016 and 2015. However, revenue for the three months ended March 31, 2016 was 17% higher than the comparable period in 2015 because the unit sold in the first quarter of 2016 was at an incrementally higher unit price and also included the sale of ancillary equipment. Customers for our LAESI® instrument platform mirror those for molecular information services. Revenue from research products increased by 18%. This increase primarily reflects an increase in revenue from sales of the Company’s REDIchip™ product.

For the three months ended March 31, 2016 versus the three months ended March 31, 2015, cost of revenue increased by 41% primarily related to an increase in personal costs and consumables attributable to molecular information services and an increase in costs associated with the LAESI® device, including component parts, royalty expenses, and warranty expense (associated with the sale of an extended warranty for the unit sold in the first quarter of 2016; the related revenue is recognized over the warranty period whereas the estimated warranty expense is recognized at the time of sale). The period-over-period increase in gross profit reflects the increase in sales and a partially offsetting increase in cost of revenue.

Selling, general and administrative (“SG&A”) expenses recognized during the three months ended March 31, 2016 were $1,604,404 or 20% less than the SG&A expenses recorded during the comparable period in 2015. The change reflects the Company’s efforts to reduce personnel costs, outside services, consulting expenses, and other activity recorded as SG&A expenses, in particular during the first nine months of 2015.

For the three months ended March 31, 2016 compared to the three months ended March 31, 2015, research and development expenses decreased 39% primarily due to a decrease in costs associated with the development of the LAESI® instrument platform and Nanopost Array (“NAPA”) technologies (the latter includes the Company’s REDIchip™ product). Both of these products are now considered commercial products. 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 $40,678 for the three months ended March 31, 2016 versus $18,344 for the three months ended March 31, 2015. 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.

The gain on sale of AzurRx Common Stock of $637,100 recorded during the first quarter of 2016 reflects the sale of 1,016,941 shares of AzurRx BioPharma, Inc. (“AzurRx”) Common Stock. The gain reflects proceeds resulting from the sale of the shares less transaction costs as the basis for the Company’s AzurRx investment had previously been reduced to $0. The Company sold an additional 550,000 shares of AzurRx Common Stock in the second quarter of 2016 resulting in net proceeds of $675,000. See also Note 3 Gain on Sale of Investment and Note 19 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 investment in AzurRx.

For the three months ended March 31, 2016, interest expense decreased 8%. As of March 31, 2016, interest-bearing indebtedness was $7,736,317 versus $7,205,047 as of March 31, 2015. The March 31, 2016 balance includes $655,000 related to a convertible debenture issued in March 2016. As of December 31, 2015, interest-bearing indebtedness was $7,166,752. There were no debt conversion inducement costs recognized in the first three months of 2016. The $60,419 recorded in the comparable period in 2015 reflects the fair value of warrants issued to Summit Resources, Inc. (“Summit”) related to the conversion of certain amounts due to Summit. See also Note 11 Bank Line of Credit, Note 12 Loans Payable to Stockholders, Note 14 Debt, and Note 19 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.

The Company recognized a minimal change in the fair value of derivative liabilities during the three months ended March 31, 2016 as there were no changes in the amount of derivative instruments outstanding versus December 31, 2015 and as compared with December 31, 2015, no changes in the assumptions underlying the calculation of estimated fair value of the derivative instruments. The amount recorded in this line item for the three months ended March 31, 2015 was primarily related to an increase in the estimated fair value during that quarter of the liabilities for warrants and anti-dilution arrangements associated with certain outstanding Common Stock. Detailed information regarding the fair value of the Company’s financial assets and liabilities, including the assumptions used to estimate the fair value of warrants and anti-dilution arrangements can be found in Note 5 Fair Value of Financial Assets and Liabilities – Derivative Financial Instruments in Notes to Consolidated Financial Statements in Part I, Item 1 of this report.

The Company did not recognize a provision for income taxes for the three months ended March 31, 2016 or the comparable period in 2015. 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 for both balance sheet dates. As of March 31, 2016, the Company had a deferred tax asset of approximately $28.2 million with a full, offsetting valuation allowance. Net operating loss (“NOL”) carryforwards totaled approximately $69.4 million as of March 31, 2016. These NOLs begin to expire in 2021 for both federal and state tax purposes.

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 ~~will~~requires ~~require~~ additional financial resources to continue its operations. If we cannot obtain additional financial resources ~~through~~ through additional ~~funding~~debt and equity financings or the sale of assets, we may be forced to further curtail our operations or consider other ~~strategic~~ strategic alternatives, which would likely result in substantial dilution of our current stockholders. Even if we are successful in raising additional financial resources, there can be no assurance regarding the ~~terms of~~timing ~~any asset sales~~ or ~~additional~~terms ~~investment–~~of any such ~~investment or other strategic alternative would likely substantially dilute our current stockholders~~transaction.

~~Fiscal~~The ~~Year~~Company ~~Ended~~continues ~~December~~to 31explore its alternatives as far as obtaining additional financial resources. Since inception, ~~2015~~we have been successful in raising funds and selling ~~Compared~~certain assets to fund our operations and believe that we will be successful in obtaining the ~~Fiscal~~necessary ~~Year~~capital ~~Ended~~resources ~~December~~to 31fund our operations going forward; however, ~~2014~~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.

WeThe ~~earned~~accompanying ~~revenue~~Consolidated ~~of $2,003,286 for the~~Financial ~~fiscal~~Statements ~~year~~do ~~ended~~not December 31, 2015 as compared to revenue of $1,768,312 for the year ended December 31, 2014, an increase of $234,974, or approximately 13%. During the year ended December 31, 2015, the Company realized service revenues of $929,076 compared to $504,750 for the year ended December 31, 2014, an increase of $424,326 or approximately 84%. Service clients include ~~major~~any ~~pharmaceutical, biotechnology,~~adjustment ~~chemical~~that ~~and~~might ~~medical~~be ~~device~~necessary ~~companies.~~if ~~In addition,~~ the Company ~~received~~is ~~grant~~unable ~~revenues associated with the DARPA grant totaling $141,484 for the year ended December 31, 2015 compared~~ to ~~$120,171~~continue ~~for~~as ~~the~~a ~~year~~going ~~ended December 31, 2014~~concern. ~~The Company also earned LAESI instrument revenue of $640,060 and research product revenue of $292,666 for the year ended December 31, 2015.~~

~~Cost~~Net ofcash ~~revenue~~used ~~totaled~~in ~~$721,656~~operating ~~for~~activities ~~the~~for ~~year~~the six months ended ~~December~~June 3130, ~~2015~~2017 ~~compared~~totaled to$2,270,549, ~~cost~~which ofrepresents ~~revenue~~a decrease of $~~871~~570,~~904~~142 ~~for~~or ~~the~~20% ~~year~~from ~~ended~~the ~~December~~net ~~31,~~cash ~~2014,~~used ain operating ~~decrease~~activities of $~~150~~2,~~248 or 17%. During 2014~~840,691 for the ~~Company~~six ~~engaged~~months aended ~~new~~June ~~contract~~30, ~~manufacture~~2016. ofThe ~~the~~largest ~~LAESI~~factors ~~unit,~~for ~~which~~the ~~substantially~~improvement ~~lowered~~include ~~the~~a ~~cost of~~lower ~~each~~overall ~~unit~~cost ~~sold.~~structure ~~The~~in ~~Company~~2017 ~~realized~~and ~~gross~~delaying ~~profits~~payment of ~~$1,281,630~~certain ~~for~~accounts ~~the~~payable ~~year~~and ~~ended~~other ~~December~~current ~~31,~~liabilities ~~2015~~(see ~~compared~~related ~~to $896,408 for~~discussion ~~the~~below ~~year~~under ~~ended~~Cash ~~December 31, 2014~~Requirements).

~~Selling,~~Net ~~general~~cash ~~and~~provided ~~administrative~~in ~~expenses~~investing activities ~~totaled~~decreased ~~$6,942,406~~99% ~~for~~in the ~~year~~six months ended ~~December~~June 3130, ~~2015,~~2017 compared to the six months ended June 30, 2016. An increase usage of cash of $869,~~736,478~~890 to purchase equipment for the ~~fiscal~~lab ~~year~~in the six months ended ~~December~~June 3130, ~~2014,~~2017 ~~a decrease~~offset by the receipt of cash of $185,~~794,072~~355 orfrom ~~approximately~~the sale ~~21%.~~of ~~The~~AzurRx ~~decrease~~stock ~~relates~~contributed to athe ~~reduction~~decrease in ~~personnel~~funds ~~costs,~~used ~~outside~~in ~~services~~investing activities for the six months ending June 30, ~~consulting~~2017. ~~expenses~~The comparable six months ending June 30, ~~and~~2016 ~~other~~cash ~~items~~used asin investing was only $7,817 offset by cash received of $1,358,127 from the ~~Company~~sale ~~has~~of ~~focused~~AzurRx ~~efforts~~stock onsales ~~reducing~~and ~~expenses~~insurance claim.

~~Research~~Net ~~and~~cash ~~development~~provided ~~expense totaled~~by ~~$1,479,367~~financing activities for the ~~fiscal~~six ~~year~~months ended ~~December~~June 3130, ~~2015,~~2017 ~~compared~~was to2,258,914, ~~research~~which ~~and~~represents ~~development~~an ~~expense~~increase of $2600,~~853,078~~754 ~~for~~or ~~the fiscal~~36% ~~year~~from ~~ended~~the ~~December~~net ~~31,~~cash ~~2014,~~provided aby ~~decrease~~financing activities of $1,~~373~~658,~~711~~160 orfor ~~approximately~~the ~~48%.~~six ~~The~~months ~~reduction~~ended inJune ~~expenses~~30, ~~relates~~2016. ~~largely~~The tofirst ~~the~~six ~~disposition~~months of ~~the~~2017 ~~Company’s~~include ~~European~~payments ~~subsidiary~~on ~~effective~~debt atand ~~the~~capital ~~end~~leases of ~~2014.~~$708,292 Nowith ~~expenses~~payments ~~were~~of ~~incurred~~$201,133 ~~for~~in the ~~year~~comparable ~~ended~~period ~~December~~in 2016. 31However, ~~2015~~net ~~related~~activity toinvolving ~~the~~stockholder ~~disposed~~advances ~~subsidiary.~~and ~~For~~debt ~~the~~was ~~year~~$1,247,773 ~~ended~~higher ~~December~~during ~~31,~~the ~~2015,~~first ~~research~~six ~~and~~months ~~development~~of ~~costs~~2017. ~~included costs~~In ~~associated~~addition, ~~with~~ the ~~development~~first six months of ~~its~~2017 ~~LAESI~~included ~~and~~proceeds ~~NAPA~~of ~~technology~~$554,258 ~~known~~from asthe ~~REDIchips.~~sale Inof ~~connection~~common ~~with~~stock. ~~the~~Additional ~~research and development~~information ofregarding the Company'’s ~~LAESI~~issuance ~~technology,~~of ~~the~~debt ~~Company~~to ~~recorded~~third ~~research~~parties ~~and~~during ~~development~~the ~~costs~~first six months of ~~$1,239,350~~2017 ~~and~~can ~~$1,451,000~~be ~~for~~found ~~the~~in ~~fiscal~~Note 12 ~~years~~Debt ~~2015~~in ~~and~~Notes ~~2014~~to Consolidated Financial Statements included in Part I, ~~respectively~~Item 1 of this report. InAdditional ~~connection~~information regarding ~~with~~activity ~~the~~involving ~~research~~stockholder advances and ~~development~~debt ofcan ~~the~~be ~~Company's~~found ~~REDIchip~~in ~~technology,~~Note ~~the~~10 ~~Company recorded~~Obligation ~~research~~to ~~and~~Stockholders ~~development~~in ~~costs~~Notes ofto Unaudited ~~$240,017~~Consolidated Financial Statements for the ~~year~~period ended ~~December~~June 3130, ~~2015~~2017 ~~compared~~included in this prospectus. As discussed below, the Company requires additional capital resources to ~~$221~~fund future operations,~~477~~ ~~for~~service ~~the~~outstanding ~~year~~debt, ~~ended~~and ~~December~~continue ~~31,~~as ~~2014~~a going concern.

AsLIQUIDITY aAND ~~result,~~CAPITAL loss from operations for the fiscal year ended December 31, 2015 was $7,140,143, compared to a loss from operations of $10,693,148 for the fiscal year ended December 31, 2014. This is a decrease of $3,553,005 or 33% from the prior year.RESOURCES

~~During~~The ~~the~~following ~~year~~section ~~ended~~pertains to ~~December~~activity ~~31,~~included ~~2015, we~~in ~~had~~the ~~other~~Company’s ~~expense~~Unaudited ofConsolidated ~~$2,434,291~~Balance asSheets ~~compared~~and toConsolidated ~~other~~Statements ~~expense~~of Cash Flows for the ~~year~~period ended ~~December~~June 3130, ~~2014 of $781~~2017,~~622.~~ ~~Other~~both ~~expense increased as a result~~ of ~~the~~which ~~change~~are incontained ~~fair market value on derivatives related to anti-dilution protection on certain securities and interest expense incurred on new debt originated~~ in ~~2015.~~this ~~This was partially off-set by a gain of $910,000 on the sale of equity method investment~~prospectus.

After foreign currency translation adjustments of $429 and $(23,455), respectively, we had a total comprehensive loss of $9,574,005, or $0.09 per share, for the fiscal year ended December 31, 2015 as compared to a total comprehensive loss of $11,498,225, or $0.17 per share, for the fiscal year ended December 31, 2014.28

32 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.

~~Liquidity~~As detailed in Note 10 Obligations to Stockholders and ~~Capital~~Note ~~Resources~~12 Debt in Notes to Unaudited Consolidated Financial Statements for the period ended June 30, 2017 included in this prospectus, 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 at a deficit during this period, thus placing an additional burden on the Company to raise additional financial resources in order to meet its obligations and otherwise sustain operations.

As of March 31, 2016, the Company’s current assets totaled $464,401, current liabilities $10,486,033, and working capital was a deficit of $10,021,632. As of December 31, 2015, current assets totaled $411,591, current liabilities $9,590,170, and working capital was a deficit of $9,178,579. The increase in current assets reflects an increase in trade accounts receivable due primarily to an increase in sales for March 2016 as compared to December 2015.

Regarding current liabilities, the amounts categorized as accounts payable and other payables and accrued expenses totaled $1,813,622 and $1,729,675 as of March 31, 2016 and December 31, 2015, respectively, or an incremental increase of 5%. Other payables and accrued expenses included incremental increases in the items recorded in this line item, as listed in Note 13 in Notes to Consolidated Financial Statements included in Part I, Item 1 of this report.

As at March 31, 2016, the Company and its wholly-owned subsidiary owes $3,000,000 under a senior secured line of credit with United Bank West Virginia, which is due on demand. The interest rate is variable–we currently pay interest at a rate of 5.87% per annum. The line of credit is secured by our equipment and the personal guarantees of three of our directors and the estate of a former director. The line of credit has had an outstanding of $3,000,000 and payable on demand since the first quarter of 2014. Management believes that the bank has no present intention to require payment of the indebtedness under the line of credit. Consequently, we have not included any proceeds from this offering as being used to reduce or repay the outstanding balance of this line of credit.

The Company had a bank overdraft of $264,661 as of March 31, 2016 that represents payments by our bank of checks we issued in an amount that exceeded our cash balance with the bank as of that date. As detailed in Note 11 Bank Line of Credit, Note 12 Loans Payable to Stockholders, and Note 14 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, including amounts due to both third-parties and stockholder as well as a line-of-credit with a bank that of $3,000,000 that has “payable upon demand” terms.

Net cash used in operating activities for the three months ended March 31, 2016 totaled $1,296,505, which was a decrease of $140,683 or 10% from the net cash used in operating activities of $1,437,188 for the three months ended March 31, 2015. The largest factors for the improvement include a lower level of disbursements in the first quarter of 2016 for payables and inventory partially offset by less cash collected on trade receivables in the first quarter of 2016.

Net cash provided by investing activities for the three months ended March 31, 2016 totaled $637,125, which is the net proceeds from the sale of AzurRx Common Stock received during the period and proceeds from sale of equipment. Net cash used by investing activities for the three months ended March 31, 2015 was $7,413, net, that resulting from the purchase and sale of certain equipment.

Net cash provided by financing activities for the three months ended March 31, 2016 was $652,882 which was a decrease of $549,564 or 46% from the net cash provided by financing activities of $1,202,446 for the three months ended March 31, 2015. The first quarter of 2016 included proceeds from the issuance of a convertible debenture to an accredited investor of $500,000, payments of principal on short-term debt and for capital leases totaling $103,779 and payment of stockholder loans of $57,500. The first quarter of 2015 included proceeds from the sale of the Company’s Preferred Stock of $571,323 and proceeds from the issuance of a promissory note to a stockholder in the period of $678,000. As discussed below, the Company requires additional capital resources to fund future operations and to continue as a going concern.

Cash Requirements

The Company’s ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements included in this prospectus 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 ~~advance~~fulfilling ~~global~~payment ~~commercialization~~obligations ofrelated ~~our~~to ~~LAESI®~~debt ~~instrument~~that ~~platform~~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. WeFor 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 includedexample, ~~in certain cases, the issuance of warrants. In addition,~~ ~~three~~we ~~members~~could ofalso ~~the~~enter ~~Company’s~~into ~~Board of Directors and the estate of~~ a ~~former~~transaction ~~board~~such 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 ofa ~~March 31,~~merger ~~2016, the Company was in an overdraft position~~ with ~~its~~a ~~bank.~~business ~~The amount of the overdraft was $264,661. There can be no assurances~~ that ~~the~~is ~~Company~~complimentary ~~will be able~~ to continue to obtain such extensions and modifications to outstanding debt or use other methods such as guarantees by 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 concernours.

33 We have also worked closely with various parties who 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 its terms, which includes $988,985 that was more than 90 days past due (see Note 16 Commitments and Contingencies included in this prospectus 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. 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.

WeIn ~~may~~January ~~also~~2017 ~~consider~~through ~~the~~March ~~sale~~2017, ofthe ~~additional~~Company ~~assets~~sold orCommon ~~entering~~Stock ~~into~~and aaccompanying ~~transaction~~warrants ~~such~~resulting ~~as a merger with a business complimentary to ours. As discussed~~ in ~~Note 3~~gross ~~Sale of Equity Method Investment, we raised~~ proceeds of $~~637~~688,~~100~~000; ~~during~~ the ~~three~~Company ~~months~~received ~~ended March 31, 2016 through sales of~~ a ~~portion~~total of ~~our ownership interest in AzurRx BioPharma~~$554, ~~Inc. (“AzurRx”). Also, as discussed in~~258 ~~Note~~after 19transaction ~~Evaluation of Subsequent Events, in the second quarter of 2016 we sold an additional ownership interest in AzurRx generating net proceeds of $675,000~~costs.

~~While~~Certain weof ~~have~~the ~~been~~Company’s ~~successful~~outstanding financial ininstruments ~~raising funds~~contain ~~and~~anti-dilution ~~selling~~provisions ~~certain~~that ~~assets~~may tobe ~~fund~~triggered ~~our~~by ~~operations~~the ~~since~~issuance ~~inception~~of ~~and~~Common weStock ~~believe~~or financial instruments such as Preferred Stock and warrants that weare ~~will~~convertible beor ~~successful~~otherwise inexchangeable ~~obtaining~~ or exercisable for shares of the ~~necessary~~Company’s Common ~~capital~~Stock. ~~resources~~As todetailed ~~fund~~in ~~our~~Note ~~operations~~13 ~~going~~Common ~~forward,~~Stock ~~there~~of ~~are~~this noprospectus, ~~assurances~~the ~~that~~Company’s wesale ~~will~~of beCommon ~~able~~Stock toin ~~secure~~the ~~any~~2016-17 Offering ~~additional~~triggered ~~funding~~anti-dilution orprovisions ~~capital~~included ~~resources~~in orcertain outstanding financial instruments and resulted in substantial dilution to the ~~terms~~Company’s ofexisting investors that did not have such ~~arrangements~~protection. ~~These~~See ~~factors~~also ~~raise~~Note ~~substantial~~4 ~~doubt~~Derivative ~~about~~Liabilities ~~our~~included ~~ability~~in this prospectus for additional information related to ~~continue~~the asestimated afair ~~going~~value of the anti-~~concern~~dilution provisions included in the Company’s financial instruments that were outstanding as of June 30, 2017.

The ~~accompanying~~Company ~~consolidated~~continues to explore its alternatives as far as obtaining additional financial resources. Since inception, we have been successful in raising funds and selling ~~statements~~certain doassets ~~not~~to ~~include~~fund ~~any~~our ~~adjustment~~operations and believe that ~~might~~we will be successful in obtaining the necessary ifcapital 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 ~~Company~~terms isand ~~unable~~conditions of any such arrangements. These factors raise substantial doubt about our ability to continue as a going -concern.

The ~~Company~~accompanying isConsolidated ~~in immediate need of additional~~Financial ~~working~~Statements ~~capital~~do innot ~~order~~include toany ~~sustain~~adjustment ~~its~~that ~~current~~might ~~level~~be ofnecessary ~~operations.~~if ~~Based on our current spending levels, management estimates that~~ the Company ~~will~~is ~~need~~unable ~~approximately $6,000,000 in additional working capital, net of cash flows from revenue,~~ to ~~maintain current~~continue ~~operations~~as ~~for the next twelve calendar months. With~~ a ~~goal~~going of raising additional capital in the third quarter of 2016 to at least meet our working capital needs through the end of 2016, we are working closely with our financial advisors to determine our tactical approach to the equity markets, with particular emphasis on identifying the best deal structure to attract and retain meaningful capital sponsorship from retail and/or institutional investing communitiesconcern. ~~However, there can be no assurance that we will be successful in raising additional capital on terms acceptable to us or at all.~~

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 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 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~~CRITICAL ~~Accounting~~ACCOUNTING ~~Policies~~POLICIES

~~The~~For ~~discussion~~information ~~and~~regarding ~~analysis~~critical ~~of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with~~ accounting ~~principles~~policies ~~generally~~see ~~accepted~~Note in2 ~~the U.S. The preparation of these financial statements requires us~~ to ~~make~~our ~~estimates~~Unaudited ~~and~~Consolidated ~~judgments that~~Financial ~~affect~~Statements ~~the reported amounts of assets, liabilities, revenues and expenses~~ for ~~each~~the period. ~~For~~ended ~~further~~June ~~discussion of critical accounting policies~~30, ~~please~~2017 ~~see Note 2 to our financial statements~~ included in this prospectus.

~~Recently~~RECENTLY ~~Issued~~ISSUED ~~Accounting~~ACCOUNTING ~~Pronouncements~~PRONOUNCEMENTS

For ainformation ~~discussion~~regarding of recently issued ~~accounting~~ accounting pronouncements, please see Note 2 to our financial statements included in this prospectus.

MARKET FOR OUR COMMON STOCK

Our ~~common~~Common ~~stock~~Stock is ~~currently~~ quoted on ~~OTCQB~~ OTC Markets under the symbol “PRGB,”; however, it is not listed on any stock exchange, and there is currently very limited trading in our securities. ~~Subject~~The toquotation ~~meeting~~of ~~all~~our ofCommon ~~the~~Stock ~~Nasdaq~~began ~~listing~~on ~~standards~~or about April 7, ~~including~~2014. ~~the~~There ~~completion~~has ofbeen ~~this~~very ~~offering,~~limited ~~our~~trading ~~common~~in our ~~stock~~Common ~~will~~Stock beto ~~approved~~date. ~~for~~On ~~listing~~August on21, ~~The~~2017, ~~Nasdaq~~the ~~Stock~~last ~~Market~~reported ~~under~~sale ~~the~~price ~~symbol~~for ~~“PRGB~~our Common Stock was $2.”55 per share.

~~The~~As ~~quotation~~ of ~~our~~the ~~common~~date ~~stock~~of ~~began on~~this orprospectus, ~~about~~the Company ~~April~~had 157,972,679 ~~2014.~~shares Onof ~~May~~our ~~26,~~Common ~~2016~~Stock ~~the~~issued ~~last~~and ~~reported~~outstanding ~~sales~~held ~~price~~by ofapproximately ~~our~~635 ~~common~~stockholders ~~stock~~of ~~was $0~~record.~~20 per share.~~

~~We intend to complete a one-for-25 reverse split of our outstanding common stock prior to the completion of the offering described in this prospectus.~~ The ~~information~~Company ~~below~~ has ~~not been adjusted to give retroactive effect to such contemplated 1-for-25 reverse stock split.~~outstanding:

As· 255,702 shares of ~~May~~common ~~26,~~stock ~~2016,~~issuable weupon ~~had~~the ~~133,720,519 shares~~exercise of ~~our~~outstanding ~~common~~ stock ~~issued~~options, ~~and~~at ~~outstanding~~a ~~held~~weighted byaverage ~~approximately~~exercise ~~526~~price ~~stockholders~~ of ~~record~~$24.33 per share;

As· 4,227,933 shares of ~~May~~common ~~26,~~stock ~~2016~~issuable weupon ~~also~~the ~~have~~exercise of outstanding: warrants at a weighted average exercise price of $10.42 per share; and

· 204,299 shares of common stock issuable upon the exercise of outstanding warrants issued to Laidlaw & Co. (UK) Ltd. or its assigns in connection with acting as placement agent in private placements of our securities consisting of (i) warrants to purchase up to 7614,~~450,269~~820 shares of ~~our~~common stock at $10.00 per share, (ii) warrants to purchase up to 9,825 shares of common stock at exercise ~~prices~~price ~~ranging~~of ~~between~~ $010.2500 ~~and~~per share, (iii) warrants to purchase up to 30,380 shares of common stock at an exercise price of $210.2500 per share, ~~subject~~and (iv) warrants to ~~adjustment~~purchase inup ~~certain~~to ~~circumstances~~149,274 asshares ~~provided~~of ~~therein;~~common ~~and~~stock at an exercise price of $3.75.

34 The following table sets forth the high and low closing bid prices for our Common Stock for the fiscal quarter indicated as reported on the OTC Market. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. Our Common Stock is very thinly traded and, thus, pricing of our Common Stock on the OTC Market does not necessarily represent its fair market value.

· options to purchase up to 16,650,000 shares of our common stock at a weighted average exercise price of $0.69 per share, subject to adjustment in certain circumstances as provided therein;

Period	High		Low
Quarter ending June 30, 2014 (from April 11, 2014)	$	2.10	$	0.70
Quarter ending September 30, 2014		0.88		0.51
Quarter ending December 31, 2014		0.55		0.20
Quarter ending March 31, 2015		0.60		0.12
Quarter ending June 30, 2015		0.48		0.20
Quarter ending September 30, 2015		0.47		0.16
Quarter ending December 31, 2015		0.25		0.10
Quarter ending March 31, 2016		0.35		0.11
Quarter ending June 30, 2016		0.24		0.10
Quarter ending September 30, 2016		0.19		0.08
Quarter ending December 31, 2016		0.12		0.06
Quarter ending March 31, 2017		0.14		0.05
Quarter ending June 30, 2017		0.09		0.04
Quarter ending September 30, 2017 (through August 25, 2017)		0.07		0.03

The following table sets forth the high and low closing bid prices for our common stock for the fiscal quarter indicated as reported on the OTCQB. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. Our common stock is very thinly traded and, thus, pricing of our common stock on the OTC Markets does not necessarily represent its fair market value.30

Period	High		Low
Quarter ending June 30, 2014 (from April 11, 2014)	$	2.10	$	0.70
Quarter ending September 30, 2014		0.88		0.51
Quarter ending December 31, 2014		0.55		0.20
Quarter ending March 31, 2015		0.60		0.12
Quarter ending June 30, 2015				0.20
Quarter ending September 30, 2015		0.47		0.16
Quarter ending December 31, 2015		0.25		0.10
Quarter Ending March 31, 2016		0.35		0.11
Quarter Ending June 30, 2016 (through May 23, 2016)		0.35		0.11

The following table sets forth the high and low closing bid prices for our Common Stock for the fiscal quarter indicated as reported on the OTC Market on a pro-forma basis, giving retroactive effect to our proposed 1-for-50 reverse stock split.

Period	High		Low
Quarter ending June 30, 2014 (from April 11, 2014)	$	105.00		35.00
Quarter ending September 30, 2014		44.00		25.50
Quarter ending December 31, 2014		27.50		10.00
Quarter ending March 31, 2015		30.00		6.00
Quarter ending June 30, 2015		24.00		10.00
Quarter ending September 30, 2015		23.50		8.00
Quarter ending December 31, 2015		12.50		5.00
Quarter ending March 31, 2016		17.50		5.50
Quarter ending June 30, 2016		12.00		5.00
Quarter ending September 30, 2016		9.50		4.00
Quarter ending December 31, 2016		6.00		3.00
Quarter ending March 31, 2017		7.00		2.50
Quarter ending June 30, 2017		4.50		2.05
Quarter ending September 30, 2017 (through August 25, 2017)		3.50		1.50

Dividends

We have not declared any cash dividends since inception and we do not anticipate paying any dividends in the foreseeable future. The payment of dividends is within the discretion of the Board of Directors and will depend on our earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit our ability to pay dividends on our common stock other than those generally imposed by applicable state law.

Securities Authorized for Issuance under Equity Compensation Plans

In 2002, the ~~Board~~board of ~~Directors~~directors of PBI adopted, and our stockholders subsequently approved, the 2002 Equity Incentive Plan (the “2002 Plan”) which governed equity awards to employees, directors and consultants of the Company. There were ~~166~~83,000 shares of common stock reserved for issuance under the Plan. Following the Reverse Merger, and in accordance with the 2002 Plan, the Company’s Board of Directors approved the substitution of the shares of PBI’s common stock underlying the options granted under the 2002 Plan with shares of common stock of the Company, subject to any further approvals or actions as may be required to ensure that the implementation of the substitution is in accordance with all state and federal rules and regulations that may be applicable.

The 2002 Plan had a term of ten years and expired in July 2012. The types of awards permitted under the 2002 Plan include qualified incentive stock options and non-qualified stock options, and restricted stock. Each option shall be exercisable at such times and subject to such terms and conditions as the Board may specify. Stock options generally vest over four years and expire no later than ten years from the date of grant.

On February 8, 2013, the Board of Directors of the Company adopted, and the Company’s stockholders subsequently approved, the 2013 Equity Incentive Plan (the “2013 Plan”), which governs equity awards to employees, directors and consultants of the Company. The 2013 Plan has a term of ten years and permits the grant of qualified incentive stock options, non-qualified stock options, restricted stock awards as well as performance based cash compensation awards. Under the 2013 Equity Incentive Plan, an additional ~~200~~100,000 shares of common stock are reserved for issuance.

As of December 1, 2014, our stockholders approved an amendment to the 2013 Plan to permit the Board to increase the number of shares of common stock issuable under the 2013 Plan on January 1 of each year in an amount equal to the lesser of: (i) ~~500~~250,000 shares of common stock or the equivalent of such number of shares after the Administrator (as defined in the 2013 Plan), in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Section 11(a) of the 2013 Plan; (ii) 15% of the shares of common stock issued and outstanding as of the last day of the prior year; or (iii) an amount determined by the Board. As a result, as of January 1, 2016, the total number of shares of common stock issuable under the 2013 Plan was increased to ~~666~~333,000.

The Board of Directors has the power to amend, suspend or terminate the 2013 Plan without stockholder approval or ratification at any time or from time to time. No change may be made that increases the total number of shares of our common stock reserved for issuance pursuant to incentive awards or reduces the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our stockholders within one year. Unless sooner terminated, the 2013 Plan will terminate ten years after it was adopted.

35 31

Equity Compensation Plan Information

The following table summarizes information about stock options at ~~March~~August 3125, ~~2016~~2017:

Plan category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders - 2013 Plan

~~289~~217,~~013~~407

1114.0098

~~210~~32,~~986~~593

Equity compensation plans not approved by security holders – 2002

~~105~~38,~~190~~295

3577.6237

Total

~~394~~255,~~203~~702

1724.5033

~~210~~32,~~986~~593

The following table summarizes information about stock options at ~~March~~June 3130, ~~2016~~2017:

		Options Outstanding						Options Exercisable
Exercise Price		Outstanding		Weighted Average Remaining contractual life (in years)		Weighted Average Exercise Price		Exercisable		Weighted Average Exercise Price
$	65.2550		~~106~~22,~~133~~000						922,~~259~~000
$	126.00		67,000						~~750~~1,313
$	127.50		379,~~160~~700						310,~~160~~638
$	1312.2550		2331,~~800~~467						416,~~463~~792
$	1324.7500		~~150~~3,~~080~~000						971,~~378~~125
$	2025.00		121,~~800~~580						121,~~800~~580
$	3126.2550		126,~~400~~500						122,~~400~~844
$	3727.50		7166,240						7149,~~240~~378
$	5062.0050		81,~~590~~000						81,~~590~~000
$	675.~~25 - $50.~~00		~~394~~32,~~203~~920		~~7.26~~	$	~~17.50~~		~~220~~32,~~040~~920	$	~~23.75~~
$	100.00		4,295						4,295
$	5.50 - $100.00		255,702		7.20	$	24.33		146,420	$	33.66

36 32

BUSINESS

~~Company~~About ~~Overview~~Our Business

~~Protea~~PBI is an emerging growth, ~~molecular~~bioanalytical ~~information~~technology company that has developed aproprietary ~~revolutionary platform~~ technology, which enables the rapid and direct ~~analysis~~identification, mapping and display of ~~biologically~~the ~~active~~ molecules present in living cells and tissue samples., ~~The~~thereby ~~technology~~providing ~~platform~~“molecular ~~offers~~information” ~~new,~~that ~~unprecedented~~is ~~capabilities useful~~of value to the pharmaceutical, diagnostic, ~~clinical research, agricultural~~ and life science industries.

~~“Molecular information”~~We ~~refers~~are applying our proprietary technology to create a new class of molecular tests for the ~~generation~~improved diagnosis and ~~bioinformatic~~management ~~processing~~of cancer. We have established a collaborative research initiative with The Yale University School of ~~very~~Medicine ~~large~~that ~~data~~employs ~~sets,~~our ~~known~~technology asfor ~~“big~~the ~~data,”~~definitive diagnosis of malignant ~~obtained~~melanoma. byWe ~~applying~~anticipate the ~~Company’s~~commercial ~~technology~~availability toof ~~identify~~our ~~and~~first ~~characterize~~cancer ~~the~~diagnostic ~~proteins,~~test ~~metabolites~~in 2018. In addition, ~~lipids~~in ~~and~~July ~~other~~of ~~molecules~~2017, ~~which~~we ~~are~~entered into a Collaborative Research Agreement with the ~~biologically~~Massachusetts ~~active~~General ~~molecular~~Hospital ~~products~~(MGH) for the joint development of ~~all~~new medical ~~living~~diagnostic ~~cells~~technology in the fields of oncology and ~~life~~wound ~~forms~~healing. Additional collaborations are in development.

~~Our~~We ~~technology is~~have ~~used~~completed tothe ~~improve~~development ~~pharmaceutical~~of ~~development~~a proprietary ~~and~~bioanalytical ~~life~~technology ~~science~~that ~~research~~enables ~~productivity~~the rapid and ~~outcomes~~direct analysis and tovisualization ~~extend~~of ~~and~~molecules ~~add~~in ~~value~~cells. toKnown ~~other~~as ~~technologies~~LAESI®, ~~that~~the ~~are~~technology ~~used~~is inexclusively ~~research~~licensed ~~and~~from ~~development~~The ~~(“R&D”)~~George Washington University, ~~such~~and asis ~~three-dimensional~~now ~~tissue~~the ~~models,~~subject ~~biomarker~~of ~~discovery,~~twelve ~~synthetic~~issued ~~biologicals~~patents and ~~mass~~over ~~spectrometry.~~50 Inpeer-reviewed ~~particular,~~publications. ~~the~~LAESI ~~Company~~technology ~~believes~~couples ~~that~~with ~~its~~“mass ~~ability to rapidly~~spectrometers,” ~~provide~~which ~~comprehensive~~are ~~molecular~~instruments ~~image-based~~that ~~datasets~~detect, ~~addresses~~characterize, aand ~~universal~~identify ~~need~~molecules. ofLAESI ~~the~~enables ~~pharmaceutical,~~rapid ~~diagnostic~~speed ~~and~~(providing ~~clinical research~~data ~~and~~results ~~life~~in ~~science~~seconds to ~~industries~~minutes vs. Todays) ~~date,~~and wethe ~~have~~generation ~~established~~of alarge ~~number~~molecular ofdatasets ~~collaborative~~- ~~research~~over ~~programs~~1,000 ~~with~~molecules ~~major~~can ~~medical facilities.~~be ~~See~~directly ~~“Strategic~~identified ~~Relationships”~~in ~~below~~a single analysis.

~~Known~~We asprovide ~~LAESI®~~bioanalytical services that ~~(Laser~~support ~~Ablation~~the ~~Electrospray~~development ~~Ionization),~~of ~~our~~new ~~technology~~pharmaceuticals ~~platform~~and isother ~~exclusively~~products ~~licensed~~by ~~from~~providing ~~The~~detailed ~~George~~molecular ~~Washington~~information ~~University (“GWU”).~~as Werequested ~~have~~by ~~subsequently~~our clients. ~~completed~~For ~~the~~example, ~~development~~our oftechnology addresses the ~~first~~molecular ~~fully~~information ~~automated~~needs ~~LAESI~~of ~~instruments~~immunotherapy and ~~requisite proprietary~~therapeutic ~~software~~protein ~~suites,~~drug ~~used~~development. We ~~for~~can ~~LAESI~~provide ~~data~~both ~~analysis~~visual and ~~for~~analytical ~~molecular~~evaluation ~~imaging~~of –therapeutic ~~the~~efficacy ~~direct~~and the analysis ~~and visualization~~ of ~~molecules~~drug intarget ~~cells~~tissues and ~~tissue~~tumor microenvironments. ~~LAESI~~Our ~~technology~~clients isinclude ~~currently~~pharmaceutical, ~~the~~chemical ~~subject~~and ofbiotechnology ~~eleven~~companies, ~~issued~~and ~~patents~~academic and ~~over~~government ~~40 peer-reviewed publications~~laboratories.

~~LAESI~~“Bioanalytics” isand ~~intended to meet the broad need~~“molecular ofinformation” ~~the~~refer ~~biologist~~here ~~for~~to the ~~direct, unbiased~~ identification and characterization of ~~molecules in biological samples. By virtue of LAESI’s improved speed and~~ the ~~comprehensive~~proteins, ~~datasets it generates~~metabolites, ~~the~~lipids ~~Company~~and isother ~~pursuing~~biologically active ~~its~~molecules ~~vision~~that ofare ~~what~~produced itby ~~believes will~~all beliving acells ~~new~~and ~~era~~life offorms. ~~human~~and ~~molecular information, where~~ the ~~molecular~~use ~~networks~~ of ~~human~~proprietary ~~disease~~machine ~~will~~learning bealgorithms ~~clearly elucidated, with~~(AI) ~~data~~to ~~more~~analyze ~~rapidly~~these ~~available,~~very ~~thereby~~large ~~accelerating~~data ~~pharmaceutical development and improving healthcare~~sets.

~~Protea~~Our ~~has~~Business applied its core technology to establish commercial leadership in the emerging field of mass spectrometry imaging (“MSI”) services. MSI is a revolutionary capability that for the first time enables the identification of all classes of biologically-active molecules produced by cells, and combines this with the ability to instantly spatially-display the molecules in tissue histology sections. MSI can be performed with no sample preparation, and no labeling or antibody techniques, thereby integrating direct molecular identification with tissue pathology.Strategy

~~The~~PBI ~~Company~~is ~~intends~~developing totwo ~~achieve~~primary ~~its~~ business ~~objectives~~ by leveraging its core MSI technology and associated bioanalytical mass spectrometry platforms to improve the availability, comprehensiveness and usefulness of molecular information to address the needs of pharmaceutical research, biomarker discovery, agriculture and other life science research markets.areas:

~~The~~Bioanalytical ~~Company’s commercial development is centered in three business lines:~~Diagnostics

·We ~~Molecular~~are ~~Information~~creating ~~Services~~a –new ~~the~~class ~~Company~~of ~~believes~~bioanalytics-based, molecular ~~that~~tests wefor ~~are~~ the ~~commercial~~improved ~~leader~~diagnosis inand ~~providing~~management ~~multimodal~~of ~~MSI~~cancer. ~~services,~~We ~~combining~~believe ~~LAESI,~~our ~~MALDI, and optical microscopy. Our~~ proprietary ~~services~~bioanalytics ~~enable~~technology ~~the~~will ~~identification~~provide more accurate and ~~quantitation~~unambiguous ofresults ~~both~~for ~~small~~use ~~molecules~~in ~~(e.g.~~the ~~lipids~~diagnosis and ~~metabolites)~~management ~~and~~of ~~large molecules (e~~cancer.g. ~~proteins)~~We ~~and~~employ ~~our~~proprietary ~~services~~“machine ~~portfolio,~~learning algorithms” ~~inclusive~~on ~~of MSI~~tissue, ~~proteomics,~~targeting ~~metabolomics,~~data ~~lipidomics~~generated ~~and~~from ~~bioinformatics~~our isproprietary ~~unique~~workflows into ~~the~~provide ~~industry.~~a ~~Our~~statistically ~~clients~~supportive ~~include major pharmaceutical, chemical and biotechnology companies;~~diagnostic decision.

·Our ~~LAESI~~test ~~Instruments,~~methodology ~~Software~~has ~~and~~been ~~Consumables~~developed –and wenow ~~offer~~applied to our first ~~proprietary~~cancer ~~LAESI DP-1000 instrument~~test, ~~software~~for ~~and~~the ~~bioanalytical~~differential ~~consumables~~diagnosis toof ~~corporate~~malignant ~~and academic research laboratories; and~~melanoma.

·To ~~Molecular~~advance ~~Diagnostics~~the ~~and~~development ~~Clinical~~of ~~Research~~a –broad werange ~~apply~~of ~~our~~new ~~multimodal~~tests, ~~MSI~~we are ~~technologies~~developing ~~and~~partnerships ~~workflows in partnership~~ with top- tier medical research institutions ~~to co-develop new, molecular diagnostic tests~~ that ~~the~~combine ~~Company~~our ~~believes~~expertise ~~can~~with ~~be used to improve~~ the ~~diagnosis~~institutions’ medical ~~and~~knowledge ~~prognosis of cancer~~ and ~~provide requisite information useful in predicting the outcome of cancer treatment~~resources. ~~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.~~

Bioanalytical Services

We provide bioanalytical services that support the development of new pharmaceuticals by providing detailed molecular information as requested by our clients. Employing our proprietary technology and methods, we can provide integrated proteomics, metabolomics, protein characterization and imaging solutions. Our mass spec imaging methods can identify biologically-active molecules produced by cells, then instantly spatially-display the molecules (both two- and three-dimensional) in tissue (histology) sections.

We will continue to develop new bioanalytics technology to improve the availability, comprehensiveness, and usefulness of molecular information to address the needs of our clients.

We will add to our list of platform extending partners, to bundle our services with theirs, to expand our total available services market opportunities.

Our Commercial Offering

Bioanalytical Services

We provide bioanalytical services that support the development of new pharmaceuticals and other products by providing detailed molecular information as requested by our clients, to help them achieve their drug development objectives. Understanding the distribution of a drug, assessing drug localization, its molecular derivatives, metabolites and the cell “molecular profile” affected by a candidate drug compound, can provide insight into the efficacy of the drug and its overall molecular impact. As examples, our services can provide molecular information to answer the following questions:

Is my drug reaching its intended molecular target and cell population?

Are there changes in the molecular production of the cells as a result of our drug?

Are there molecular “biomarkers” that will tell us if patients are responders?

We offer services for the identification and characterization of both small molecules (e.g., lipids and metabolites) and large molecules (e.g. proteins). We offer mass spec imaging services that provide both small and large molecule 2D and 3D molecular imaging capabilities. With our collaboration partner Agilent (NYSE: A), we develop new methods for the characterization of monoclonal antibodies for the biopharmaceutical industry.

The Company’s “Mass Spec Imaging” services enable the identification of biologically-active molecules produced by cells, and combines this with the ability to instantly spatially-display the molecules (both two- and three-dimensional) in tissue sections. LAESI imaging can be performed without sample preparation, labeling or antibody techniques, thereby integrating direct molecular identification with tissue pathology. Since the sample is not touched, data is unbiased and rapidly available.

Our proprietary LAESI technology is also capable of rapidly analyzing micro titer well plates filled with biofluids such as blood, urine or serum. The cycling time per well can be less than 10 seconds. This profiling speed is incredibly useful for researchers with large numbers of samples who are interested in a rapid “snapshot” of the molecular content in a well.

Because LAESI operates at ambient pressure (non-vacuum), it is the only laser based mass spectrometry imaging technology that can analyze vacuum incompatible samples such as living cell cultures and bacterial colonies. Due to this unique capability, LAESI can be used to analyze a bacterial colony, and then that colony can be re-incubated and analyzed at a later time, enabling biodynamics studies on living samples for the first time. Below is a LAESI mass spec image of a bacterial colony. This application can be used to rapidly screen and discover potential new pharmaceuticals produced from bacteria and fungi. In addition, LAESI can be used to monitor the production of a specific compound being overexpressed for increased production and yield in bioprocessing workflows.

LAESI is the only laser based mass spectrometry imaging technology that performs a volumetric sampling on biological samples. All other biological mass spectrometry imaging technologies perform surface analysis or desorption whereby they are only extracting small amounts of molecular information. This volumetric sampling is a key, unique advantage, which enables three-dimensional analysis and imaging. Our LAESI software then compiles the molecular data into planes representing each layer of sample analyzed by the LAESI system.

Below is a three-dimensional (3D) LAESI mass spectrometry image that shows the distribution of a molecule in a contact lens. The left image shows the contact lens (in gray) with the two-dimensional image of a specific compound mapped in the lower quarter of the lens. The right image shows the same data but in a three-dimensional view, mapping the distribution of the compound throughout the depth of the lens. This type of imaging can provide insight into lens materials as well as biomolecules adhering to the lens after being worn. Source: The Company

LAESI two-dimensional ion map image of a live bacterial colony showing the spatial distribution of an antibiotic molecule (green) and a biomolecule produced by the bacterial cells (orange). The bacterial colony in gray is analyzed by the LAESI system directly on the plate at ambient pressure without any manipulation. The colony could then be incubated for further time-course studies, since it was not removed from the plate. This as-is analysis enables rapid profiling or screening for antibiotics or other compounds that could feed into the drug development pipeline. The ProteaPlot software maps the distribution of these compounds as an overlay across the bacterial colony. Source: Shrestha B., Walsh C.M., Boyce G.R., Nemes P. (2016) Microprobe MS imaging of live tissues, cells, and bacterial colonies using LAESI. In: Cramer R. (eds) Advances in Maldi and Laser-Induced Soft Ionization Mass Spectrometry. Springer, Cham, pp 149-167.

Bioanalytical Products

We developed and brought to market related, proprietary consumable products for use in molecular analysis, including Progenta™ reagents - acid labile surfactants used to solubilize proteins for mass spectrometry analysis.

Bioanalytical Diagnostics

We are creating a new class of bioanalytics-based, molecular tests for the improved diagnosis and management of cancer. We believe our proprietary bioanalytics technology will provide more accurate and unambiguous results for use in the diagnosis and management of cancer. To advance development of our cancer molecular diagnostic assays, we intend to expand our collaborations with major medical centers for the joint development of additional tests. These external collaborations are structured to afford access to the expertise of top tier medical professionals to support the test development processes. Internally, we are focused on the following:

Increasing the overall robustness and statistical power of the assays by increasing the number of samples used to create the training sets in the algorithms developed for each assay.

Standardizing the sample preparation and complete sample analysis workflow to create an industrialized process that is robust, reproducible and transferrable to other testing facilities.

Delivering the test results to a defined set of analytical performance specifications, which is required in the CLIA (Clinical Laboratory Improvement Amendments) testing environment.

Engaging medical professionals for early access to our molecular diagnostic assays for assessment of patient samples in a pre-clinical environment.

We are in discussions with large industry providers to commercialize these assays via out-licensing arrangements. We also are planning to in-license related assays and technologies to be offered as clinical tests within a future CLIA laboratory. We are assembling the infrastructure to create a bioanalytics CLIA lab with the goal to commence offering our first test to patients and clinicians nationwide in 2018.

Melanoma diagnosis - Yale Collaboration

We established a collaborative research initiative with The Yale University School of Medicine that employs our technology to differentiate benign melanocytic nevi from malignant melanoma, by identifying unique protein expression profiles within the cells. 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, and Dr. Erin Seeley, our Principal Investigator.

To date we have analyzed 229 patients that were classified at 96% accuracy into 128 malignant melanomas and 101 benign nevi cases. The assay has produced 90% sensitivity and 92% specificity between malignant and benign patients in a validation set of 50 cases per group. The assay is also classifying based on 8 subtypes of melanoma. Additional samples are planned for analysis to increase the sample set to over 1000 patients. The results from our current study will be completed in 2017.

The U.S. market for analysis of indeterminate or borderline analysis of malignant melanoma is approximately $720 million annually. About 500,000 skin biopsies are labeled as indeterminate or borderline every year in the U.S. Moreover, in a recent study where 13 pathologists reviewed the same 75 samples, there was a very high discordance between their individual diagnoses of the same samples. (Gerami, et al. Am J Surg Pathol 2014;38:934–940). More accurate, sensitive and unbiased testing is needed to address samples where the diagnosis is initially indeterminate.

Oncology and wound healing – Collaboration Agreement with Massachusetts General Hospital

In July 2017, we entered into Collaborative Research Agreement with the MGH for the joint development of new medical diagnostic technology in the fields of oncology and wound healing. We will sponsor two collaborative research projects with the Vaccine and Immunotherapy Center (VIC), a partnership of the Massachusetts General Hospital and Harvard Medical School.

The two projects are titled “Information Layering on Immunohistochemistry with Mass Spectrometry Imaging as a Novel System for Immunotherapy Assessment and Prognosis in Cancer”, and “Using Mass Spectrometry Imaging as a Novel Predictive Diagnostic Tool for the Rapid Assessment of Chronic Wounds”. Under the Terms of the Agreement, the Company will have the exclusive right to negotiate exclusive or non-exclusive, royalty-bearing licenses, for commercial purposes, to patent rights resulting from inventions occurring during the Term of the collaborative research agreement.

The Company is obligated to pay MGH a total of $489,000 for the two studies over the course of the year to cover direct and indirect costs. In addition, we will be obligated to pay the patent costs. The Term of the Agreement is for one year, and can be terminated by mutual consent; also, Protea may terminate the agreement or any specific research plan at any time in its sole discretion by giving 60 days advance written notice.

We believe that if the results of either or both studies are positive, it could greatly enhance the demand for our mass spectrometry tests and services for hospitals, physicians and other health care facilities and significantly increase our revenues.

We were able to obtain the collaboration agreement with MGH 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 720,000 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 720,000 shares. For further information, see “Certain Relationships and Related Transactions” on page 56 of this prospectus.

Our Technology, Research and Development

Bioanalytical Diagnostic Technology

To support our development of a new class of bioanalytics-based molecular tests, we developed a proprietary software suite known as “Histology Guided Mass Spec Imaging (HG-MSI).” The software enables pathologists to combine traditional microscopy and histology with high resolution mass spectrometry molecular imaging, allowing researchers to share, annotate and direct the analysis of specific tissue morphologies and cell subpopulations by mass spec imaging. With HG-MSI, molecular profiling data are collected from discrete locations within a tissue section using a histology stained section as a guide. The digital tissue scans are visually analyzed by pathologists, who annotate specific areas for further analysis. The annotated areas are then targeted by mass spectrometry to acquire a chemical fingerprint of the representative area. This chemical information can then be used to identify specific molecules of interest and map the biomolecules present in a visualized morphology. This workflow is applicable to all classes of biomolecules (e.g., proteins, peptides, lipids, metabolites) and can be carried out on both fresh frozen and formalin fixed, paraffin embedded (FFPE) tissue specimens. We have analyzed a number of tissues with a known diagnosis to create a training set of data. The training set contains a spectrum of peptides that are indicative of malignant or benign melanoma. The training set was used to create a machine learning algorithm that can be applied to tissues of unknown diagnosis.

(1) Source: “Mass Spectrometry Imaging - an objective and reliable method to differentiate between benign melanocytic nevi and malignant melanomas”, Rossitza Lazova, MD¹ and Erin H. Seeley, PhD²; ¹Department of Dermatology, Yale University School of Medicine, New Haven, CT. ²Protea Biosciences, Inc., Morgantown, WV; October, 2015 Annual meeting of the American Society of Dermatopathology, San Francisco, CA.

~~Industry~~LAESI ~~and~~bioanalytics ~~Market Overview~~technology

WeLAESI ~~believe~~(Laser ~~there~~Ablation isElectrospray ~~a large and broad-based~~Ionization) ~~market~~technology ~~opportunity~~was ~~for~~invented ~~molecular~~in ~~information.~~the ~~The~~laboratory ~~market~~of ~~opportunity~~Professor ~~can~~Akos beVertes, ~~viewed~~Ph.D., inDept. ~~terms~~ of ~~the~~Chemistry, ~~primary~~The ~~markets~~George ~~for~~Washington University (GWU), and ~~the platform~~exclusively-licensed ~~technologies~~to ~~that~~Protea ~~generate,~~on ~~molecular information~~[DATE].

~~Molecular~~LAESI ~~Information~~employs ~~Markets:~~a ~~The~~proprietary (patented) ~~Preclinical~~method ~~Pharmaceutical~~that ~~Research~~utilizes ~~and~~the ~~Biomarker~~water ~~Discovery~~content ~~Markets~~in a sample (native or applied) to transition the sample into a gas state, where it can be analyzed by a mass spectrometer. LAESI accomplishes this without requiring the sample to be touched. By eliminating sample preparation, the biological sample can be analyzed without the possible contamination, bias or sample loss that occurs with current techniques, which require the introduction of chemicals, or the destruction of the sample itself, in order to enable analysis by mass spectrometry.

~~Preclinical~~We ~~pharmaceutical~~successfully ~~research~~completed ~~refers to~~ the ~~discovery~~development of ~~and~~prototype ~~testing~~instrumentation of ~~new~~LAESI ~~therapeutic~~technology, ~~compound~~which ~~candidates~~integrates ~~prior~~with tolaboratory ~~their~~instruments ~~use~~known inas ~~human~~mass ~~clinical trials~~spectrometers. ~~For every 5,000-10,000~~The ~~preclinical~~Company ~~drug~~believes ~~candidates,~~that ~~only~~LAESI ~~five~~technology ~~enter~~has ~~human~~the ~~clinical~~potential ~~trials.~~to ~~There~~significantly isimprove athe ~~substantial~~availability ~~failure~~of ~~rate,~~molecular ~~estimated~~information ~~that, even after~~in ~~completing~~pharmaceutical ~~all~~research ~~preclinical~~as ~~toxicology~~well ~~and~~as ~~efficacy~~many ~~testing,~~other ~~90%~~fields ofincluding ~~drug~~agriculture, ~~candidates~~pathology, ~~fail~~biomarker ~~after~~discovery, ~~entering~~biodefense ~~human~~and ~~testing (Nature Reviews 2004)~~forensics.

~~There~~Because isLAESI aoperates ~~great~~at ~~need~~ambient ~~to obtain higher~~pressure ~~quality~~(non-vacuum), ~~datasets~~it ~~more~~is ~~rapidly~~the toonly ~~better~~laser ~~identify~~based ~~the~~mass ~~most~~spectrometry ~~promising~~imaging ~~drug~~technology ~~candidates.~~that ~~The~~can ~~Pharmaceutical~~analyze ~~Research~~vacuum ~~and~~incompatible ~~Manufacturers~~samples such ofas ~~America~~living ~~(“PhRMA”),~~cell ancultures ~~industry~~and ~~group~~bacterial ~~comprised~~colonies. ofDue 45to ~~United~~this ~~States-based~~unique ~~biopharmaceutical~~capability, ~~companies~~LAESI ~~had~~can be used to analyze a ~~total~~bacterial colony, ofand ~~$49.58~~then ~~billion~~that incolony ~~research~~can ~~and~~be ~~development~~re-incubated ~~expenditures~~and inanalyzed ~~2012.~~at Ofa ~~this~~later time, ~~$11.82~~enabling ~~billion~~biodynamics ~~was~~studies ~~spent~~ on ~~prehuman/preclinical~~living ~~functions, which~~samples ~~represented~~for 23the first time.8% ofBelow ~~all~~is ~~R&D~~a ~~expenditures.~~LAESI ~~This~~mass ~~figure,~~spec ~~which~~image isof ~~only~~a ~~comprised~~bacterial ofcolony. This ~~R&D~~application bycan ~~PhRMA~~be ~~member~~used ~~companies, does~~to ~~not~~rapidly ~~include~~screen ~~R&D~~and ~~expenditures~~discover potential bynew ~~government~~pharmaceuticals ~~agencies~~produced ~~such~~from asbacteria ~~the~~and ~~National~~fungi. In ~~Institute~~addition, ofLAESI ~~Health~~can ~~(NIH)~~be ~~and~~used ~~National~~to ~~Institute~~monitor the production of ~~Cancer~~a ~~(NIC)~~specific orcompound ~~domestic~~being ~~and~~overexpressed ~~international~~for ~~biopharmaceutical~~increased ~~companies~~production ~~that~~and ~~are~~yield ~~not~~in ~~members~~bioprocessing ~~of PhRMA~~workflows.

~~Biomarker~~LAESI ~~discovery~~ is the ~~process~~only ~~of finding~~laser ~~specific~~based ~~molecules,~~mass orspectrometry ~~panels~~imaging oftechnology ~~molecules,~~ that ~~have~~performs ~~been~~a ~~found~~volumetric tosampling beon ~~regulated~~biological insamples. ~~conjunction~~All ~~with~~other ~~specific~~biological ~~disease states or~~mass ~~drug~~spectrometry ~~treatments~~imaging ~~relevant~~technologies toperform ~~human~~surface ~~health~~analysis ~~and~~or ~~disease.~~desorption ~~The~~whereby ~~global~~they ~~market~~are ~~for~~only ~~biomarkers~~extracting insmall ~~2011~~amounts ~~was~~of ~~$13.8 billion and expected to~~molecular ~~reach $37~~information.68 ~~billion~~This involumetric ~~2022.~~sampling ~~The~~is ~~global~~a ~~market~~key, ~~for~~unique ~~biomarkers includes biomarker development and technologies~~advantage, ~~biomarker~~which ~~diagnostics and~~enables ~~biomarker~~three-dimensional ~~services.~~analysis ~~Biomarker development~~ and ~~technologies accounted for 53~~imaging.1% ofOur ~~the global market in 2011 and is expected~~LAESI tosoftware ~~account~~then ~~for~~compiles ~~43.3% of~~ the ~~2022~~molecular ~~market.~~data Ininto ~~2011,~~planes ~~biomarker~~representing ~~diagnostics~~each ~~and~~layer ~~biomarker~~of ~~services~~sample ~~accounted~~analyzed ~~for~~by ~~40.2%~~the ~~and~~LAESI 6system.7% ofThis allows the ~~market~~integration ~~and are expected to account for 49.8% and 6.9%~~ of ~~the~~mass ~~market~~spectrometry indata ~~2022,~~with ~~respectively~~current ~~(Visiongain~~pathology ~~2012. Biomarkers: Technological~~ and ~~Commercial~~microscopic ~~Outlook~~imaging ~~2012 - 2022)~~techniques.

~~Biomarker~~LAESI discovery is the essential starting point for the development of new prognostic and diagnostic tests, as well as for the emerging field of predictive medicine, where biomarkers can identify those patients who will respond well to specific therapies. The human disease biomarker sector seeks to identify and validate biomolecules that are associated with the onset and progression of a specific disease, and thus can become new diagnostics, or biomarkers, to be used for personalized medicine, as well as companion diagnostics to guide new pharmaceutical development for specific patient subgroups.Illustration

~~Biomarker~~As ~~discovery~~depicted ~~can~~above, beLAESI ~~classified~~technology ~~into~~utilizes ~~four~~a ~~major~~mid-range ~~sub~~infrared ~~segments:~~laser ~~genomics,~~pulse ~~proteomics,~~that ~~bioinformatics,~~rapidly ~~metabolomics~~(microseconds) ~~and~~boils ~~other,~~the ~~which~~water isin ~~based~~a ongiven ~~the~~sample ~~technology~~creating ~~used~~an ~~and class~~ablation ofevent ~~molecule~~ that results isin ofthe ~~interest.~~biomolecules ~~Genomics~~from isthat ~~focused~~particular onarea ~~the~~being ~~analysis~~ejected ofvertically ~~DNA~~where ~~through~~they ~~the~~meet ~~use~~a stream of ~~polymerase~~electrospray ~~chain reaction~~droplets orand ~~DNA~~become ~~sequencing~~charged tobiomolecules ~~extract~~or ~~genetic information from biological samples~~ions. The ~~Human~~ionized ~~Genome~~sample ~~Project,~~then ~~which~~moves ~~was~~through ~~completed in 2003, marked the sequencing of~~ an ~~entire~~inlet ~~human~~tube ~~genome~~and ~~that~~into ~~led to~~ the ~~discovery~~mass ~~that~~spectrometer ~~there are 20,000 - 25,000 human genes. Proteomics~~where is the ~~study~~mass ofanalyzer ~~proteins,~~determines ~~which~~the ~~are synthesized by DNA and are biologically active. It is estimated that there are up~~ mass-to-charge ~~400,000 distinct~~ratio ~~proteins~~of in the ~~human~~representative ~~body.~~biomolecules ~~Bioinformatics is comprised of tools~~ and ~~technologies~~their ~~such~~relative asabundance ~~software~~is ~~programs that are used~~determined toby ~~analyze~~the ~~large sets of data~~detector.

Additional molecular information markets addressed by Protea include agriculture, microbiology, consumer products and medical devices.

Molecular Information Platform Technologies

The two primary technologies for identifying and characterizing the biologically active molecules that are produced by cells are mass spectrometry and indirect molecular imaging.

Mass Spectrometry

Mass spectrometry is a 50 year old sector and represents the backbone of the bioanalytics industry. Mass spectrometers are used in a wide range of research applications in academic, pharmaceutical and chemical/industrial based laboratories worldwide, including their use to identify molecules in biological samples based on their “mass to charge” ratios.

According to TechNavio’s 2011 - 2015 Global Mass Spectrometry Market report, the global mass spectrometry market was valued at U.S. $3.9 billion in 2013 and is expected to reach US $5.9 billion by 2018, growing at a compound annual growth rate (“CAGR”) of 8.7% from 2013 to 2018. In 2013, it was estimated that there was a total installed base of 6,200 mass spectrometers in the large pharmaceutical companies sub-segment alone. The CAGR for the installed base for this sub-segment is expected to be 3.7% during the period 2011-2015. In 2013, a total of 715 mass spectrometers were expected to be installed, which includes both new mass spectrometer systems and replaced mass spectrometer systems in this sub-segment. Mass spectrometers are used extensively in the biopharmaceutical, industrial, chemical, materials and forensics industries as well as in academic research institutions.

~~According~~The toLAESI ~~the~~DP-1000 ~~SDI~~instrument ~~Report,~~is the ~~mass~~Company’s ~~spectrometry instrument~~prototype ~~market~~embodiment ~~can~~of beproprietary ~~segmented~~LAESI ~~into~~technology. ~~three~~It ~~major~~is ~~sub~~a ~~segments:~~fully-automated ~~Biopharmaceuticals,~~instrument ~~Academia~~ and ~~Industrial~~accepts ~~which~~all ~~represented 40%,~~types ~~29% and 31%~~ of ~~the~~liquid ~~market, respectively, as cited in Strategic Directions International, Inc.~~ and ~~Global~~tissue ~~Assessment Report 12th Edition, The Laboratory Analytical & Life Science Instrumentation Industry Market Forecast 2012 - 2016, October 2012~~samples.

~~Protea~~Molecular ~~estimates~~(ion) ~~that~~Map ~~the~~of ~~current~~a ~~LAESI instruments~~dosed ~~are~~pharmaceutical, ~~compatible with approximately 6~~clozapine,~~000~~ ~~mass~~using ~~spectrometers~~ProteaPlot ~~worldwide~~Software. ~~that~~The ~~are~~histologically ~~produced~~stained bysection ~~Waters~~is ~~Corp.~~highlighted ~~(NYSE:WAT)~~to ~~and Thermo~~show ~~Fisher~~the ~~Scientific~~correlation ~~(NYSE:TMO).~~of ~~Protea’s~~the ~~LAESI~~dosed ~~platform~~drug ~~development~~to ~~roadmap~~its ~~includes~~target ~~enabling~~in ~~LAESI~~the ~~instrument~~cerebral ~~compatibility with~~cortex ~~mass~~and ~~spectrometers~~other ~~from~~regions ~~all~~in ~~major~~the ~~manufacturers~~brain.

~~The~~LAESI ~~global~~instruments ~~mass~~employ ~~spectrometry~~proprietary ~~market is~~software ~~dominated~~developed by ~~five~~the ~~key~~Company ~~players:~~that ~~Agilent~~creates ~~Technologies~~“molecular ~~Inc~~maps” - the ability to instantly display the distribution of molecules throughout tissue sample in both two- and three-dimensional imaging. The software facilitates the storage and display of datasets in a user friendly, ~~Bruker~~intuitive ~~Corp~~software environment., ~~Danaher~~LAESI ~~Corp~~software displays the data obtained by mass spectrometry analysis combined with actual images of the tissue and cell samples. Thus, ~~Thermo~~mass ~~Fisher~~spectrometry ~~Scientific~~data ~~Inc.~~can ~~and~~be ~~Waters~~integrated with a sample’s tissue ~~Corp~~architecture.

Company	Market Cap USD ($B)			Annual Sales USD ($M)
Agilent (NYSE:A)	$	18.69	B	$	580	M
Bruker (Nasdaq:BRKR)	$	3.82	B	$	290	M
Danaher (NYSE:DHR)	$	51.77	B	$	640	M
Thermo Fisher (NYSE:TMO)	$	48.47	B	$	550	M
Waters Corp. (NYSE:WAT)	$	8.77	B	$	440	M

The ability to display molecular information obtained from LAESI as direct molecular images is of great advantage to pathologists who can analyze samples of choice with no sample preparation, and can rapidly obtain molecular information along with traditional microscopic analysis. Also, the remaining sample is not destroyed so ion location information can be obtained and the ion maps can be visualized over the sample of origin for integration with more traditional biological analyses such as histology.

Source: TechNavio Analysis, Global Mass Spectrometry Market 2011 - 2015. Capital IQ as of July 31, 2014.

Quantitative Whole Body Autoradiography (“QWBA”)

Autoradiography is defined as an image recorded on a photographic film or plate produced by the radiation emitted from a specimen, such as a section of tissue that has been treated or injected with a radioactively labeled isotope.

Traditional bioanalytical measurements determine concentrations of drug and metabolites in plasma; however, most drugs exert their effects in defined target tissues. As there is no clear relation between concentrations in plasma and those in tissue, alternative methods must be employed to study the absorption, distribution, metabolism and excretion properties of new therapeutic agents. The FDA requires distribution data in most new NDA applications prior to Phase II study initiation. Quantitative whole-body autoradiography is currently used in the drug development process to determine the distribution and concentrations of radiolabeled test compounds in laboratory animals. Quantitative whole-body autoradiography can provide information on tissue PKs, penetration, accumulation and retention. Although the technique is considered the industry standard for performing preclinical tissue distribution studies, It's disadvantages include the high cost and the radiolabeling of the molecule of interest and radiolabeling can take 90 days longer depending on the complexity (synthesis process and label required). Another shortcoming of the technique is that QWBA can take weeks to perform and only indicates the drug associated radioactivity. Additional studies then need to be performed to obtain the drug profile in tissues.

Mass spec imaging eliminates the need for a radiolabel, takes days instead of weeks, looks at the molecule and its metabolites directly eliminating the need for additional profiling studies, and is significantly less expensive than QWBA.

The Total Global indirect molecular imaging market is estimated at $7.3 billion according to a 2009 report by Scienta Advisors /Kolorama Information. The overall pre-clinical imaging (in vivo) market was valued at $790 million in 2012, and is estimated to grow at an annual growth rate of 14.5% over the next five years per a January 2013 Pre-Clinical Molecular Imaging Market report by marketsandmarkets.com. The global market for molecular imaging devices was valued at $2 billion in 2012. This market is expected to reach $2.2 billion in 2013 and nearly $3 billion by 2018, with a CAGR of 6.2% for the period of 2013 to 2018 according to a November 2013 report by BCC-Global Markets for Molecular Imaging Technology and Devices.

Limitations of Existing Technologies

There are a number of limitations to the existing platforms, as described below:

Mass Spectrometry

· Sample Preparation is Required: Mass spectrometry requires sample preparation that is tedious, time consuming and results in operating complexity that requires experienced and highly skilled users.

· Loss of Spatial Distribution Information: Traditional mass spectrometry requires that a sample be homogenized, sometimes purified, or have additional chemicals introduced to it in order to be analyzed by a mass spectrometer. These processes destroy the tissue structure, which eliminates the ability to show where a specific molecule is located within a given tissue region. Understanding where a specific compound is localized could provide insight into a given disease or treatment action.

· Limited Type and Number of Compatible Samples: Current mass spectrometry analysis occurs under vacuum conditions and therefore cannot analyze living cell samples such as bacterial colonies or cell cultures because the sample will be immediately destroyed as a result of the vacuum conditions. These are sample types used extensively in preclinical pharmaceutical research and biomarker discovery.

· Limited Imaging Capability: Mass spectra can be very complex data sets that are difficult to interpret and can have limited relevance to biology-centric applications. Additionally, traditional mass spectrometry analyses do not provide direct, spatial relationships with the sample. Normally, bulk sample is processed and analyzed, which causes loss of the spatial association and value.

Quantitative Whole Body Autoradiography:

· require radioactive labels that must be incorporated or synthesized in the drug to generate the images. As a result, they have half-lives, which can be as short as a few minutes in duration. The synthesis of these compounds takes time and requires highly trained technicians.

· are only able to analyze a few molecules in a single analysis. Typically, only the labeled molecules can be visualized and if the label does not become a part of any metabolites, then they remain invisible to the process.

· have resolutions that only reach the millimeter-scale level. While millimeter resolution enables the visualization of large anatomical components such as bones and organs, it is not adequate for tissue or cell-specific molecular analysis.

· can only detect the drug associated radioactivity and not the distribution of the molecule and its metabolites. Further investigation and follow on studies are required to identify the actual distribution profile.

· require special licensing for handling radioactive samples.

Advantages of LAESI Technology Platform

We believe that our proprietary LAESITM platform is disruptive technology that provides us with certain competitive advances over existing technologies and which we believe will become a new industry standard.

The LAESI platform eliminates two of the major drawbacks of traditional mass spectrometry - sample preparation and loss of spatial information. LAESI can analyze a wide range of sample types with no sample preparation required. In addition, samples such as a tissue section or cells can be analyzed “as is,” even live cells and bacterial colonies. LAESI technology generates big data molecular profiles of tissue sections, biofluids (blood, urine and serum) and many other sample types, including horticulture specimens, cell lines & pellets, bacterial colonies, hair fibers, contact lenses and hydrogels.

~~Enables~~Therapeutic ~~Mass~~Protein ~~Spectrometry Imaging:~~Characterization Protea's LAESI technology directly analyzes biological samples without the need to apply chemicals or introduce tags or tracers. Proprietary software developed at the company enables two- and three-dimensional direct molecular imaging, displaying the distribution of molecules in biological samples.Technology

~~Numerous~~The ~~Molecules~~field ~~per~~of ~~Analysis:~~biotherapeutics is advancing Itrapidly and, it is ~~not~~in ~~unusual~~need toof ~~detect~~innovative ~~over~~methods ~~1,000~~to ~~individual~~determine ~~molecules~~the indetailed astructures, ~~single~~including ~~experiment~~post-translational modification (“PTM”) analysis. ~~Larger~~PTM’s ~~databases~~are ~~aid~~changes in the ~~“molecular~~protein ~~eyesight” of~~after aformation ~~researcher,~~that ~~improving~~can ~~their~~enable ~~prospects~~or tochange ~~find~~the ~~new~~functionality of ~~biomarkers~~the orprotein. ~~molecular~~We ~~data~~collaborate ~~that~~with ~~will~~Agilent ~~provide~~(NYSE:A) to co-develop new ~~research~~bioanalytics ~~insight~~technology for improved therapeutic protein characterization.

NoAnother ~~Sample~~emerging ~~Preparation~~area ~~Required:~~of importance is ~~Protea’s~~host ~~LAESI~~cell ~~technology~~protein ~~analyzes~~analysis ~~samples~~as ~~directly~~part ~~without~~of the ~~need~~recombinant ~~for~~DNA ~~sample~~production ~~preparation other than standard tissue sectioning~~process. ~~Virtually~~ Host ~~all~~cells ~~sample~~used ~~types~~to ~~can~~generate ~~be inserted directly into~~ the ~~LAESI instrument where they are ablated (put into gas phase), ionized~~protein ~~(charged)~~of ~~and~~interest ~~sent~~also ~~into~~produce ~~the mass spectrometer, with this process taking~~ a ~~fraction~~number of alow ~~second.~~level ~~LAESI~~other ~~instrumentation~~proteins ~~employs user-friendly software~~ that ~~eliminates~~may ~~the~~serve ~~operation~~as ~~complexity~~contaminants ofin ~~traditional~~the ~~mass~~final ~~spectrometry~~protein product. Monitoring these ~~Molecular~~proteins ~~information~~can isbe ~~acquired~~indicative onof ~~samples in~~the ~~their~~purity ~~native~~and ~~state;~~overall ~~such~~efficiency ~~data~~of ~~can~~therapeutic beproduction ~~more useful, particularly to biologists~~process.

Minimal Sample Destruction: Because of the small spot size, the sample is only locally destroyed by the laser ablation pulse. With the use of positional stages, LAESI allows, the spatial localization of biomolecules within a sample, thereby enabling two- and three-dimensional direct molecular imaging.39

~~High~~Each ~~Throughput~~of ~~Sample~~these ~~Profiling: The~~and ~~LAESI~~other ~~platform~~pieces ~~also~~of ~~functions~~molecular information asare acritical ~~high~~to ~~throughput~~the ~~processing~~biopharmaceutical ~~system~~industry for ~~well~~monitoring ~~plate~~and controlling the safety, efficacy, and ~~bacterial~~stability ~~analysis.~~of biotherapeutics, ~~With~~and can drive decisions all the ~~ability to~~way ~~analyze~~from ~~samples~~the inresearch ~~seconds,~~and ~~researchers~~development ~~are~~phase ~~able~~through scale-up and production and to ~~quickly~~QA ~~screen~~batch ~~libraries~~testing. We have developed a suite of ~~compounds,~~optimized ~~strains,~~methods ~~and~~for ~~other~~the ~~assays~~characterization ~~very~~of ~~rapidly~~monoclonal antibodies for the biopharmaceutical industry.

~~Improvements~~Biotherapeutic inSoftware ~~Resolution:~~development ~~Protea's LAESI technology has the ability to produce images that have micron~~-~~scale~~ ~~resolution,~~collaboration ~~enabling~~with ~~imaging~~Protein ~~at the cellular level. This gives Protea the ability to image a select number of cells of interest in a given biological sample.~~Metrics

We have renewed our collaboration with California-based Protein Metrics Inc. for further applications development of their advanced analytical software for Protea’s bioanalytical services. By combining our high-resolution mass spectrometry molecular data with the analytical power of Protein Metrics software, we will develop bioinformatics tools that we can offer to facilitate the analysis of the structure of therapeutic proteins, including their disulfide linkages, glycoforms and other structural components.

DARPA Contract

In January 2014, the Company, as a subcontractor to GWU, was awarded a multi-year project with the Defense Advanced Research Projects Agency (“DARPA”). In addition to Protea, The Stanford Research Institute International and GE Global Research also collaborate on the project entitled, “New Tools for Comparative Systems Biology of Threat Agent Action Mechanisms.” A $15 million five-year project, the goal of DARPA’s Rapid Threat Assessment (“RTA”) program is to develop new methods to elucidate the mechanism of action of a threat agent, drug, biologic or chemical on living cells within 30 days from exposure. Uncovering the mechanism of action of such agents in 30 days, compared to the years currently required, could be key to the development of effective countermeasures. The molecular networks within living cells are vast and complex. Conventional approaches fail to capture the system-wide response of a living cell to a threat agent. We believe our participation in this project will result in new technology to accelerate the characterization of biological threat agents.

Proprietary reagents

We developed proprietary bioanalytical reagents and products to facilitate sample preparation prior to mass spectrometry analysis. Our proprietary products include new surfactants, the Progenta ™ acid labile surfactants that feature novel, acid cleavable formulations that are sample sensitive and fully compatible with mass spectrometry analysis.

Industry and Market Overview:

Malignant Melanoma

According to the American Cancer Society, there will be an estimated 87,110 new cases of melanoma diagnosed in the USA in 2017, and about 9,730 people are expected to die of melanoma. In the US, the skin biopsy rate has increased approximately 50% over an eight-year period between 2002 and 2009, and the overall melanoma incidence rate increased approximately 4% over the same period (Br J Dermatol, 2017, 76: 949–954.) As a standard clinical practice, there are one to two million biopsies performed each year to rule out melanoma. Of these biopsies, 25% cannot be definitively classified using routine histopathology (Am J Surg Pathol, 2009, 33, 1146-56). There can also be significant discordance between dermatopathologists in the diagnosis of melanocytic lesions. In one study, eight pathologists reviewed the same 37 slides, where 10 cases had one discordance and 14 cases had two or more discordances (Human Pathol. 1996, 27, 528-531.)

Currently, additional testing is necessary in order to assess the indeterminate skin biopsy samples. The current method for indeterminant diagnosis is using comparative genomic hybridization (CGH) and fluorescent in situ hybridization (FISH). Abbott Molecular Laboratories offers the commercially available FISH melanoma probe to target frequent chromosomal alterations (Histopathology 2012, 60, 706–714.). Both CGH and FISH methodologies are used to monitor chromosomal aberrations to better guide histopathologists to make a diagnostic decision, but there are drawbacks. Sample fixation, pretreatment and other preparation steps are key to good performance with FISH testing, and other sources of error include reproducibility issues and observer variation (Histopathology 2012, 60, 706–714.)

Advanced genetic testing services are available for melanoma patients, but these tests are predictive based on gene expression profiles and lack the ability to provide definitive pathologic diagnosis. Companies providing these services include Myriad Genetics and Castle Biosciences, for example. These tests measure expression of genes by a qRT-PCR (quantitative reverse transcription polymerase chain reaction) methodology, providing a risk based prognostic evaluation. While prognostics or providing insight into the risk or possible outcome is valuable, being able to provide a higher degree of confidence in the diagnostic is essential to the patients who have been biopsied specifically to determine the result of a questionable skin lesion.

We believe a more accurate and specific test is needed for clinicians to be confident in their diagnosis. We believe our mass spectrometry based technology provides a higher level of unbiased, data driven understanding of the molecular information present in the tissue sections. Our test uses the molecular fingerprint of proteins and peptides that have been expressed in the tissue, as indicators of disease. We feel that looking at proteins rather than genes is more accurate, since the proteins have truly been expressed in the tissues. Removing the subjective factor and understanding the proteins or biomarkers present in the tissue with advanced statistical power can enable more educated and confident decisions on treatment options. The approach we take includes sample preparation, analytical instrumentation and statistical power to deliver substantially more accurate and specific results to drive better treatment outcomes.

~~Improvement~~The inBioanalytics Analysis Speed: Due to the elimination of sample preparation and the rapid speed of LAESI, data can be made available in seconds to minutes. This factor makes LAESI attractive to users that have high-throughput molecular information applications (i.e., a large number of samples must be analyzed a limited number of times).Industry

AThe ~~LAESI~~largest ~~Mass~~segment ~~Spec~~of ~~Imaging~~the ~~Data~~bioanalytics market ~~File~~is comprised of the pharmaceutical industry’s use of bioanalytics to support the development of new therapeutics. The Pharmaceutical Research and Manufacturers of America (“PhRMA”), estimated a total of $49.58 billion in research and development expenditures in 2012. Of this, $11.82 billion was spent on prehuman/preclinical functions, which represented 23.8% of all R&D expenditures. This figure does not include non-PhRMA member companies, and R&D expenditures by government agencies such as the National Institute of Health (NIH) and National Institute of Cancer (NIC) or domestic and international biopharmaceutical companies that are not members of PhRMA.

~~LAESI~~The ~~image~~global Pharmaceutical services market is projected to reach USD 41.86 Billion by 2021 from USD 29.29 Billion in 2016, at a CAGR of ~~human~~7.4% ~~brain~~from ~~tissue~~2016 ~~showing~~to 2021. The market ~~marked~~is ~~localization~~expected to witness significant growth in the ~~gray~~coming ~~matter~~years ~~(left)~~due ~~for~~to the ~~lipid~~increased atdemand ~~756~~for ~~m/z,~~outsourcing of analytical testing and ~~white~~clinical ~~matter~~trial ~~(right)~~services ofmajorly aby ~~lipid~~pharmaceutical, ~~(m/z~~biopharmaceutical, ~~630)~~and medical device companies. ~~This~~The ~~dataset~~high-quality standards ~~shows~~in the ~~power~~pharmaceutical ofindustry, ~~LAESI~~rapid togrowth ~~provide~~in ~~distinct~~the ~~spatial~~biosimilars ~~localization~~and ~~visualized~~biologics market (biotherapeutics), rising demand for ~~these~~outsourcing services ~~two~~by ~~lipids~~pharmaceutical and biopharmaceutical companies, ~~which~~and ~~would~~increase bein ~~lost~~the ~~with~~number aof ~~traditional~~clinical trial activities are factors ~~approach.~~driving ~~(Anal~~the ~~Chem~~growth of this market. ~~2015~~(Contract ~~Jan~~Research ~~20;~~Organizations 87(2CROs): ~~1137–1144~~Services Market by Type, Therapeutic Area, End User - Global Forecast to 2021; marketsandmarkets.com; ~~Source~~October 2016; Report Code: ~~The~~PH ~~Company.~~4672)

~~Our~~Therapeutic ~~Technology~~proteins (known as “biopharmaceuticals,” “biotherapeutics” or “biologics”), represent a rapidly growing sector of the pharmaceutical industry. The global market for the largest biopharmaceutical component (“therapeutic antibodies”), was valued at USD 85.4 billion in 2015 and is expected to reach a value of USD 138.6 billion by 2024 with an annual growth rate of 5.7%. Rising incidence of cancer and other chronic diseases is serving as the key contributing factor for the growth of the monoclonal antibodies market. Increasing R&D pertaining to the development of therapeutic mAbs coupled with the structural complexity of therapeutic proteins and the increasing regulatory needs for molecular information all require new analytical capabilities from the bioanalytics industry. (Monoclonal Antibodies (mAbs) Market Analysis By Source, By Type of Production, By Indication, By End-use And Segment Forecasts, 2013 – 2024; Report ID: GVR-1-68038-280-8).

~~LAESI~~Bioreactors ~~Mass~~are used ~~Spectrometry~~to produce biopharmaceuticals, and bioreactor optimization is important for increasing production yields and for both control of the structure of the biotherapeutic. The global bioreactors market is expected to reach to USD 1,417 Million by 2021 from USD 955 Million in 2015, at a CAGR of 6.8% between 2015 and 2021. The increase in adoption of single-use technologies, use of hybrid technologies: single-use and stainless steel, growing popularity of single-use bioreactor among biopharmaceutical companies, and growing biologics are spurring the growth of the bioreactors market. Bioreactor R&D is expected to register the highest growth rate from 2016 to 2021 owing to increased bioreactor usage in process development. (Bioreactors Market by Scale Range, Material, Usage, Suppliers, End-User, Region - Global Forecast to 2021; marketsandmarkets.com; Publishing Date: September 2016; Report Code: BT 4613)

~~Protea~~A ~~exclusively~~related ~~licensed~~sector of the ~~technology known~~Bioanalytics asIndustry ~~Laser~~is ~~Ablation~~the ~~Electrospray~~identification ~~Ionization~~of (disease-specific molecular “~~LAESI~~biomarkers.”) ~~from~~Biomarkers ~~GWU~~are ~~in 2008~~specific molecules, ~~invented~~or inpanels ~~the laboratory~~ of ~~Professor Akos Vertes~~molecules, ~~Ph.D.~~that ~~Protea~~have ~~has~~been ~~completed~~found ~~the~~to ~~development~~be ofregulated ain ~~novel~~conjunction ~~bioanalytical~~with ~~instrument~~specific ~~platform~~disease ~~known~~states asor ~~the~~drug ~~LAESI DP-1000~~treatments ~~Direct~~relevant ~~Ionization~~to ~~System.~~human ~~This~~health ~~technology~~and ~~enables~~disease. ~~the~~The ~~direct~~human ~~identification~~disease ofbiomarker ~~proteins,~~sector ~~lipids~~seeks ~~and~~to ~~metabolites~~identify ~~in tissue, cells~~ and ~~biofluids,~~validate ~~such~~biomolecules asthat ~~serum~~are ~~and~~associated with ~~urine,~~the ~~without~~onset ~~any~~and ~~sample~~progression ~~preparation~~of ~~prior~~a tospecific ~~analysis. By eliminating sample preparation~~disease, ~~the biological~~and ~~sample~~thus can bebecome ~~analyzed~~new ~~without the possible contamination~~diagnostics, ~~bias~~ or ~~sample loss that occurs with the current techniques~~biomarkers, ~~which~~ ~~require~~to ~~the~~be ~~introduction~~used offor ~~chemicals~~personalized medicine, oras ~~the~~well ~~destruction~~as ofcompanion ~~the~~diagnostics ~~sample~~to ~~itself,~~guide innew ~~order~~pharmaceutical todevelopment ~~enable~~for ~~analysis~~specific bypatient ~~mass spectrometry~~subgroups. The ~~ProteaPlot~~global ~~software~~market for ~~then~~biomarkers ~~can~~in ~~display~~2011 ~~the~~was ~~data~~$13.8 ~~obtained~~billion byand ~~mass~~expected ~~spectrometry~~to ~~analysis~~reach ~~combined~~$37.68 ~~with~~billion ~~actual~~in ~~images~~2022. ofBiomarker ~~the~~development ~~tissue~~ and ~~cell~~technologies ~~samples~~accounted for 53.1% ~~Thus,~~of ~~mass~~the ~~spectrometry~~global ~~data~~market ~~can~~in be2011 ~~evaluated~~and inis ~~the~~expected ~~context~~to ofaccount ~~the~~for ~~biology~~43.3% of the ~~sample;~~2022 ~~this~~market. ~~allows~~In ~~the~~2011, ~~integration~~biomarker diagnostics ofand ~~mass~~biomarker ~~spectrometry~~services ~~data~~accounted ~~with~~for ~~current~~40.2% ~~pathology~~ and ~~microscopic imaging techniques~~6.7% ~~Data~~of isthe ~~available~~market inand ~~seconds~~are expected to ~~minutes,~~account ~~allowing rapid~~for ~~time~~49.8% ~~to results~~ and ~~the~~6.9% ~~capacity to analyze thousands~~ of ~~samples~~the market in ~~a single work period. As an example~~2022, arespectively ~~researcher~~(Biomarkers: ~~testing a~~Technological ~~new~~and ~~drug’s~~Commercial ~~effects~~Outlook on2012 ~~living~~– ~~cells~~2022; ~~can~~Visiongain ~~analyze~~2012). Of the ~~changes~~disciplines inwithin the ~~cells’~~biomarkers ~~metabolism~~research ~~across a specific time course~~area, ~~thereby almost~~Proteomics ~~immediately~~makes ~~obtaining~~up ~~data~~22% ~~as to the activity~~ of the ~~new~~total ~~drug~~market share. If ~~The Company believes~~ that ~~LAESI~~discipline translates ~~technology~~into ~~has~~ the ~~potential to~~service ~~significantly~~market, ~~improve~~that ~~the~~would ~~availability~~equate ofto ~~molecular~~$310M ~~information~~ in ~~pharmaceutical~~2016. (Biomarkers: ~~research,~~Technological asand ~~well as many other fields, including~~Commercial ~~agriculture,~~Outlook ~~pathology,~~2012-2022; ~~biomarker~~Visiongain ~~discovery, biodefense and forensics~~2012).

~~LAESI~~Mass ~~Illustration~~Spectrometry

Mass spectrometry is the gold standard methodology for bioanalytics. It is an analytical technique that ionizes chemical species and sorts the ions based on their “mass-to-charge ratio. It is a 100-year-old method that was originally used for radioisotope enrichment and chemical composition analysis. More recent developments in soft ionization techniques (e.g. electrospray and MALDI), drove advances in the use of mass spectrometry for the analysis of biomolecules, and have helped solidify biological mass spectrometry as the backbone of the Bioanalytics Industry. Mass spectrometers are used extensively in the biopharmaceutical, industrial, chemical, materials and forensics industries, as well as in academic research institutions.

Mass Spectrometry provides several advantages over traditional techniques where chemical information specific to the target protein, peptide or molecule, as well as impurities, is obtained in addition to the separation based upon physicochemical properties. Mass spectrometers are used in a wide range of research applications in academic, pharmaceutical and chemical/industrial based laboratories worldwide, including their use to identify molecules in biological samples based on their mass to charge ratios. The global mass spectrometry market was valued at U.S. $4.9 billion in 2015 and is expected to reach US $7.3 billion by 2020, growing at a compound annual growth rate (“CAGR”) of 8.1% from 2015 to 2020. (Mass spectrometry Market by Platform & by Application - Analysis & Global Forecast to 2020; marketsandmarkets.com; Publishing Date: November 2015; Report Code: AST 3787).

As depicted above, LAESI utilizes a mid-range infrared laser pulse that rapidly (microseconds) boils the water in a given sample creating an ablation event that results in the biomolecules from that particular area being ejected vertically where they meet a stream of electrospray droplets and become charged biomolecules or ions. The ionized sample then moves through an inlet tube and into the mass spectrometer where the mass analyzer determines the mass-to-charge ratio of the representative biomolecules and their relative abundance is determined by the detector.

Key LAESI Components

ProteaPlotTM Direct Molecular Mass Spec Imaging Software

Using its own internal software development team, Protea developed the software platform ProteaPlot to address two other limitations of traditional mass spectrometry: the inability to determine the location of a molecule or ion in a sample and the difficulty a non-analytical chemist has in interpreting mass spectrometry data. ProteaPlot is designed to create images known as ion maps or “molecular maps,” from traditional mass spectrometry data (mass spectrum). These molecular maps depict the distribution of a specific molecule in a given sample and the relative intensity (abundance) of that molecule.

The image of a rat brain below is a screen shot from the ProteaPlot software program. A traditional mass spectrum can be seen on the right side of the image. The image to the left is an ion map of clozapine, an anti-psychotic drug prescribed for the treatment of schizophrenia, with a mass-to-charge ratio (m/z) of 270 Da. The colorimetric scale represents the relative intensity of this ion with blue representing the regions with the lowest relative intensity, the areas in red representing the regions with the highest relative intensity and the areas in black representing regions where that molecule is not present at all.

ProteaPlot Software Screen showing molecular (ion) distribution image.

Molecular (ion) Map of a dosed pharmaceutical, clozapine, using ProteaPlot Software. The histologically stained section is highlighted below to show the correlation of the dosed drug to its target in the cerebral cortex and other regions in the brain.

Proprietary MSI Software

In January 2015, the Company announced it had completed the in-house development of a novel workflow and software suite. Known as “Histology Guided Mass Spec Imaging (HG-MSI),” the workflow and software enables pathologists to combine traditional microscopy and histology with high resolution mass spectrometry molecular imaging, allowing researchers to share, annotate and direct the analysis of specific tissue morphologies and cell subpopulations by mass spec imaging. With HG-MSI, molecular profiling data are collected from discrete locations within a tissue section using a histology stained section as a guide. The digital tissue scans are visually analyzed by pathologists, who then annotate specific areas for further analysis. The annotated areas are then targeted by mass spectrometry to acquire a chemical fingerprint of the representative area. This chemical information can then be used to identify specific molecules of interest and map the biomolecules present in a visualized morphology. This workflow is applicable to all classes of biomolecules (e.g., proteins, peptides, lipids, metabolites) and can be carried out on both fresh frozen and formalin fixed, paraffin embedded (FFPE) tissue specimens.

This web interface can be accessed via any device (e.g., laptop, tablet, cell phone, etc.) allowing the end user to visualize, annotate and download microscopy images from anywhere in the world. The development of the ProteaScope portal and HG-MSI workflow and service enables researchers to obtain molecular information from specific regions of tissues, combining optical morphology with spatial biomolecular information Clinicians can share, annotate and direct the analysis of specific tissue morphologies and cell subpopulations by MSI. Understanding the molecular differences between select cell sub-populations supports the identification and characterization of biomarkers within these regions that improves the differential diagnosis of cancer.

Our Business Strategy

Protea intends to achieve its business objectives by leveraging its knowhow and technology to improve the availability, comprehensiveness and usefulness of molecular information to address the needs of the preclinical pharmaceutical research, biomarker discovery and other life science markets. Key strategic elements are the following:

· Maintain and advance our commercial leadership in developing and providing mass spectrometry imaging services, combined with existing bioanalytical workflows, to improve the availability, comprehensiveness, and usefulness of molecular information to address the needs of our pharmaceutical research, biomarker discovery, agriculture and other life science research clients.

· Collaborate with platform extending companies including three-dimensional tissue suppliers, biomarker discovery and other commercial technology platforms where the Company’s technology can advance and add value to their capabilities.

· Advance the Company’s market by developing and validating an expanding portfolio of LAESI capabilities and continuously expand the commercial applications for the technology. Our customers continuously provide guidance for new applications and workflows which we can address with the LAESI platform.

· Continuously advance and upgrade our software offering, and introduce new software-driven data bioinformatics capabilities. Protea is focused on creating software and analytical tools that enhance the value of the data, including bioinformatics datamining tools. In January 2015, we announced our development of new software, known as ”Histology Guided Mass Spec Imaging (HG-MSI).” The software enables pathologists to combine traditional microscopy and histology with high resolution mass spectrometry molecular imaging, allowing researchers to share, annotate, and direct the analysis of specific tissue morphologies and cell subpopulations by mass spec imaging.

· Partner with first tier medical research laboratories to apply our core MSI technology and workflows to create new, molecular diagnostic tests that can be used to improve the diagnosis and prognosis of cancer. Our current programs target the differential diagnosis and prognosis of malignant melanoma and the characterization of subpopulations of cells in lung adenocarcinoma

Our Commercial Offering

Molecular Information Services

We believe we are the commercial leader in the offering of MSI services. Our clients send their tissue and biofluid samples directly to the Company’s laboratory, where samples are analyzed utilizing the Company’s state of the art mass spectrometry instrumentation, scientific expertise and bioinformatics capabilities. We combine our proprietary LAESI platform with MALDI workflows. Our clients include major pharmaceutical, biotechnology, chemical and medical device and consumer products companies. The services unit is operated within a “Quality by Design” environment, which is necessary to meet the internal research and development standards of pharmaceutical and clinical research clients.

The Company’s MSI services represent a revolutionary capability that for the first time enables the identification of all classes of biologically-active molecules produced by cells, and combines this with the ability to instantly spatially-display the molecules (both two- and three-dimensional) in tissue histology sections. MSI can be performed without sample preparation, labeling or antibody techniques, thereby for the first time integrating direct molecular identification with tissue pathology. Since the sample is not touched, data is unbiased and more rapidly available, providing molecular information that rapidly answers questions critical to the drug development process, such as, “is my drug actually getting inside the target cells,” “is my immune modulating agent changing the molecular output of the tumor cell,” or “how long did it take for the drug to enter the target cells” as well as questions of drug concentration and duration.

We have developed workflows specifically for the characterization of therapeutic antibodies, to provide both visual and analytical certainty of therapeutic efficacy, and validation of therapeutic design. Once target tissues are imaged, data analysis can include quantitation of the dosed therapeutic, distribution analysis, and other bioinformatics workflows, including statistical and pathway analysis.

In January 2014, the Company, as a subcontractor to GWU, was awarded a multi-year project with the Defense Advanced Research Projects Agency (DARPA). In addition to Protea, The Stanford Research Institute International and GE Global Research also collaborate on the project entitled, “New Tools for Comparative Systems Biology of Threat Agent Action Mechanisms.” A $14.6 million five year project, the goal of DARPA’s Rapid Threat Assessment (“RTA”) program is to develop new tools and methods to elucidate the mechanism of action of a threat agent, drug, biologic or chemical on living cells within 30 days from exposure. Uncovering the mechanism of action of such agents in 30 days, compared to the years currently required, could be key to the development of effective countermeasures. The molecular networks within living cells are vast and complex. Conventional approaches fail to capture the system-wide response of a living cell to a threat agent.

LAESI Instrument, Software and Consumables

This technology enables the direct identification of proteins, lipids and metabolites in tissues, cells and biofluids, such as serum and urine. Data is available in seconds to minutes, allowing rapid time to results and the capacity to analyze thousands of samples in a single work period. As an example, a researcher testing a new drug’s effects on living cells can analyze changes in the cells’ metabolism across a specific time course, thereby almost immediately obtaining data as to the activity of the new drug. The Company believes that LAESI technology has the potential to significantly improve the availability of molecular information in pharmaceutical research, as well as many other fields, including agriculture, pathology, biomarker discovery, biodefense and forensics.

LAESI instruments employ proprietary software developed by the Company that creates “molecular maps” - the ability to instantly display the distribution of molecules throughout tissue sample in both two- and three-dimensional imaging. The Company currently offers the LAESI Desktop Software and ProteaPlot software that facilitates operating the instrument, and the storage and display of datasets in a user friendly, intuitive software environment. The LAESI and ProteaPlot software includes tools for post-processing of LAESI-MS data, generation of molecular maps/images, and mass spectral comparison for regions of interest. LAESI software display the data obtained by mass spectrometry analysis combined with actual images of the tissue and cell samples. Thus, mass spectrometry data can be integrated with a sample’s tissue architecture.

We have developed and brought to market related, proprietary consumable products for use in molecular analysis, including REDIchipsTM (Resonance-Enhanced Desorption Ionization - sample target plates with nanopost array surfaces for matrix-free laser desorption ionization of small molecules); and, ProgentaTM a(acid labile surfactants use to solubilize proteins for mass spectrometry analysis).

LAESI Applications

Direct Molecular Imaging of Tissues and Cell samples

The LAESI is capable of rapidly analyzing and mapping the spatial distribution of biomolecules in tissue. The LAESI DP-1000 currently has a resolution of 200 (micron) that allows it to analyze a small number of cells per ablation, which occurs in a matter of seconds. The LAESI DP-1000 can analyze and image both human and animal tissue. It is not unusual for over a thousand individual molecular entities to be identified in a single experiment. Below is a LAESI mass spec image of two molecules shown simultaneously in a mouse pup section.

LAESI 2 dimensional map image of four molecules shown simultaneously in a mouse pup brain section

Rapid Profiling of Biofluids and Assays

LAESI is capable of rapidly analyzing micro titer well plates filled with biofluids such as blood, urine or serum. The LAESI Desktop Software makes the automation of this type of analysis very easy for the user. A grid pattern can be quickly drawn for 96, 384 or 1536 sample well plates and the number of ablations per well can be set. Once the user’s settings have been entered the analysis will assess each well systematically and takes less than ten seconds to complete per well. This profiling speed is incredibly useful for researchers with a large number of samples interested in a rapid “snapshot” of the molecular content in a well. This screening application can aid in assay monitoring and the detection of specific compound presence or production.

In Vivo Direct Molecular Imaging

Because LAESI operates at ambient pressure (non-vacuum) it is the only laser based mass spectrometry imaging technology that can analyze vacuum incompatible samples such as living cell cultures and bacterial colonies. Due to this unique capability, LAESI can be used to analyze a bacterial colony and then that colony can be re-incubated and analyzed at a later time, enabling biodynamics studies on living samples for the first time. Below is a LAESI mass spec image of a bacterial colony. This application can be used to rapidly screen and discover potential new pharmaceuticals produced from bacteria and fungi. In addition, LAESI can be used to monitor the production of a specific compound being overexpressed for increased production and yield in bioprocessing workflows.

LAESI 3 dimensional ion molecular map image of a live bacterial colony showing the spatial distribution of an antibiotic molecule (green) and a biomolecule produced by the bacterial cells (orange)

Three-Dimensional LAESI Mass Spectrometry Imaging

LAESI is the only laser based mass spectrometry imaging technology that performs a volumetric sampling. All other mass spectrometry imaging technologies perform surface analysis or desorption whereby they are only extracting small amounts of molecular information. This is a key, unique advantage, as the LAESI DP-1000 mid-IR laser enables it to penetrate samples in the Z-plane, which enables 3 dimensional analysis and imaging. The ProteaPlot software then is able to recompile the molecular data into planes representing each layer of sample analyzed by the LAESI system. Below is a three-dimensional LAESI mass spectrometry image that assessed the distribution of a molecule in a contact lens.

LAESI 2 Dimensional (left) and 3 Dimensional (right) Ion Molecular Map Image of a Contact Lens, displaying the presence, location and intensity of a molecule

Source: The Company

Molecular Diagnostics and Clinical Research

We have established a collaborative research partnership with the Memorial Sloan-Kettering Cancer Center and the Dana-Farber Cancer Institute. The first target of the collaboration is early stage lung adenocarcinoma. The objectives of the collaboration are to demonstrate that different cancer cell sub-groups within a lung cancer will have different molecular profiles and will behave differently. The goal is to define these molecular differences, to identify the sub-group of cancer cells with the worst prognosis that are most likely to recur, thereby enabling earlier treatment intervention, and to use these findings to achieve lung adenocarcinoma tumor cell “molecular profiling,” leading to more precise treatment selection and higher survivor rates.

The market for analysis of indeterminate or borderline analysis is $720 million annually, based upon current pricing. Moreover, 41% of metastatic melanomas were missed by experts in a recent study of borderline melanocytic lesions (need reference). About 500,000 skin biopsies are labeled as indeterminate or borderline every year.

We are advancing our MSI melanoma test with further clinical studies.

(1) Source: “Mass Spectrometry Imaging - an objective and reliable method to differentiate between benign melanocytic nevi and malignant melanomas”, Rossitza Lazova, MD1 and Erin H. Seeley, PhD2; 1Department of Dermatology, Yale University School of Medicine, New Haven, CT. 2Protea Biosciences, Inc., Morgantown, WV; October, 2015 Annual meeting of the American Society of Dermatopathology, San Francisco, CA.

Intellectual Property

Protea currently owns eight patents (with additional pending applications) and has an exclusive license to fourteen additional patents and other pending applications owned by GWU. The subjects of the patent applications include: 1) Laser Ablation Electrospray Ionization (“LAESI”) for high throughput and imaging mass spectrometry (two- and three-dimensional biomolecular imaging); 2) nanopost arrays (“NAPA”) for high sensitivity and matrix-free analysis of biological samples in MALDI mass spectrometers; 3) novel acid-cleavable chemical surfactants; and 4) protein microscope.

Research and Development

The Company’s primary research focus is advancing the capabilities of its proprietary LAESI technology platform, related technologies and software. New advances and applications for the LAESI technology platform and software include increasing spatial resolution, improving sensitivity, expanding applications for LAESI direct molecular imaging services, developing new software database structures and next generation instrumentation.

In addition, through the development of diagnostics, the Company is developing intellectual property and knowledge relating to the presence or absence of specific molecules in normal and disease-specific tissues, to be used to validate a new tissue analytics-based class of tests for the differential diagnosis of cancer.

The Company devotes most of its R&D resources to advancing its core LAESI technology platform. New advances and applications for the LAESI technology platform are in development, including the integration of the LAESI-DP 1000 system with expanded mass spectrometer vendor coverage and advancing the spatial resolution of the LAESI technology.

In 2014, we teamed with GWU, Stanford Research International (SRI) and GE Global Research and were awarded up to $14.6 million for a cooperative agreement from DARPA’s Rapid Threat Assessment program.

The goal of DARPA’s Rapid Threat Assessment program is to develop new tools and methods to rapidly define the mechanism of action of a threat agent, drug, biologic or chemical on living cells - within 30 days from the time of exposure. Uncovering the mechanism of action of such agents in 30 days, compared to the years currently required, will aid the development of threat mitigations and countermeasures. Such a breakthrough capability could also reduce the strategic advantage associated with rapidly emerging chemical or biological threats in a national security context. Current methods fail to capture the system-wide response of living cells to a threat agent. To accomplish this objective, Protea has developed a novel silicon wafer known as a “REDIchip” (resonance enhanced desorption ionization), exclusively licensed to Protea by GWU that will help to achieve the goal of real time threat identification on the battlefield.

The company has successfully commercialized the first generation REDIchip product in late 2015. REDIchip can be used on commercially available MALDI mass spectrometers and has numerous applications outside of rapid threat assessment such as biomarker discover, clinical research, polymer science, food safety and others. The Company believes that REDIchip has advantages over existing MALDI mass spectrometry due to the ability to analyze samples without the addition of a chemical matrix, which enables a more sensitive, rapid, and quantitative workflow. The REDIchip is easily integrated into existing MALDI-MS instrumentation and can improve throughput, reduces background signal, and enables reproducible small molecule characterization and quantitation results.

Sales and Marketing

~~The~~Our ~~Company~~bioanalytical ~~markets~~services ~~its~~customers ~~products~~include major ~~and~~pharmaceutical, ~~services worldwide~~biotech, ~~utilizing~~industry aand ~~combination~~life ofscience ~~field~~medical ~~sales,~~and ~~distributors,~~research ~~in-house~~institutions. By ~~sales~~working ~~support~~collaboratively with ~~and~~customers, ~~web-based~~we ~~marketing.~~help ~~The~~to ~~Company~~define ~~attends exhibitions in~~ the ~~U.S.~~experimental ~~and~~plan, ~~Europe~~develop tonew ~~present~~methods ~~its products~~required, and indeliver the ~~last~~data 12or ~~months~~products ~~has~~in ~~exhibited~~a atprofessional manner. Many ~~over~~of ~~eight~~our ~~major~~collaborative ~~industry exhibitions~~efforts ~~and~~are ~~over~~presented ~~ten~~through ~~regional~~publication, ~~conferences.~~either ~~Protea's~~at ~~sales~~national ~~and~~or ~~marketing~~international ~~staff~~scientific conferences ~~consists~~and ofmany ~~three~~have ~~field~~resulted ~~sales~~in ~~professionals, two~~peer-reviewed ~~inside~~journal ~~sales~~articles. Presenting ~~representatives~~our technologies, services, and ~~two~~diagnostic capabilities ~~marketing~~in ~~professionals.~~scientific Insettings ~~addition,~~has ~~Protea~~resulted ~~established~~in aan ~~global~~increase ~~co-marketing~~in ~~agreement with~~awareness ~~Waters~~and ~~Corp~~business growth. These ~~(NYSE:WAT),~~channels ahave also ~~major~~enabled ~~mass~~the ~~spectrometry~~formulation ~~focused~~of ~~company~~relationships ~~headquartered~~between inkey ~~Milford,~~strategic ~~Massachusetts~~collaborators inand ~~2012~~customers.

InWe ~~2015,~~market ~~Protea~~our ~~announced~~services aand ~~joint~~products ~~collaboration~~worldwide, ~~with~~utilizing ~~Agilent~~a ~~Technologies,~~combination ~~Inc.~~of ~~(NYSE:~~our A)own ~~(“Agilent”),~~field tosales ~~develop~~organization, ~~new~~distributors, ~~bioanalytical~~in-house ~~workflows~~sales insupport ~~order~~and toweb-based ~~meet~~marketing. ~~the~~Protea ~~emerging~~attends ~~needs~~exhibitions ofin the ~~growing~~U.S. ~~biopharmaceutical~~and ~~industry~~overseas to present our services and products. Protea ~~Under~~has ~~the~~established ~~terms~~marketing partnerships ofwith ~~the~~VWR ~~Memorandum~~International ofand ~~Understanding,~~Fisher ~~Protea,~~Scientific ~~using~~for ~~Agilent instrumentation~~global ~~combined~~sales ~~with~~and ~~its~~marketing. These ~~technology,~~purchasing ~~will~~channels are ~~develop~~widely ~~workflows~~used ~~that~~within ~~focus~~research onorganizations ~~developing~~and ~~new~~enable ~~methods~~rapid ~~for~~purchasing ~~the~~and ~~field~~receipt of ~~biotherapeutics~~our bioanalytical products.

In ~~March~~ 2016, ~~the~~we ~~Company~~established ~~entered~~a ~~into~~co-marketing an agreement with anMatTek ~~advertising~~Corporation ~~firm~~(“MatTek”), ~~for~~which ~~certain~~allows ~~services~~Protea to beinclude ~~rendered~~MatTek’s tohuman ~~the~~cell ~~Company~~based ~~over~~in vitro antissue ~~estimated~~models ~~ninety~~with ~~(90)~~Protea’s ~~day~~proprietary ~~period~~molecular imaging services.

~~Protea~~In ~~also~~2016, ~~engages~~we ~~distributor~~renewed ~~partners~~a co-marketing agreement ~~globally~~with ~~including~~Protein ~~VWR~~Metrics ~~International~~for ~~and~~further ~~Fisher~~application ~~Scientific~~development of their analytical software for our bioanalytical services.

In April 2017, we entered into a co-marketing agreement with Proteos, Inc. (“Proteos”), which allows Protea to promote Proteos’ protein expression and purification service business, and serve as the provider for their mass spectrometry analytical needs.

In January 2017, we launched a new Company website which features our Corporate “Resource Center”, where researchers can access publications and application notes and other support materials on the Company’s bioanalytical services and technologies. The website also allows researchers to purchase products directly and provides a breadth of information about our technologies and services.

Competition

~~The~~We ~~Company~~believe ~~believes~~ that ~~its~~our technology provides ~~differs~~significant ~~substantially~~improvements ~~from~~over what is currently on the market. Bioanalytics is a major ~~sector~~global ~~of the biotechnology~~ industry, and competition is expected to be broad-based.; ~~However~~however, ~~the~~we ~~Company~~believe ~~also believes~~ that the ~~mass spec~~ industry also affords opportunities for commercial partnerships, ~~and~~such as ~~that~~our ~~industry~~collaboration ~~participants~~with ~~can~~Agilent ~~also be potential partners~~(NYSE:A). The following list of competitors is not intended to be exhaustive, and there are other existing competitors and there likely will be new potential competitors in the future. Many competitors, including most of the companies identified below, are much larger than Protea in terms of capital, employees and other measures of size and have been in business longer than Protea and thus may have greater market acceptance or brand recognition:

·Bioanalytical Imabiotech (Loos, France, http://www.imabiotech.com/?lang=en). Imabiotech develops software that enables quantitative MALDI mass spectrometry imaging and offers only MALDI based mass spectrometry services to pharmaceutical and biotechnology companies.diagnostics

·Competitors ~~Kinemed~~include Myriad Genetics (~~Emeryville,~~U.S.) ~~CA,~~Castle ~~http://www~~Biosciences (U.~~kinemed~~S.~~com~~), and traditional dermatopathological services. Myriad ~~Kinemed~~Genetics ~~works~~is ~~with~~a ~~major~~molecular ~~pharmaceutical~~testing company ~~and~~offering ~~biotechnology~~a ~~companies~~suite toof ~~making~~tests ~~predictions~~in the areas of ~~efficacy~~companion diagnostics, hereditary cancers, melanoma, neuroscience, prostate cancer, and ~~toxicity~~rheumatoid arthritis. The majority of Myriad’s tests screen for specific genes that have been documented to be ~~accelerate~~involved ~~drug~~in ~~development~~the specific diseases, and ~~reduce~~many of them provide a risk based scale for the ~~overall~~potential ~~cost~~of a patient to develop the disease.

·Bioanalytical ~~Prosolia (Indianapolis, IN, www.prosolia.com). Prosolia develops and markets DESI, a mass spectrometry imaging technology and provides DESI based~~ services ~~to pharmaceutical and biotechnology companies.~~

·Competitors ~~Molecular~~include ~~Imaging~~Quintiles Transnational Holdings Inc. (U.S.), Laboratory Corporation of America Holdings (U.S.), Pharmaceutical Product Development, LLC (U.S.), PAREXEL International Corporation (U.S.), and Icon Plc (Ireland), PRA Health Sciences, Inc. (~~Ann~~U.S.), ~~Arbor~~InVentiv Health Inc. (U.S.), MICharles River Laboratories International Inc. (U.S.), ~~http://www~~INC Research Holdings Inc.~~molecularimaging~~ (U.~~com~~S.), and Wuxi PharmaTech (Cayman) Inc. (China). Many ~~Molecular~~of ~~Imaging~~these iscompetitors afor ~~CRO~~services ~~that~~operate ~~provides~~at invarious ~~vivo~~steps ~~pharmacology~~across the drug discovery and ~~small~~development ~~animal~~process from disease target identification, preclinical testing, toxicology and safety analysis, and clinical trial design and manufacturing. Competitors in ~~vivo~~the field of mass spectrometry imaging services toinclude ~~pharmaceutical~~ImaBiotech ~~and~~based ~~biotechnology~~in ~~companies~~Loos, France.

49 License & Corporate Agreements & Intellectual Property

~~Strategic~~Intellectual ~~Relationships~~Property

~~Over~~Protea ~~the~~currently ~~past~~owns eight ~~years~~patents we(with additional ~~have~~pending ~~established collaborative~~applications) ~~research~~and ~~initiatives~~has ~~with~~an ~~certain~~exclusive ~~major~~license ~~universities~~to sixteen additional patents and ~~teaching~~other ~~medical~~pending ~~facilities~~applications owned by GWU. ~~These~~The subjects of the patent applications include: Laser Ablation Electrospray Ionization (“LAESI”) for high throughput and imaging mass spectrometry (two- and three-dimensional biomolecular imaging), novel surfactants for proteomics research, and novel cancer diagnostic assay technologies.

Agreement with The George Washington University (“GWU”)

In December 2008, the Company entered into an Exclusive License Agreement, as amended on February 22, 2010 and from time to time thereafter with GWU (Washington, D.C.) for the LAESI technology developed in the laboratory of 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. Under the terms of the license agreement, the Company has the exclusive, worldwide rights to commercialize the technology. The Company is obligated to pay expenses for the preparation, filing and prosecution of future related patent applications governed by the license agreement and related license fees, annual royalties equal to 5% of the net sales of products and processes sold by the Company, or an affiliate that utilizes the subject technology, after taking into account the annual minimum royalty fees described below, and 50% of payments received by the Company in connection with any sublicense of the technology under the agreement. On the first anniversary of either the date on which the Company first sells a product or service utilizing the technology underlying the agreement or the date on which the Company enters into its first sublicense agreement, whichever occurs first (the “First Sale Date”), the Company is required to pay GWU a non-refundable minimum royalty payment equal to $5,000. The university is also entitled to the following non-refundable minimum royalty payments on each subsequent anniversary of the First Sale Date: second anniversary: $10,000; third anniversary: $15,000; fourth anniversary and continuing annually through the expiration or termination of the agreement: $20,000.

Unless earlier terminated in accordance with its terms, the 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. Currently, the LAESI patent (US 7,964,843) is the underlying patent and will expire on May 21, 2026. The Company has made all the payments required under the agreement, and is otherwise in full compliance with the terms of the agreement.

In November 2012, the Company entered into a Patent License Agreement with GWU for Laser Desorption/Ionization and Peptide Sequencing on Laser-Induced Silicon Microcolumn Arrays (Matrix) and Nanophotonic Production, Modulation and Switching of Ions by Silicon Microcolumn Arrays technology developed in the laboratory of Akos Vertes Ph.D. Under the terms of the license agreement, the Company has an exclusive, worldwide license to make, have made, use, import, offer for sale and sell the licensed products. The Company paid a license initiation fee of $25,000 and a license diligence resource fee of $12,500 in 2013. In addition, the Company is required to pay $20,000 each year thereafter to develop and commercialize the products, $30,000 milestone payment upon the first sale of a licensed product, and royalties will be 7% of the net sales of licensed products and 5% of the net sales of combination products for combined cumulative net sales up to $50 million. Thereafter, royalties reduce to 6% and 4%, respectively, after taking into account quarterly minimum royalties of $1,500 for the first four quarters after the first sale of a licensed product, $2,500 for the next four quarters, $3,500 for the next four quarters and $6,000 for each succeeding quarter. ~~The Company has made all the payments required under the Patent License Agreement, and the Company is otherwise in full compliance with the terms of the Patent License Agreement.~~

GWU and DARPA

In January 2014, the Company, as a subcontractor to GWU, was awarded a multi-year project with the Defense Advanced Research Projects Agency (“DARPA”). In addition to Protea, The Stanford Research Institute International and GE Global Research also collaborate on the project entitled, “New Tools for Comparative Systems Biology of Threat Agent Action Mechanisms.” A $15 million five-year project, the goal of DARPA’s Rapid Threat Assessment (“RTA”) program is to develop new tools and methods to elucidate the mechanism of action of a threat agent, drug, biologic or chemical on living cells within 30 days from exposure. Uncovering the mechanism of action of such agents in 30 days, compared to the years currently required, could be key to the development of effective countermeasures.

Yale License Agreement

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 Clinical Imaging 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 2117 and an annual license maintenance royalty of $5,000 in each anniversary year thereafter. We also 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.

Agreement with Agilent

In 2015, we entered into a Memorandum of Understanding (the “MOU”) with Agilent Technologies, Inc. (NYSE: A) (“Agilent”), to develop new bioanalytical workflows in order to meet the emerging needs of the growing biopharmaceutical industry. Under the terms of the MOU, Protea, using Agilent instrumentation provided by Agilent combined with its expertise, will develop workflows to improve the characterization of protein therapeutics including monoclonal antibodies and new methods for the field of metabolomics.

Agreement with West Virginia University (“WVU”)

On December 21, 2005, the Company entered into an Exclusive License Agreement (the “WVU Agreement”) with the West Virginia University Research Corporation, a nonprofit West Virginia corporation (“WVURC”) acting for and on behalf of West Virginia University. Under the terms of the WVU Agreement, the Company is required to pay (i) a license fee equal to $25,000 due within 90 days of the date on which the first notice of allowance is issued by the United States Patent and Trademark Office or a similar foreign country with respect to the technology underlying the WVU Agreement; (ii) annual royalties equal to 4% of the gross sales of products and services that utilize the subject technology which are payable semi-annually within 30 days of June 30 and December 31 of each calendar year covering gross sales received during the preceding year; and (iii) expenses for the preparation, filing and prosecution of related patent applications. In the event the Company is required to license any intellectual property from third parties in order to practice or commercialize the technology underlying the WVU Agreement, the royalty payments will be reduced by the lesser of (a) 50% or (b) the royalty and licensing fees actually incurred by the Company to license the intellectual property rights from such third party. If such a reduction is applicable, WVURC is entitled to earned royalties of at least 2% on gross sales of products and services that utilize the WVU subject technology. For any sublicense granted to sub-licensees, WVURC is entitled to 10% of any license fee and other payments or fees received from the sublicensee, which is due and payable within ten days of receipt by the Company from the sublicensee. At present, the Company sponsors collaborative research in the WVU School of Medicine Department of Pathology and the Mary Babb Randolph Cancer Center (MBRCC).

Unless earlier terminated in accordance with its terms, the WVU Agreement automatically terminates upon the later of: (i) the expiration of the last patent to expire issued in respect of the licensed technology, or (ii) 20 years from the first commercial sale by the Company of the last licensed product included in the subject technology by amendment to the WVU Agreement. At present, there are no patent applications being pursued by WVU in respect of the technology licensed to the Company under the WVU Agreement. The Company has made all the payments required under the WVU Agreement, and the Company is otherwise in full compliance with the terms of the WVU Agreement.

Memorial Sloan-Kettering Cancer Center and the Dana-Farber Cancer Institute

Yale License Agreement

We established a collaborative research initiative with The Yale University School of Medicine that employs the Company’s MSI technology to differentiate melanoma from benign spitz nevi cells. In a recent publication, we showed that MSI can differentiate between benign melanocytic nevi and malignant melanomas in formalin-fixed, paraffin-embedded tissue sections based on proteomic differences, that MSI is an objective and reliable method that may be helpful in difficult cases, in which rendering a firm diagnosis of either benign nevus or malignant melanoma may be very difficult.

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 Clinical Imaging 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 also 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.

Sale of European Subsidiary

In December 2014, Protea Biosciences, Inc., our wholly-owned subsidiary, completed the sale of 100% of the issued and outstanding capital stock of ProteaBio Europe SAS, to AzurRx BioPharma, Inc. (“AzurRx”). Pursuant to the terms of the Stock Purchase and Sale Agreement (the “SPA”), we received the following consideration in exchange for the subsidiary:

(i) an aggregate amount of $300,000 including $200,000 in cash and $100,000 from the forgiveness of outstanding indebtedness of the Company owed to AzurRx; (ii) 100 shares of Series A Preferred Stock of AzurRx (the “Preferred Stock”) that is convertible into 33% of the issued and outstanding common stock of AzurRx; and (iii) the right to receive certain other contingent consideration to be paid upon the satisfaction of certain events, including (a) a one-time milestone payment of $2,000,000 due within (10) days of receipt of the first approval by the FDA of a New Drug Application or Biologics License Application for a Business Product (as such term is defined in the SPA); (b) royalty payments equal to 2.5% of net sales of Business Product up to $100,000,000 and 1.5% of net sales of Business Product in excess of $100,000,000 and (c) ten percent (10%) of the Transaction Value (as defined in the SPA) received in connection with a sale or transfer of the pharmaceutical development business of Protea Europe.

Effective upon the closing of the Sale, Thijs Spoor, a former director of the Company, was appointed as the sole director and Executive Chairman of AzurRx. While Mr. Spoor was a director of the Company, he did not receive any compensation for his services rendered as an executive officer or director of AzurRx. Pursuant to the SPA, so long as the Company owns such number of shares of Preferred Stock that are convertible into twenty percent (20%) or more of the issued and outstanding common stock of AzurRx, the Company will have the right to designate at least one member of AzurRx's board of directors.

In November 2015, the Company converted 29 shares of Series A Preferred Stock of AzurRx into 707,416 shares of common stock of AzurRx. Subsequently, the Company entered into various stock purchase agreements for the sale of such shares of common stock of AzurRx and received gross proceeds of $910,000 as of December 31, 2015.

In addition, the Company entered into various Stock Purchase Agreements to sell shares of its AzurRx Common Stock and received aggregate proceeds of $1,262,100 from the sale.

Government Regulation

The Company’s products and services are sold for research use only and are not subject to U.S. Food and Drug Administration or other government agency approval.

Sources and Availability of Raw Materials

The Company does not believe that it has any critical issues of availability of raw materials or vendors where there are not multiple sources for the raw materials or vendor support that its business requires.

Environmental Matters

We are subject to various laws and governmental regulations concerning environmental matters and employee safety and health in the United States and other countries. U.S. federal environmental legislation that affects us includes the Toxic Substances Control Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). We are also subject to regulation by the Occupational Safety and Health Administration (OSHA) concerning employee safety and health matters. The United States Environmental Protection Agency (EPA), OSHA, and other federal agencies have the authority to promulgate regulations that have an effect on Protea’s operations. As of the date of this ~~filing~~prospectus, we ~~did~~ did not have any accrued liabilities related to environmental matters.

Employees

As of the date of this ~~filing~~prospectus, the ~~Company~~ Company currently has 3528 full-time and 1 part-time employee, consisting of 1712 technicians and scientists (63 PhD level), 8 management/administrative (21 PhD level), ~~3 IT/software development,~~ and 7 sales and marketing (1 PhD level). None of our employees are represented by a union.

Facilities

The Company leases laboratory and office space of approximately 10,412 square feet located at White Birch Towers II, 1311 Pineview Drive, Suite 501, Morgantown, WV 26505. The lease has an initial five-year term beginning on April 1, 2012, (the “Initial Term”). The rent during the Initial Term is equal to $16.10 per square foot per year or $13,969 per month. The Company has the exclusive option to renew the term of the lease for an additional five years following the expiration of the Initial Term, (the “Renewal Option”). The Renewal Option must be exercised at least 120 days prior to the end of the Initial Term. If the Renewal Option is exercised, the rent payable during the Renewal Period shall be equal to $17.75 per square foot per year; however, the Land Lord agreed to renew the lease at $16.10 per square foot per year. We have the option to terminate the lease after reaching the thirty-seventh month of the then existing term upon 90 days’ advance written notice to the lessor and the payment of an amount equal to two months’ rent.

In June 2017, the Company has leased additional space of approximately 4,236 square feet at White Birch Towers II, 1311 Pineview Drive, Suite 200, Morgantown, WV 26505. The lease has an initial three-year term beginning on June 12, 2017, (the “Initial Term”). The rent during the Initial Term is equal to $16.10 per square foot per year or $5,683.30 per month. The Company has the exclusive option, if the lease is free from defaults beyond any applicate notice and cure periods, to renew the term of the lease for two (2) additional (1) year periods following the expiration of the Initial Term, (the “Renewal Option”). The Renewal Option must be exercised at least 120 days prior to the end of the Initial Term. If the Renewal Option is exercised, the renewal term shall be the same terms, covenants and conditions as the original term.

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.

~~There~~In ~~are~~2016, ~~currently~~the noCompany ~~pending~~had ~~legal~~received ~~proceedings~~three court summons for past due accounts payables. The claims total $213,032 and are related to ~~which~~amounts the Company orhas ~~any~~properly ofaccounted for in its ~~subsidiaries~~accounting isrecords, including late-payment fees and interest, if applicable. In December 2016, the Company entered into a ~~party~~confessed orjudgement with one of ~~which~~the ~~any~~vendor ofagreeing ~~their~~to ~~property~~make ispayment ~~the~~of ~~subject~~$161,889.16 ~~that~~in wefull ~~believe~~by ~~will~~January ~~have~~31, ~~individually or~~2017. inTwo ~~the~~payments of ~~aggregate~~$25,000 aeach ~~material~~were ~~adverse~~made ~~effect~~in onDecember ~~our~~2016 ~~business~~leaving a balance of $111,889.16 ~~financial~~to ~~condition~~pay orby ~~operating~~January ~~results~~31, 2017. AsThe ~~far~~Company asmade wefull ~~are~~and final ~~aware~~payment of $111, no889.16 ~~governmental~~on ~~authority~~the isconfessed ~~contemplating~~judgement ~~any~~on ~~such~~January ~~proceeding~~31, 2017.

52 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 prospectus total claims are $130,455.

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.

MANAGEMENT

The ~~names,~~following ~~positions~~table ~~and~~identifies our ~~ages~~executive ofofficers ~~our~~and directors, ~~and~~their ~~executive~~ages, ~~officers~~their asrespective ofoffices ~~the~~and ~~date~~positions ofand ~~this~~their ~~prospectus,~~respective ~~are~~dates asof ~~follows:~~election or appointment.

Name	Age	Position	Officer/Director Since
Stephen Turner	7072	Chief Executive Officer and Chairman of the Board	2001	*
Greg Kilby	47	Vice President and Chief Operating Officer	2014
David Halverson	51	President	2016
Matthew Powell	4042	Vice President, Research & Development and Chief Science Officer	~~2006~~2011	*
Stanley Hostler	87	Vice President, Secretary and Director	2006	*
Haddon Goodman	34	VP Corporate Development and Chief Business Officer	2017
Steven Antoline	59	Director	2010	*
Cynthia Price	42	Controller and Corporate Secretary	2017
Leonard Harris	79	Director	2003	*
Steven Antoline	61	Director	2010
Ed Roberson	70	Director	2009	*
Leonard Harris	80	Director	2003
Scott Segal	60	Director	2008	*
Ed Roberson	72	Director	2009
Josiah T. Austin	68	Director	2013	*
Scott Segal	62	Director	2008
Patrick Gallagher	51	Director	2015
Patrick Gallagher(1)	52	Director	2015
Maged Shenouda	51	Director	2015
Josiah T. Austin	70	Director	2013

* Represents the date on which such ~~person~~ person was appointed to the referenced office of Protea Biosciences, Inc. Each such person was appointed to the identical position of of the Company, effective September 2, 2011 upon the closing of the reverse merger in September of 2011.

~~There~~(1) ~~are~~Appointed noby ~~family~~the ~~relationships~~board ~~among any~~of directors of ~~our~~the ~~executive~~Company ~~officers~~to ~~and~~serve ~~directors~~as director to fill an existing vacancies on the board. ~~None~~Mr. Gallahgher was appointed pursuant to a provision of ~~our~~a ~~directors~~unit ~~has,~~purchase ~~during~~agreement among the ~~past~~Company ~~ten~~and ~~years,~~the ~~been~~investors ~~involved~~ in ~~any~~the ~~legal~~Company’s ~~proceedings described~~winter in2014 ~~subparagraph~~– 2015 private placement offering provided that two (f2) ofpersons ~~Item~~nominated ~~401~~by the placement agent for the offering would be appointed directors of ~~Regulation~~the ~~S-K~~Company.

~~Business~~There ~~Experience~~are no family relationships among any of our executive officers and directors. In addition, none of our directors has during the past ten years been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.

Business Experience. The following biographical information is aprovided ~~brief~~with ~~summary~~respect ofto ~~the background of~~ each of our ~~directors and~~ executive officers and directors.

Stephen Turner is Chief Executive Officer and Chairman of the Board, positions he has held since founding the Company in ~~July~~August, 2001. From 1999 to 2001 he served as President and ~~CEO~~Chief Executive Officer of Quorum Sciences, Inc. From 1984 to 1997 he was President and ~~CEO~~Chief Executive Officer of Oncor, Inc. He founded Bethesda Research Laboratories, Inc., (“BRL”) in 1975 and served as its Chairman and ~~CEO~~Chief Executive Officer from 1975 to 1983, at which time BRL became the molecular biology division of Life Technologies, Inc. Prior to commencing his career in biotechnology, Mr. Turner held the position of Director of Marketing for the Clinical Microbiology Division of Becton, Dickinson & Co. He received his B.A. from Stanford University in 1967. In 1994 he received the Ernst & Young Entrepreneur of the Year Award in Life Sciences for the Washington, D.C. region. Mr. Turner was appointed to serve as a ~~director~~ member of the ~~Company~~Board of Directors because he is the founder of ~~Protea~~the Company and his deep knowledge of our products and market opportunity led the Board of Directors to determine that he should serve as a ~~director~~member of the Board of Directors.

~~Greg~~David W.Halverson ~~Kilby, Ph.D.~~ is ~~Vice~~ President, since ~~Operations~~October 27, ~~Director~~2016. DrMr. ~~Kilby~~Halverson, has ~~over~~worked 18with ~~years~~the ofCompany ~~experience~~since in2013 ~~applying~~and ~~advanced~~prior ~~biological mass spectrometry~~ to ~~areas~~his ofappointment ~~research including~~as ~~structural biology~~President, ~~protein~~Mr. ~~characterization,~~Halverson served ~~and~~as ~~proteomics~~the toVice ~~support~~President ~~drug discovery~~ and ~~development~~Chief ~~and~~Business toOfficer ~~support the sales~~ of ~~liquid chromatography mass spectrometry (LCMS) analytical equipment into~~ the ~~life sciences, government, academic, and applied markets in the Americas~~Company. ~~Prior~~From 2006 to ~~joining~~2011 ~~Protea,~~he ~~Dr.~~served ~~Kilby held a position~~ in ~~Thermo~~several ~~Fisher~~positions ~~Scientific~~with ~~of Director,~~Huntingdon ~~North America~~ Life Sciences ~~Mass~~including ~~Spectrometry~~Head ~~Application~~of European and ~~Demonstration~~U.S. ~~Laboratories,~~sales. ~~leading~~From a2001 ~~team responsible for providing product demonstrations and application services~~ to ~~support~~2006 ~~quota~~he ~~performance~~served ~~and~~as ~~business~~a ~~growth~~Director of ~~the~~Sales ~~Thermo~~for ~~Scientific~~PPD ~~life~~Discovery and ~~sciences~~Quintiles ~~mass~~Preclinical ~~spectrometry portfolio in North America~~Groups. ~~Before~~From ~~joining~~1993 ~~Thermo~~to ~~Fisher~~2001 ~~Scientific~~he inserved ~~2012, Dr. Kilby held several positions in Agilent Technologies, starting~~ as a ~~senior~~Staff ~~Proteomics~~Scientist ~~and~~in ~~BioPharma~~the ~~applications~~Drug ~~scientist~~Metabolism asGroup ~~well~~at asCovance ~~being responsible~~Laboratories. ~~for~~He ~~developing~~graduated ~~and~~from ~~implementing~~Kemper ~~two~~Military ~~state~~Academy ~~of the art Demonstration Centers of Excellences (COE)~~ in ~~Wilmington~~1987 DE and ~~Santa~~received ~~Clara CA, showcasing Agilent’s entire breadth of analytical technologies portfolio. In 2007, Dr. Kilby moved to~~ a ~~management~~commission ~~position within~~as ~~Agilent~~2LT ~~responsible~~in ~~for managing~~ the ~~two~~US ~~COE~~Army ~~facilities~~ and ~~two~~served ~~satellite~~on ~~laboratories~~active ~~across~~duty, ~~North America and the respective~~Wisconsin ~~mass~~National ~~spectrometry applications scientist~~Guard, ~~administrative~~ and ~~logistics~~Army ~~staff.~~Reserve ~~Prior~~through to2000. ~~his work at Agilent, Dr~~Mr. ~~Kilby~~Halverson ~~held,~~has ~~from 1998~~in-depth toknowledge ~~2004,~~of ~~several senior positions in~~ the ~~Discovery~~Company’s ~~Technologies~~product ~~Department~~lines ~~with~~and ~~Pfizer Global Research & Development,~~a ~~culminating~~wealth ~~in Research Associate, responsible for leading a team~~ of ~~scientists~~experience tonegotiating ~~provide~~collaborations ~~advanced mass spectrometry support for structural biology~~ and ~~therapeutic~~contracts ~~area~~within ~~projects~~analytical ~~and~~service asbased ~~part of Pfizer's global proteomics center of emphasis (COE)~~companies. ~~Dr. Kilby received his Ph.D. in Analytical Chemistry from the University of Wollongong, Australia in 1996.~~

Matthew Powell, Ph.D. is Vice President, Research & Development and Chief Scientific Officer since 2006. He received his Ph.D. in Analytical Chemistry from West Virginia University in 2005. Dr. Powell is considered by the Company to be an expert in the field of biological mass spectrometry and is an inventor of several proprietary bioanalytical technologies in development at the Company.

53Haddon Goodman is Protea's Vice President of Corporate Development and Chief Business Officer since January 2017. Prior to joining Protea, from 2007 to 2009 Mr. Goodman held various positions at Fisher Scientific in product management launching new products, managing strategic supplier relationships, and planning marketing campaigns. This experience combined with his background in biology enabled Mr. Goodman to operate in various product management, marketing, and business roles at Protea. Today, Mr. Goodman is focused on driving Protea's innovative technologies and workflows through key collaborations and in licensing and out licensing opportunities.

Stanley Hostler is Vice President, Secretary and Director. He has been a Director of the Company since January 2006 and Vice President and Secretary since June 2006. Mr. Hostler is an attorney with a career practice in the field of labor and employment law. From 2000 to 2010 he served as Special Assistant to the Governor of the State of West Virginia. From 2002 to 2004 he served as Counsel to the Prim Law Firm. From 2000 to 2010 he served on the West Virginia University Foundation Board of Directors, and from 1995 to 2010 on the Advisory Committee of the WVU School of Medicine. He is a graduate of the West Virginia University School of Law (1965). Mr. Hostler’s legal experience and business contacts and relationships with West Virginia University and the State of West Virginia have been an asset to the Company and led the Board to determine that he should serve as a director of the Company.46

~~Steven~~Cynthia ~~Antoline joined~~Price ~~the~~is Protea's Controller ~~Board~~and ofCorporate ~~Directors~~Secretary insince ~~April~~July ~~2010~~2017. HeMs. isPrice ahas ~~successful~~been ~~owner,~~with ~~developer~~Protea since 2015. Prior to becoming Protea’s Controller and ~~manager~~Corporate Secretary, Ms. Price held the position of ~~coal~~Senior Accountant and ~~natural~~was ~~resource~~later ~~properties~~promoted ~~and~~to ~~inventor of~~Accounting ~~new~~Manager ~~equipment~~of ~~for~~Protea in ~~coal~~early ~~mining~~2016. From ~~1996~~2014 to ~~2006~~2015, heMs. Price was ~~President~~an ~~and~~Accountant ~~owner~~at ofServiceLink, ~~Superior~~A ~~Highwall~~Black ~~Mining,~~Knight ~~Inc~~Company., ~~which~~From ~~was~~2013 ~~sold~~to 2014, she worked with Robert Half International holding different accounting titles in multiple roles with various companies. From 2006 to 2012, she was a ~~partnership~~Senior ~~comprised~~Accountant ofat ~~Lehman~~PNC ~~Bros~~Bank NA with their PNC Realty Investors, Inc. ~~(60%)~~group, ~~and~~who ~~Tennessee~~managed ~~Valley~~the ~~Ventures~~AFL-CIO ~~(40%)~~Building Investment Trust. HeFrom ~~received~~2003 ~~his~~to ~~Bachelor~~2005, ofshe ~~Arts~~held ~~from~~a ~~West Virginia~~Senior ~~University.~~Accountant ~~Mr.~~position ~~Antoline~~with ~~was~~prominent ~~appointed~~development companies in Maryland. From 1999 to 2003, ~~serve~~she asheld aseveral ~~director~~accounting ofpositions ~~the~~including ~~Company~~Senior ~~because~~Accountant ofat ~~his~~a ~~prior~~small ~~experience~~boutique inproperty ~~the~~management ~~development~~company in Canonsburg, ~~and~~PA. ~~sale~~Ms. ofPrice ~~companies~~received her Accounting Degree from Waynesburg University in 2002, and inis currently working ~~with~~toward ~~investment~~obtaining ~~bankers~~her CPA license.

~~Leonard~~Steven ~~Harris~~Antoline joined the Company’s Board of Directors in April ~~2003~~2010. ~~Since~~He ~~1977,~~is hea issuccessful ~~the~~owner, ~~founder~~developer and ~~Chief~~manager ~~Executive Officer~~ of ~~Southern~~coal ~~Computer~~and ~~Consultants,~~natural ~~Inc. located~~resource inproperties ~~Frederick,~~and ~~Maryland,~~inventor aof ~~company~~new ~~which~~equipment ~~provides~~for ~~products~~coal ~~and~~mining. ~~services~~From 1996 to ~~the~~2006, ~~United~~he ~~States~~was ~~government~~President and ~~Fortune~~owner ~~500~~of ~~corporations.~~Superior Highwall Mining, MrInc., ~~Harris’~~which ~~extensive~~was ~~experience~~sold into ~~technology-based~~a ~~corporate~~partnership ~~development,~~comprised ~~which~~of ~~provides~~Lehman ~~support~~Bros. (60%) and ~~guidance~~Tennessee toValley ~~the~~Ventures ~~Company’s~~(40%). Mr. Antoline was appointed ~~LAESI~~to ~~instrument~~serve ~~platform,~~as ~~led~~a director of the ~~Board~~Company tobecause ~~determine~~of ~~that~~his heprior ~~should~~experience ~~serve~~in asthe adevelopment ~~director~~and sale of ~~the~~companies, ~~Company~~and in working with investment bankers.

EdLeonard ~~Roberson~~Harris ~~joined~~has ~~the~~been ~~Board~~a member of ~~Directors in September 2009. From July 2006 to June 2010 he served as Chairman of~~ the Company’s Board of ~~the~~Directors ~~Methodist~~since ~~Healthcare~~April ~~System~~2003. He ~~received~~Since ~~his~~1977 ~~MBA~~he inhas ~~accounting~~been ~~in 1972 from~~ the ~~University~~founder ofand ~~Georgia.~~Chief ~~From~~Executive ~~2006-2011~~Officer ~~he was President~~ of ~~Beacon Financial in~~Southern ~~Memphis~~Computer Consultants, ~~Tennessee~~Inc., ~~and~~a ~~from~~company ~~2006-2007~~located ~~President~~in ofFrederick, ~~Conwood~~Maryland ~~LLC.~~which Heprovides ~~was~~products aand ~~director~~services ofto the ~~Paragon~~United ~~National~~States government ~~Bank~~and ~~from~~Fortune ~~2004~~500 tocorporations. ~~2016~~Mr. He isHarris ~~currently~~has aextensive ~~director~~experience ofin ~~Consol~~technology-based ~~Energy.~~corporate ~~From 1972 to 1992~~development, ~~Mr.~~which ~~Roberson~~knowledge allows ~~was~~him ~~employed~~to byprovide ~~KPMG,~~support ~~most~~and ~~recently~~guidance asto ~~partner.~~the ~~Mr. Roberson~~Company’s ~~experience,~~research ~~both as a Partner with KPMG~~ and ~~subsequently~~development ~~as a CEO~~activities, and led the Company’s Board of Directors to determine that he should serve as a director of the Company.

~~Scott~~Ed ~~Segal~~Roberson joined the ~~Board~~Company’s Board of Directors in ~~February~~September ~~2008~~2009. HeFrom isAugust a2006 ~~practicing~~to ~~attorney,~~June ~~specializing~~2010 inhe ~~the~~served ~~fields~~as Chairman of ~~personal~~the ~~injury,~~Board ~~product~~of ~~liability~~the ~~and~~Methodist Healthcare ~~related~~System. ~~matters,~~From ~~and~~2006 isto ~~the~~2011 he was President of ~~the~~Beacon ~~Segal~~Financial ~~Law~~in ~~Firm~~Memphis, ~~Charleston~~Tennessee, ~~West~~and ~~Virginia. He received his JD~~ from ~~the~~2006 to 2007 ~~West Virginia~~President ~~University School~~ of ~~Law~~Conwood inLLC. ~~1981,~~He ~~and~~ has been a ~~member~~Director of the ~~American~~Paragon ~~Bar~~National ~~Association~~Bank from ~~1981~~2004 to present. ~~Mr.~~From ~~Segal~~1972 ~~has~~to ~~extensive relationships~~1992, ~~within~~Mr. ~~the~~Roberson ~~State~~was ofemployed by ~~West~~KPMG, ~~Virginia~~most ~~and~~recently isas ~~considered~~partner. byMr. ~~the~~Roberson ~~Company~~received tohis beM.B.A anin ~~expert~~accounting in ~~several~~1972 ~~areas~~from ~~which~~the ~~may~~University ~~have use~~of ~~for~~Georgia. ~~the~~Mr. ~~Company~~Roberson’s financial ~~technology~~expertise and experience, ~~including~~both ~~forensics~~as a Partner with KPMG and ~~occupational~~subsequently ~~health,~~as ~~which~~a Chief Executive Officer, led the Board of Directors to determine that he should serve as a director of the Company.

~~Josiah~~Scott ~~T. Austin~~Segal joined the Company’s Board of Directors in ~~January~~February ~~2013~~2008. ~~Mr.~~He ~~Austin~~is ~~serves~~a aspracticing ~~the~~attorney, ~~managing~~specializing ~~member~~in ofthe Elfields ~~Coronado~~of ~~Holdings,~~personal ~~L.L.C.~~injury, aproduct ~~privately owned~~liability ~~investment holding company which invests in public~~ and ~~private~~related ~~companies.~~matters, He and ~~his~~is ~~family own and operate agricultural properties in~~ the ~~states~~President of ~~Arizona,~~the ~~Montana,~~Segal ~~and~~Law ~~northern~~Firm ~~Sonora,~~located ~~Mexico~~in ~~through El Coronado Ranch & Cattle Company~~Charleston, ~~L.L.C.~~West ~~and other entities~~Virginia. ~~Mr.~~He ~~Austin~~received ~~previously~~his ~~served~~JD onfrom the West ~~Board~~Virginia ofUniversity ~~Directors~~School of ~~Monterey~~Law ~~Bay~~in ~~Bancorp~~1981 ~~of Watsonville, California,~~ and ishas been a ~~prior board~~ member of ~~New~~the ~~York~~American ~~Bancorp,~~Bar ~~Inc.,~~Association ~~and~~from ~~North~~1981 ~~Fork~~to ~~Bancorporation~~present. HeMr. Segal has ~~served~~extensive aslegal aexperience ~~director~~and ofrelationships ~~Goodrich~~within ~~Petroleum,~~the ~~Inc. since~~State ~~April~~of ~~2002~~West Virginia and ~~was~~is ~~named~~considered toby the ~~Board~~Company ofto ~~Directors~~be an ofexpert ~~Novogen Limited~~ in ~~September~~several ~~2010.~~areas ~~Mr.~~which ~~Austin~~may ~~also~~have ~~serves~~use asfor ~~a trustee of~~ the ~~Cuenca~~Company’s ~~Los Ojos Foundation Trust~~technology, aincluding ~~non-profit~~forensics ~~organization working to preserve~~ and ~~restore~~occupational ~~the biodiversity of the borderland~~health, ~~region~~which ~~between~~led the ~~United~~Board ~~States~~of ~~and~~Directors ~~Mexico~~to ~~through~~determine ~~land~~that ~~protection,~~he ~~habitat~~should ~~restoration~~serve ~~and~~as ~~wildlife reintroduction. Mr. Austin graduated from the University of Denver with~~ a ~~Bachelor~~director of ~~Science~~the ~~in Finance in 1971~~Company.

Patrick Gallagher joined the Company’s Board of Directors in April 2015. Since 2014, Mr. Gallagher ishas been a ~~CFA~~Managing Director and anHead ~~accomplished Capital Markets executive, advisor and investor with a distinguished record~~ of ~~success~~Institutional inSales ~~both~~for ~~the~~Laidlaw ~~public~~& ~~and~~Company ~~private~~(UK) ~~markets~~Ltd. From ~~with~~2012 ato ~~focus on healthcare~~2014, ~~agriculture and industrials~~ Mr. HeGallagher ~~has over two~~served ~~decades~~as VP of ~~experience~~Business onDevelopment ~~Wall Street~~ and ~~extensive~~Investor ~~experience~~Relations ~~in alternative investments, research~~ and ~~marketing.~~as ~~He is~~ a ~~Managing Director~~strategic ~~and~~consultant ~~Head of Institutional Sales~~ for ~~Laidlaw~~Kinex &Pharmaceuticals. From ~~Company~~2001 to ~~(UK)~~2011, ~~Ltd~~Mr., aGallagher ~~healthcare~~was ~~focused~~Chief ~~investment~~Executive ~~bank.~~Officer ~~Mr.~~of ~~Gallagher co-founded~~ Black Diamond Research, LLC (“BDR”), ana ~~independent sell-side research~~ firm ~~specializing~~he ~~in healthcare and~~co-founded, where ~~industrial~~he ~~investing,~~oversaw ~~financing and operations, serving the~~ institutional ~~investing~~research ~~community~~and ~~at large~~sales. Prior Asto ~~CEO of BDR~~2001, Mr. Gallagher ~~oversaw~~ ~~institutional research and sales. Prior, he~~ held various sales positions at Kidder Peabody, PaineWebber, New Vernon Associates and Concept Capital. Mr. Gallagher served as VP of Business Development and Investor Relations as well as a strategic consultant for Kinex Pharmaceuticals, a biotechnology firm focused on next-generation therapies in oncology and immunology. He ~~also~~currently serves as an advisor to CHD Biosciences, and is a ~~novel~~member ~~antimicrobial~~of ~~company. Mr. Gallagher sits on~~ the board of directors ~~for~~of BioSig Technologies, Inc.~~, a medical technology company that is developing a proprietary platform in the electrophysiology space.~~ Mr. Gallagher received his B.S. from the University of Vermont, his M.B.A. from Pennsylvania State University and is a CFA charter holder. Mr. Gallagher’s extensive experience in healthcare banking, both as a CFA and institutional sales manager, led the Board of Directors to determine that he should serve as a director of the Company.

~~Maged~~Josiah T. ~~Shenouda~~ Austin joined the Company’s Board of Directors in ~~April~~January ~~2015~~2013. ~~Mr.~~He ~~Shenouda~~owns ~~has over 25 years of experience in the pharmaceutical~~ and ~~securities~~operates ~~industries.~~agricultural ~~Most~~properties ~~recently,~~in ~~Mr. Shenouda was~~ the ~~Head~~states of ~~Business~~Arizona ~~Development~~ and ~~Licensing~~Montana. ~~at Retrophin, Inc~~Mr. ~~Prior~~Austin tohas ~~that,~~previously he served ason the ~~Head~~ board of ~~East~~directors ~~Coast~~of ~~Operations~~Monterey atBay ~~Blueprint~~Bancorp ~~Life~~of ~~Science Group~~Watsonville, California, aand ~~strategic~~is ~~investor~~a ~~relations~~prior ~~consultancy.~~board ~~Mr.~~member ~~Shenouda spent the bulk~~ of ~~his~~New ~~career~~York ~~as an equity analyst with senior level positions at Stifel Nicolaus~~Bancorp, ~~UBS and JP Morgan~~Inc., ~~covering a broad range of small~~ and ~~large~~North ~~cap~~Fork ~~biotechnology companies~~Bancorporation. ~~Mr.~~He ~~Shenouda~~served ~~started~~as ~~his~~a ~~sell-side~~director ~~career~~of ~~with Citigroup and Bear Stearns where his~~Goodrich ~~coverage~~Petroleum, ~~universe focused on U~~Inc.S. ~~and~~from ~~European~~2002 ~~pharmaceutical~~- June ~~companies.~~2016 ~~Before~~and ~~entering Wall Street, Mr. Shenouda~~ was anamed ~~management consultant~~to ~~with~~the ~~PricewaterhouseCoopers’~~board ~~Pharmaceutical~~of ~~Consulting~~directors ~~practice~~of ~~and~~Novogen ~~also~~Limited ~~spent time~~ in ~~pharmaceutical~~September ~~sales,~~2010 ~~having~~– ~~worked~~April as2013. aMr. ~~hospital~~Austin ~~representative~~graduated ~~and~~from ~~managed~~the ~~care~~University ~~specialist~~of ~~for~~Denver ~~Abbott~~with ~~Laboratories’ Pharmaceutical Products Division. Mr. Shenouda earned~~ a B.S. in ~~pharmacy~~Finance ~~from~~in St1971. Mr. ~~John's~~Austin ~~University~~has ~~and~~extensive investment isexperience ain ~~registered~~early ~~pharmacist~~stage inbiotechnology ~~New~~companies, ~~Jersey~~which ~~and~~led ~~California. He~~the ~~also~~Board ~~received~~of anDirectors ~~M.B.A.~~to ~~from~~determine ~~Rutgers~~that ~~University~~he ~~Graduate~~should ~~School~~serve as a director of ~~Management~~the Company.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires executive officers, directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership with the SEC. Executive officers, directors and more than 10% shareholders are required by regulations to furnish us with copies of all Section 16(a) reports they file.

Based solely on the Company’s review of the copies of the forms received by it during the fiscal year ended December 31, 2015 and written representations that no other reports were required, the Company believes that the following person(s) who, at any time during such fiscal year, was a director, officer or beneficial owner of more than 10% of the Company’s common stock failed to comply with all Section 16(a) filing requirements during such fiscal years:

Name	Number of Late Reports	Number of Transactions not Reported on a Timely Basis	Failure to File a Required Form
Steve Turner	None	None	None
Greg Kilby	2	2	None
Matthew Powell	None	None	None
Stanley Hostler	2	3	None
Scott Segal	2	4	None
Leonard Harris	1	2	None
Ed Roberson	2	4	None
Summit Resources, Inc.	5	6	None
Josiah T. Austin	6	8	None
Maged Shenouda	2	3	None
Patrick Gallagher	2	3	None

Code of Ethics

On December 20, 2007, we adopted a formal code of ethics statement for senior officers and directors (the “Code of Ethics”) that is designed to deter wrongdoing and to promote ethical conduct and full, fair, accurate, timely and understandable reports that the Company files or submits to the SEC and others. A form of the Code of Ethics has been filed as an exhibit to the Company’s Form 10-KSB filed with the SEC on March 7, 2008 and is incorporated herein by reference. Requests for copies of the Code of Ethics should be sent in writing to Protea Biosciences Group, Inc., Attention: Chief Executive Officer, 1311 Pineview Drive, Suite 501, Morgantown, West Virginia 26505.

Corporate Governance

~~Our~~ Board of Directors ~~has~~Meetings ~~an Audit Committee~~ and ~~a Compensation Committee. Our Board of Directors has not yet adopted procedures by which stockholders may recommend nominees to the Board of Directors.~~Committees

During the year ended December 31, 2016, the Board of Directors met in person or by telephonic meetings four (4) times. During 2016, the Company audit committee (the “Audit Committee”) held four (4) meetings. During 2016, the Company compensation committee (the “Compensation Committee”) held four (4) meetings. During 2016, each member of the Board of Directors attended at least 50% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings of all committees on which such director served.

It is anticipated that each member of the Board of Directors will attend the Company’s next annual meeting of stockholders. The Company does not have a formal policy with respect to directors’ attendance at the annual meeting of stockholders.

Board Leadership Structure and Role in Risk Oversight

In accordance with the Company’s Bylaws, the Board of Directors elects the Company Chairman of the Board of Directors and Chief Executive Officer. Each of these positions may be held by the same person or may be held by different people. Currently, these two offices are held by the same person. The Board of Directors believes that the Company and its stockholders are best served by having a policy that provides the Board of Directors the ability to select the most qualified and appropriate individual to lead the Board of Directors as Chairman of the Board of Directors.

Mr. Turner currently serves as Chairman of the Board of Directors and Chief Executive Officer and is expected to continue to serve in both capacities.

The Company is exposed to a number of risks that are inherent with every business. Such risks include, but are not limited to, financial and economic risks and legal and regulatory risks. While management is responsible for the day-to-day management of these risks, the Board of Directors, as a whole and through its committees, is responsible for the oversight of risk management. The Board of Directors is responsible for evaluating the adequacy of risk management processes and determining whether such processes are being implemented by management. The Board of Directors has delegated to the Audit Committee the primary role in carrying out risk oversight responsibilities. The Board of Directors has delegated to the Compensation Committee oversight of risks associated with the Company’s policies and practices relating to compensation.

Independent Directors

While the Company is not currently trading on the Nasdaq Capital Markets, it has relied upon the director independence standards set forth in the Nasdaq Capital Markets Rule 5605. Upon consideration of the criteria and requirements regarding director independence set forth in the Nasdaq Capital Markets Rule 5605, the Board of Directors has determined that other than Mr. Turner, our Chief Executive Officer, all of the other director nominees meet the Nasdaq Capital Markets independence standards.

Audit Committee

Ed Roberson, ~~Stan~~and ~~Hostler,~~ Leonard Harris ~~and~~ ~~Maged Shenouda~~ are each members of our Audit Committee. The Audit Committee’s function is to oversee our accounting and financial reporting processes, internal systems of control, independent auditor relationships and the audit of our financial statements. EdThe ~~Roberson~~Company isdoes not currently have a financial expert serving ason its audit committee ~~chairman~~at ~~and~~this time; provided however, Mr. Roberson, a current director, would be deemed a financial expert. ~~All~~In ~~members~~addition, ~~except~~the ~~for~~Company ~~Stanley~~has ~~Hostler,~~engaged ofcertain ~~the~~consultants ~~Audit~~in ~~Committee~~order ~~are~~to ~~independent~~assist ~~under~~ the ~~applicable~~Company ~~definition~~in ~~contained~~performing an evaluation of internal controls in ~~the~~accordance with Sarbanes-Oxley rules ofand ~~the~~regulations ~~Nasdaq~~to ~~Stock~~identify ~~Market~~control gaps and ~~Rule~~to ~~10A-3(b)(1)~~recommend ~~under~~control ~~the~~improvement ~~Exchange~~opportunities. ~~Act~~Mr. ~~The~~Roberson ~~Audit~~and ~~Committee~~Mr. isHarris ~~governed by~~would aeach ~~written~~be ~~charter~~deemed ~~approved~~independent byin accordance with the ~~Board~~Nasdaq ofCapital ~~Directors~~Markets Rule 5605(a)(2).

Compensation Committee

~~Steve~~Patrick ~~Antoline~~Gallagher, ~~Leonard Harris~~Chairman, ~~Josiah Austin~~Steve Antoline, and ~~Maged~~Leonard ~~Shenouda~~Harris are ~~each~~the members of the Compensation Committee~~, with the latter being Chairman~~. The purpose of the Compensation Committee is to aid the Board of Directors in meeting its responsibilities with regard to oversight and determination of executive compensation. Among other things, the Compensation Committee ~~reviews~~will review, ~~recommends~~recommend and ~~approves~~approve salaries and other compensation of the Company’s executive officers, and will administer the Company’s equity incentive plans (including reviewing, recommending and approving stock option and other equity incentive grants to executive officers). The Company has not adopted a compensation committee charter.

55 Nominating Committee

~~Family~~No ~~Relationships~~nominating committee has been appointed. Nominations of directors are made by the Board of Directors. Our Board of Directors has not yet adopted procedures by which stockholders may recommend nominees to the Board of Directors. The Board of Directors is of the view that the present management structure does not warrant the appointment of a nominating committee.

~~There~~Other ~~are no family relationships among our directors and executive officers.~~Committees

~~Involvement~~The inBoard ~~Certain~~of ~~Legal~~Directors ~~Proceedings~~may establish additional standing or ad hoc committees from time to time.

ToStockholder ~~the~~Communication ~~best~~with ~~of our knowledge, none of our directors or executive officers has, during~~ the ~~past ten years, been involved in any legal proceedings described in subparagraph~~ ~~(f) of~~Board ~~Item 401~~ of ~~Regulation S-K.~~Directors

~~Insider~~Correspondence ~~Participation~~from inthe ~~Meetings~~Company’s stockholders to the Board of Directors or any individual director or officer should be sent to the Company’s Secretary. Correspondence addressed to either the Board of Directors as a body, or to any director individually, will be forwarded by the Company’s Secretary to the Chairman of the Board or to the individual director, as applicable. The Company’s Secretary will regularly provide to the Board of Directors a summary of all stockholder correspondence that the Secretary receives. This process has been approved by the Company’s Board of Directors.

~~Our~~All ~~determination~~correspondence ofshould ~~the~~be ~~independence~~sent ofto Protea ~~directors~~Biosciences isGroup, ~~made using the definition of “independent” contained in Rule 5605(a)(2) of The Nasdaq Stock Market~~Inc., ~~On the~~1311 ~~basis~~Pineview ofDrive, ~~information~~Suite ~~solicited~~501, ~~from each director~~Morgantown, ~~the~~West ~~Board~~Virginia ~~has~~26505, ~~determined~~Attention: ~~that each of our directors with the exception of Mr~~Ms. ~~Turner~~Cynthia ~~and Mr~~Price. ~~Hostler is independent within the meaning of such rule.~~

Other than Mr. Turner, our Chief Executive Officer and President and Mr. Hostler, our Vice-President, all of our remaining directors are independent directors. All matters to be acted upon where potential conflicts exist between our executive officers and the Company (for example, the terms of employment agreements, option grants, bonus awards, etc.) are discussed and approved by the non-interested directors. During the years ended December 31, 2015 and 2014, Mr. Turner did not participate in deliberations of the Company's Board of Directors concerning his compensation.48

Insider Participation

Other than Stephen Turner, our Chairman of the Board and Chief Executive Officer, all of our remaining directors are independent directors. All matters to be acted upon where potential conflicts exist between our executive officers and the Company (for example, the terms of employment agreements, option grants, bonus awards, etc.) are discussed and approved by the non-interested directors. During the year ended December 31, 2016, Mr. Turner did not participate in deliberations of the Company's Board of Directors concerning his compensation.

Code of Business Conduct and Ethics

The Board of Directors has adopted a code of ethics designed, in part, to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with or submits to the Securities and Exchange Commission (“SEC”) and in the Company’s other public communications, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of violations of the code to an appropriate person or persons, as identified in the code, and accountability for adherence to the code. The code of ethics applies to all directors, executive officers and employees of the Company. The Company will provide a copy of the code to any person without charge, upon request in writing to Protea Biosciences Group, Inc., 1311 Pineview Drive Suite 501, Morgantown, West Virginia 26505, Attention: Ms. Cynthia Price.

The Company intends to disclose any amendments to or waivers of its code of ethics as it applies to directors or executive officers by filing them with the SEC on a Current Report on Form 8-K.

Executive Compensation

The following table illustrates the compensation paid by ~~Protea~~us to ~~its~~our Chief Executive Officer, ~~its~~our three most highly compensated executive officers other than the Chief Executive Officer who were serving as executive officers at the end of the last completed fiscal year and who earned in excess of $100,000,. ~~and~~The upCompany refers to ~~one~~these ~~additional~~individuals ~~individual~~as ~~for~~the ~~whom~~“Named ~~disclosure~~Executive ~~would~~Officers.” We have ~~been~~an ~~provided~~employment ~~but~~agreement ~~for~~with ~~the~~Stephen Turner, ~~fact~~our ~~that~~Chief ~~the~~Executive ~~individual~~Officer. ~~was~~We do not ~~serving as~~currently anhave ~~executive~~employment ~~officer~~agreements ofwith ~~the~~David ~~Company~~Halverson ator ~~the~~Matthew ~~end~~Powell, ofalthough we ~~the~~may ~~last~~enter ~~completed~~into ~~fiscal~~such ~~year.~~agreements Wein ~~refer to these individuals as~~ the ~~“Named Executive Officers”~~future. The disclosure is provided for the years ended December 31, ~~2015~~2016 and ~~2014~~2015.

Name and Principal Position	Year		Salary ($)		~~Salary ($)~~		Bonus ($)		~~Bonus ($)~~		Other Benefits ($) (1)		~~Other Benefits ($) (1)~~		Option Award ($) (2)		~~Option Award ($) (2)~~		Total ($)		~~Total ($)~~
Stephen Turner, Chief Executive Officer, President		2015				240,000				-				19,336				-				259,336
Stephen Turner, Chief Executive	2016			240,000				-				20,116				-				260,116
		2014				240,000				-				18,819				130,600				389,419
Officer, President	2015			240,000				-				19,336				-				259,336
Matthew Powell, Vice President, R&D, CSO		2015				180,000				6,009				18,049				4,412				208,469
Matthew Powell, Vice President,	2016			180,000				-				17,820				5,930				203,750
		2014				151,357				2,500				17,901				17,647				189,405
R&D, CSO	2015			180,000				-				18,049				4,412				202,461
Gregory Kilby, Vice President, Operations		2015				210,000				-				9,676				13,151				232,827
Gregory Kilby, Vice President,	2016			-				-				-				-				-
		2014				210,000				-				18,313				27,961				256,274
COO	2015			210,000				-				9,676				13,151				232,827
David Halverson, President,CBO	2016			240,000				-				19,694				24,506				284,200

(1)

Other benefits include living allowances, insurance benefits paid by company and cell phone reimbursement.

(2) The amount included in the “Option Awards” column does not reflect compensation actually received by the Named Executive Officer but represents the compensation cost that we recognized in each year presented, determined in accordance with FASB ASC 718. The valuation assumptions used in determining such amounts are described in Note 8 ofStock ~~our~~Options ~~financial~~and ~~statements~~Stock ~~for~~Based Compensation in the ~~fiscal~~Notes ~~year~~to ~~ended~~Consolidated ~~December~~Financial ~~31,~~Statements ~~2015~~in this prospectus.

~~We do not currently have employment agreements with our Named Executive Officers, although we may enter into such agreements in the future.~~49

56 Outstanding Equity Awards at Fiscal Year-End

The following table provides information about equity awards granted to our Named Executive Officers that were outstanding on December 31, ~~2015~~2016.

Name	Number of securities underlying unexercised options (#) exercisable						Number of securities underlying unexercised options (#) unexercisable		Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)		Options Exercise Price ($)		Options Expiration Date		Number of shares or units of stock that have not vested (#)		Market value of shares of units of stock that have not vested ($)		Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)		Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
	Option Awards												Stock awards
(a)	(b)			(c)			(d)		(e)		(f)		(g)		(h)		(i)		(j)
Name	Number of securities underlying unexercised options (#) exercisable			Number of securities underlying unexercised options (#) unexercisable			Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)		Options Exercise Price ($)		Options Expiration Date		Number of shares or units of stock that have not vested (#)		Market value of shares of units of stock that have not vested ($)		Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)		Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
Stephen Turner		4,000						-		-	$	20.00		6/07/2016		-		-		-		-
(a)	(b)		(c)	(d)			(e)		(f)		(g)		(h)		(i)		(j)
		10,000						-		-	$	37.50		4/23/2020		-		-		-		-
Stephen Turner		5,000			-			-	$	75.00		4/23/2020		-		-		-		-
		-			14,000			~~28,000~~-	$	-27.50	$	~~13.75~~2/27/2024		~~2/27/2024~~-		-		-		-		-
Matthew Powell		42,000			-			-	$	-62.50	$	~~31.25~~1/19/2017		~~1/19/2017~~-		-		-		-		-
		1,600						-		-	$	37.50		12/31/2019		-		-		-		-
		800			-			-	$	75.00		12/31/2019		-		-		-		-
		1,200			(1	)		2,000		-	$	13.75		4/1/2024		-		-		-		-
		1,000	(1)		600			-	$	27.50		4/1/2024		-		-		-		-
Gregory Kilby		2,625			(1	)		3,375		-	$	13.75		2/3/2024		-		-		-		-
		313	(1)		4,688			-	$	7.50		9/30/2026		-		-		-		-
		750			(1	)		5,250			$	13.25		4/1/2025		-		-		-		-
David Halverson		1,625	(1)		375			-	$	27.50		7/31/2023		-		-		-		-
		-			(1	)		18,000			$	6.25		12/18/2025		-		-		-		-
		375	(1)		625			-	$	26.50		4/1/2025		-		-		-		-
		-			(2	)		22,000			$	6.25		12/18/2025		-		-		-		-
		938	(1)		2,063			-	$	24.00		7/16/2025		-		-		-		-
		375	(1)		1,125			-	$	12.50		12/18/2025		-		-		-		-
		563	(1)		8,438			-	$	7.50		9/30/2026		-		-		-		-

(1) Options vest in 25% increments over a four-year vesting schedule. Grant dates are ten years prior to expiration date.

	(1)	Options vest in 25% increments over a four-year vesting schedule. Grant dates are ten years prior to expiration date.
	(2)	Performance award will vest upon realization of certain measures as of 12/31/2016.

~~(2)~~The ~~Performance~~Company ~~award~~has not ~~will~~granted ~~vest~~stock ~~upon~~awards ~~realization~~to ofour ~~certain~~Named ~~measures~~Executive asOfficers ofthat ~~12/~~were outstanding on December 31/, 2016.

Stephen Turner Employment Agreement

On April 1, 2015, the Company entered into an employment agreement (the “Employment Agreement”) with Stephen Turner as Chief Executive Officer and Chairman of the Board of Directors (the “Board”). The Employment Agreement provides for (i) a term of employment of three years from April 1, 2015, unless terminated by the Company or Mr. Turner, (ii) a base salary of $240,000, (iii) the eligibility of Mr. Turner to receive an annual bonus of at least 20% of his annual base salary (the “Performance Bonus”) provided that he has achieved the metrics established for such calendar year by the Compensation Committee of the Board, (iv) the eligibility of Mr. Turner to receive an additional discretionary bonus as determined by the Board, (v) the eligibility of Mr. Turner to receive a financing bonus in the amount of one $100,000 (the “Financing Bonus”) within thirty (30) days of the completion of the Company’s next round of financing, (vi) the eligibility of Mr. Turner to participate in the Company’s family health insurance benefits and to be covered under the Company’s key man and other life insurance policies and (vii) Mr. Turner’s entitlement to reimbursement for all reasonable out-of-pocket business, entertainment and travel expenses incurred in connection with the performance of his duties under the Employment Agreement. In the discretion of the Board, Mr. Turner may also be eligible for additional Financing Bonuses to the extent the Company raises additional funds. The Company will continue to provide Mr. Turner with coverage under, or equivalent to, its professional liability, directors and officers, and other similar policies for a period of three years following termination of his employment for any reason.

The Employment Agreement may be terminated by either the Company or Mr. Turner at any time and for any reason upon a minimum of 30 days’ advice written notice. In the event that Mr. Turner is terminated by the Company for Cause (as defined in the Employment Agreement), Mr. Turner would be entitled to (x) any accrued but unpaid Base Salary through the date of termination, (y) any unused vacation time, and (z) reimbursement for any unreimbursed business expenses properly incurred by Mr. Turner. In the event that Mr. Turner is terminated by the Company without Cause, Mr. Turner would be entitled to the amounts specified in (x), (y) and (z) above as well as any unpaid Performance Bonus and unpaid Financing Bonus (all such amounts, the “Accrued Amounts”), and a lump sum payment of 18 months’ of his base salary; the Company will pay the premiums for his family health insurance coverage for a period of 18 months; and all stock, restricted stock, options, stock appreciation rights, performance compensation, and any other equity or phantom equity awarded to him that is unvested will vest as of the termination date. In the event the employment term is terminated due to the acquisition of the Company by another company, Mr. Turner will be entitled to receive the Accrued Amounts, and he will be entitled to receive continued base salary for the remainder of the original employment term. In the event of Mr. Turner’s death or disability, the Company will pay him (or his estate and/or beneficiaries, as the case may be) the Accrued Amounts and a lump sum payment of 18 months’ of his base salary. In the event Mr. Turner’s employment terminates due to disability, the Company will also pay the premiums for his family health insurance coverage for a period of 18 months.

The Company agrees to indemnify Mr. Turner for any liabilities, damages, costs, and expenses (including attorneys’ fees) relating, directly or indirectly, to any claims, charges or proceedings of any nature that arise out of or concern his employment with or service to the Company and any of its affiliates, subsidiaries, or related entities, including his employment with or services to the Company that preceded the execution of the Employment Agreement.

The Employment Agreement is filed as an Exhibit to this Registration Statement on Form S-1. The foregoing summary of the terms of the Employment Agreement is subject to, and qualified in its entirety by, the full text of such document, which is incorporated herein by reference. The Company does not have any employment agreements with any of its other executive officers.

Board Compensation

During the fiscal year ended December 31, ~~2015~~2016, ~~each~~our ~~non-employee member of the~~ Board of Directors ~~was~~received ~~entitled~~the tofollowing ~~receive cash~~ compensation for ~~his~~their services. Inas ~~lieu of such cash compensation, each non-employee Director agreed to accept Common Stock at $0~~directors.~~25 per share. The following table provides information about such shares of the Company’s Common Stock issued to the Directors.~~

Name	Fees earned and paid in Common Stock (1)		Option Award		Other Compensation		Total
Stanley Hostler	$	25,000		-		-	$	25,000
Stanley Hostler(**)	$	-		-		-	$	-
Steven Antoline	$	25,000		-		-	$	25,000
Leo Harris	$	25,000		-		-	$	25,000
Ed Roberson	$	30,000		-		-	$	30,000
Scott Segal	$	20,~~000~~120		-		-	$	20,~~000~~120
Josiah Austin	$	25,000		-		-	$	25,000
Maged Shenouda	$	25,000		-		-	$	25,000
Maged Shenouda(*)	$	25,000		-		-	$	25,000
Patrick Gallagher	$	20,000		-		-	$	20,000

(*) Mr. Shenouda resigned as a member of the board of directors in June 2017. (**) Mr. Hostler passed away in June 2017. (1) Board compensation paid in Common Stock at $06.2500 per share. (2) The amount included in the “Option Awards” column does not reflect compensation actually received by the Named Executive Officer but represents the compensation cost that we recognized in each year presented, determined in accordance with FASB ASC 718. The valuation assumptions used in determining such amounts are described in Note 8 in the Financial Statement Footnotes of this prospectus.

(2) The amount included in the “Option Awards” column does not reflect compensation actually received by the Named Executive Officer but represents the compensation cost that we recognized in each year presented, determined in accordance with FASB ASC 718. The valuation assumptions used in determining such amounts are described in Note 8 of our financial statements for the fiscal year ended December 31, 2015.50

The following table provides information about equity awards granted to members of our Board of Directors in prior years that were outstanding on December 31, ~~2015~~2016.

	Number of Securities Underlying Unexercised Options					Options		Options
				Not		Exercise		Options Expiration
Name	Exercisable			Not Exercisable		Exercise Price ($)		Expiration Date
Name	Exercisable			Exercisable		Price ($)		Date
Stanley Hostler(**)		2,000			-	$	75.00	9/17/2020
Stanley Hostler		4,000			-	$	20.00	6/07/2016
		5,000			-	$	27.50	3/22/2023
		4,000			-	$	37.50	9/17/2020
		320			-	$	75.00	9/1/2017
		10,000			-	$	13.75	3/22/2023
		960			-	$	75.00	12/31/2018
		640			-	$	37.50	12/31/2017
		960			-	$	75.00	12/31/2019
		1,920			-	$	37.50	12/31/2018
		960			-	$	75.00	12/31/2020
		1,920			-	$	37.50	12/31/2019
		720			-	$	75.00	9/30/2021
		1,920			-	$	37.50	12/31/2020
		240			-	$	100.00	12/31/2021
		1,440			-	$	37.50	12/31/2021
		880			-	$	100.00	11/30/2022
		480			-	$	37.50	12/31/2021
		80			-	$	25.00	12/31/2022
		1,760			-	$	50.00	11/30/2022
		960			-	$	27.50	12/31/2023
		160			-	$	12.50	12/31/2022
		240			-	$	27.50	3/31/2024
		1,920			-	$	13.75	12/31/2023
		1,333	(2)		-	$	12.50	12/1/2025
		480			-	$	13.75	3/31/2024
Steven Antoline		2,000			-	$	75.00	4/23/2020
		-	(2)		2,667	$	6.25	12/1/2025
		1,333	(2)		-	$	12.50	12/1/2025
Steven Antoline		4,000			-	$	37.50	4/23/2020
Leo Harris		2,000			-	$	75.00	9/17/2020
		-	(2)		2,667	$	6.25	12/1/2025
		5,000			-	$	27.50	3/22/2023
Leo Harris		4,000			-	$	20.00	6/07/2016
		1,333	(2)		-	$	12.50	12/1/2025
		4,000			-	$	37.50	9/17/2020
Ed Roberson		2,000			-	$	75.00	4/23/2020
		10,000			-	$	13.75	3/22/2023
		1,830	(1)		170	$	27.50	1/1/2024
		-	(2)		2,667	$	6.25	12/1/2025
		1,333	(2)		-	$	12.50	12/1/2025
Ed Roberson		4,000			-	$	37.50	4/23/2020
Scott Segal		2,000			-	$	75.00	5/30/2018
		2,310	(1)		1,690	$	13.75	1/1/2024
		5,000			-	$	27.50	3/22/2023
		-	(2)		2,667	$	6.25	12/1/2025
		1,333	(2)		-	$	12.50	12/1/2025
Scott Segal		4,000			-	$	37.50	5/30/2018
Josiah T. Austin		3,000	(1)		-	$	27.50	1/28/2023
		10,000			-	$	13.75	3/22/2023
		1,333	(2)		-	$	12.50	12/1/2025
		-	(2)		2,667	$	6.25	12/1/2025
Maged Shenouda(*)		1,333	(2)		-	$	12.50	12/1/2025
Josiah T. Austin		5,783	(1)		217	$	13.75	1/28/2023
Patrick Gallagher		1,333	(2)		-	$	12.50	12/1/2025
		-	(2)		2,667	$	6.25	12/1/2025
Maged Shenouda		-	(2)		2,667	$	6.25	12/1/2025
Patrick Gallagher		-	(2)		2,667	$	6.25	12/1/2025

(*) Mr. Shenouda resigned as a member of the board of directors in June 2017.

(**) Mr. Hostler passed away in June 2017.

(1) Options vest in 33% increments over a three-year vesting schedule. Grant dates are ten years prior to expiration date.

(2) Options vest incrementally over a one-year vesting schedule. Grant dates are ten years prior to expiration date.

58 Stephen Turner Employment Agreement

On April 1, 2015, the Company entered into an employment agreement (the “Employment Agreement”) with Stephen Turner as Chief Executive Officer and Chairman of the Board. The Employment Agreement provides for (i) a term of employment of three years from April 1, 2015, unless terminated by the Company or Mr. Turner, (ii) a base salary of $240,000, (iii) the eligibility of Mr. Turner to receive an annual bonus of at least 20% of his annual base salary (the “Performance Bonus”) provided that he has achieved the metrics established for such calendar year by the Compensation Committee of the Board, (iv) the eligibility of Mr. Turner to receive an additional discretionary bonus as determined by the Board, (v) the eligibility of Mr. Turner to receive a financing bonus in the amount of one $100,000 (the “Financing Bonus”) within thirty (30) days of the completion of the Company’s next round of financing, (vi) the eligibility of Mr. Turner to participate in the Company’s family health insurance benefits and to be covered under the Company’s key man and other life insurance policies and (vii) Mr. Turner’s entitlement to reimbursement for all reasonable out-of-pocket business, entertainment and travel expenses incurred in connection with the performance of his duties under the Employment Agreement. In the discretion of the Board, Mr. Turner may also be eligible for additional Financing Bonuses to the extent the Company raises additional funds. The Company will continue to provide Mr. Turner with coverage under, or equivalent to, its professional liability, directors and officers, and other similar policies for a period of three years following termination of his employment for any reason.

The Employment Agreement may be terminated by either the Company or Mr. Turner at any time and for any reason upon a minimum of 30 days’ advice written notice. In the event that Mr. Turner is terminated by the Company for Cause (as defined in the Employment Agreement), Mr. Turner would be entitled to (x) any accrued but unpaid Base Salary through the date of termination, (y) any unused vacation time, and (z) reimbursement for any unreimbursed business expenses properly incurred by Mr. Turner. In the event that Mr. Turner is terminated by the Company without Cause, Mr. Turner would be entitled to the amounts specified in (x), (y) and (z) above as well as any unpaid Performance Bonus and unpaid Financing Bonus (all such amounts, the “Accrued Amounts”), and a lump sum payment of 18 months’ of his base salary; the Company will pay the premiums for his family health insurance coverage for a period of 18 months; and all stock, restricted stock, options, stock appreciation rights, performance compensation, and any other equity or phantom equity awarded to him that is unvested will vest as of the termination date. In the event the employment term is terminated due to the acquisition of the Company by another company, Mr. Turner will be entitled to receive the Accrued Amounts, and he will be entitled to receive continued base salary for the remainder of the original employment term. In the event of Mr. Turner’s death or disability, the Company will pay him (or his estate and/or beneficiaries, as the case may be) the Accrued Amounts and a lump sum payment of 18 months of his base salary. In the event Mr. Turner’s employment terminates due to disability, the Company will also pay the premiums for his family health insurance coverage for a period of 18 months.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information, as of ~~May~~August 2625, ~~2016~~2017, with respect to the holdings of (1) each person who is the beneficial owner of more than 5% of of our ~~Common~~common ~~Stock~~stock, (2) each of our directors, (3) each executive officer, and (4) all of our current directors and executive ~~officers~~ officers as a group.

All shares, ~~Common~~common ~~Stock~~stock, and per share data gives pro forma effect to the 1-for-50 reverse stock split of our outstanding capital stock that was consummated on __________ ____, ~~2016~~ 2017.

Beneficial ownership before offering of the common stock is determined in accordance with the rules of the Securities and Exchange Commission and includes any shares of common stock over which a person exercises sole or shared voting or investment power, or of which a person has a right to acquire ownership at any time within 60 days of the date of this ~~filing~~prospectus. Except as otherwise indicated, we believe that the persons ~~named~~ named in this table have sole voting and investment power with respect to all shares of common stock held by them. Applicable percentage ownership in the following table is based on 57,~~348~~972,~~820~~679 shares of common stock plus, for each individual, any securities that individual has the right to acquire within 60 days of ~~May~~August 2625, ~~2016.~~2017

To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is no arrangement, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

Title of Class: ~~Common~~common ~~Stock~~stock – Before Offering

Name and Address of Beneficial Owner	Title	Beneficially Owned*			Percent of Class**
Officers and Directors
Stephen Turner	Chief Executive Officer and Chairman of the Board		~~106~~78,~~861~~977	(1)		~~1.99~~*	%
Stanley Hostler	Secretary and Director		370,876	(2)		6.78	%
David Halverson	President and Chief Business Officer		5,938	(2)		*
Greg Kilby	Vice President and Chief Operating Officer		5,250	(3)		-	*
Matthew Powell	Vice President, Research & Development, and Chief Science Officer		2,938	(3)		*
Matthew Powell	Vice President, Research & Development		7,000	(4)		-	*
Haddon Goodman	Chief Business Officer		4,025	(4)		*
Steve Antoline	Director		~~713~~3,~~307~~349,623	(5)		1232.4266	%
Leonard Harris	Director		~~165~~257,~~465~~632	(6)		3.0722	%*
Ed Roberson	Director		2538,~~815~~588	(7)		-*	*
Scott Segal	Director		~~134~~121,~~326~~016	(8)		21.5051	%*
Josiah T. Austin	Director		~~385~~362,~~241~~789	(9)		64.9648	%*
Patrick Gallagher	Director		36,~~867~~267	(10)		-*	*
Maged Shenouda	Director		4,667	(11)		-	*
Officers and Directors as a Group (total of 11 persons)			4,227,793			40.46	%
Officers and Directors as a Group (total of 13 persons)			1,922,675			31.06	%
5% Stockholders
El Coronado Holdings, LLC			~~580~~480,~~406~~608	(1211)		105.5595	%
Summit Resources, Inc.	-		~~617~~3,~~278~~279,342	(1312)		1032.8205	%
Andreas Wawrla			724,222	(14)		12.83	%
Estate of Stanley Hostler	Former Director		686,951	(13)		8.53	%
Andreas Wawrla			948,778	(14)		10.89	%

Represents ownership under 1%.

(1) Includes 8670,~~135~~614 shares of Common Stock, 63,~~726~~363 shares of Common Stock to be acquired upon the exercise of warrants and 145,000 shares of Common Stock to be acquired upon the exercise of stock options.

(2) Includes ~~142~~5,~~176~~938 shares of ~~common~~Common ~~stock,~~Stock ~~55,608 shares of common stock~~ to be acquired upon the exercise of ~~warrants and 31,307 shares of common~~ stock ~~to be acquired upon the exercise of stock~~ options. Also includes 95,267 shares of common stock held by Mr. Hostler’s wife, Virginia Child and 36,137 shares of common stock to be acquired upon the exercise of warrants held by Mr. Hostler’s wife, Virginia Child. Also includes 5,932 shares of common stock and 4,449 shares of common stock to be acquired upon the exercise of warrants jointly held by Stanley Hostler and Virginia Child.

(3) Includes 52,~~250~~938 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options.

59 (4) Includes 4,025 shares of Common Stock to be acquired upon the exercise of stock options.

~~(4) Includes 7,000 shares of common stock to be acquired upon the exercise of stock options.~~53

(5) Includes 6046,~~562~~948 shares of ~~common~~Common ~~stock~~Stock and 3020,~~800~~000 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants owned of record by the ~~Steve~~Wilderness A.Land ~~Antoline~~Company, ~~2006 Irrevocable Trust (the “Antoline Trust”)~~LLC. Also includes ~~252~~1,~~777~~020,457 shares of ~~common~~Common ~~stock~~Stock, ~~and 364~~1,~~501~~792,218 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants owned of record by Summit Resources, Inc. As the trustee of the ~~Antoline~~Wilderness ~~Trust~~Land Company, LLC and president of Summit Resources, Inc., Mr. Antoline has voting and dispositive control over any securities owned of record by the ~~Antoline~~Wilderness ~~Trust~~Land Company and Summit Resources, Inc. Therefore, he may be deemed to beneficially own the shares of ~~common~~Common ~~stock~~Stock and the shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants held of record by the ~~Antoline~~Wilderness ~~Trust~~Land Company, LLC and Summit Resources, Inc. Includes 43,~~667~~333 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options. up to 466,667 shares of Common Stock issuable upon the optional conversion of a $1,750,000 senior secured note issued to Summit Resources. As president of Summit Resources, Inc., Mr. Antoline has voting and dispositive control over any securities owned of record by Summit Resources, Inc. Therefore, he may be deemed to beneficially own the shares of Common Stock and the shares of Common Stock to be acquired upon the exercise of warrants held of record by Summit Resources, Inc.

(6) Includes ~~118~~236,~~269~~701 shares of ~~common~~Common ~~stock~~Stock, 2812,~~529~~598 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants and 188,~~667~~333 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options.

(7) Includes 1132,~~504~~109 shares of ~~common~~Common ~~stock~~Stock, 21,~~290~~145 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants and 75,~~307~~333 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options. Also includes 21,~~714~~357 shares of ~~common~~Common ~~stock~~Stock ~~and warrants to purchase 2,000 shares of common stock~~ owned of record by ~~Morgan~~Raymond ~~Keegan~~James & CoAssociates, Inc., an IRA account of Ed Roberson.

(8) Includes 98102,~~647~~678 shares of ~~common~~Common ~~stock~~Stock, 2110,~~012~~006 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants and 148,~~667~~333 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options.

(9) Includes ~~193~~236,~~656~~686 shares of ~~common~~Common ~~stock~~Stock, 64,~~667~~333 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options, ~~160~~109,~~676~~978 shares to be acquired upon the exercise of warrants, and 2411,~~242~~791 shares of ~~common~~Common ~~stock~~Stock upon the conversion of a convertible debenture.

(10) Includes 34,~~200~~933 shares of ~~common~~Common ~~stock~~Stock and ~~667~~1,333 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options.

(11) Includes 4370,~~000~~630 shares of ~~common~~Common ~~stock~~Stock, ~~and~~109,978 ~~667~~ shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of ~~stock options~~warrants.

(12) Includes ~~419~~1,~~730~~020,457 shares of ~~common~~Common ~~stock~~Stock, 1,792,218 shares of Common Stock to be acquired upon the exercise of warrants and ~~160~~up to 466,~~676~~667 shares of ~~common~~Common ~~stock~~Stock issuable upon the optional conversion of a $1,750,000 senior secured note issued to Summit Resources. As president of Summit Resources, Inc., Mr. Antoline has voting and dispositive control over any securities owned of record by Summit Resources, Inc. Therefore, he may be deemed to beneficially own the shares of Common Stock and the shares of Common Stock to be acquired upon the exercise of warrants held of record by Summit Resources, Inc.

(13) Includes ~~252~~604,~~777~~021 shares of ~~common~~Common ~~stock~~Stock, ~~and 364~~46,~~501~~277 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants. Asand ~~president~~36,563 shares of ~~Summit~~Common ~~Resources,~~Stock ~~Inc.,~~to ~~Mr.~~be ~~Antoline~~acquired ~~has~~upon ~~voting~~the ~~and~~exercise ~~dispositive~~of ~~control~~stock ~~over~~options. ~~any~~Also ~~securities~~includes ~~owned~~232,933 shares of ~~record~~Common Stock held by ~~Summit~~Mr. ~~Resources~~Hostler’s wife, ~~Inc.~~Virginia ~~Therefore~~Child and 19,793 heshares ~~may~~of beCommon ~~deemed~~Stock to ~~beneficially~~be ~~own~~acquired upon the exercise of warrants held by Mr. Hostler’s wife, Virginia Child. Also includes 2,966 shares of ~~common~~Common ~~stock~~Stock and ~~the~~2,225 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants jointly held ofby ~~record~~Stanley byHostler ~~Summit~~and ~~Resources,~~Virginia ~~Inc~~Child.

(14) Includes ~~424~~212,~~222~~111 shares of ~~common~~Common ~~stock~~Stock, ~~and 300~~416,~~000~~667 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants and 320,000 shares of Common Stock issuable upon the optional conversion of a $1,200,000 20% OID debenture issued in June 2017.

Beneficial ownership post offering of the Common Stock is determined in accordance with the rules of the Securities and Exchange Commission and includes any shares of Common Stock over which a person exercises sole or shared voting or investment power, or of which a person has a right to acquire ownership at any time within 60 days of March 31, 2016. Except as otherwise indicated, we believe that the persons named in this table have sole voting and investment power with respect to all shares of Common Stock held by them. Applicable percentage ownership in the following table is based on 5,348,820 shares of common stock outstanding as of March 31, 2016 plus, for each individual, any securities that individual has the right to acquire within 60 days of March 31, 2016.54

~~All~~Title ~~shares, Common Stock, and per share data gives pro forma effect to the 1-for-25 reverse stock split~~ of ~~our~~Class: ~~outstanding~~common ~~capital~~ stock to– bePost ~~consummated prior to the effective date of the registration statement of which this prospectus is a part.~~Offering

Name and Address of Beneficial Owner	Title	Beneficially Owned*		Percent of Class**
Officers and Directors
Stephen Turner	Chief Executive Officer and Chairman of the Board		(1)		%
David Halverson	President		(2)		*
Matthew Powell	Vice President, Research & Development		(3)		*
Haddon Goodman	Chief Business Officer		(4)
Steve Antoline	Director		(5)		%
Leonard Harris	Director		(6)		%
Ed Roberson	Director		(7)		*
Scott Segal	Director		(8)		%
Josiah T. Austin	Director		(9)		%
Patrick Gallagher	Director		(10)		*
Officers and Directors as a Group (total of 13 persons)					%

5% Stockholders
El Coronado Holdings, LLC			(11)		%
Summit Resources, Inc.			(12)		%
Estate of Stanley Hostler	Former Director		(13)
Andreas Wawrla			(14)		%

Title of Class: Common Stock – Post Offering

Name and Address of Beneficial Owner	Title	Beneficially Owned*			Percent of Class**
Officers and Directors
Stephen Turner	Chief Executive Officer and Chairman of the Board		106,861	(1)		1.3	%
Stanley Hostler	Secretary and Director		370,876	(2)		4.4	%
Greg Kilby	Vice President and Chief Operating Officer		5,250	(3)		-	*
Matthew Powell	Vice President, Research & Development		7,000	(4)		-	*
Steve Antoline	Director		713,307	(5)		8.4	%
Leonard Harris	Director		165,465	(6)		2	%
Ed Roberson	Director		25,815	(7)		-	*
Scott Segal	Director		134,326	(8)		1.6	%
Josiah T. Austin	Director		385,241	(9)		4.6	%
Patrick Gallagher	Director		3,867	(10)		-	*
Maged Shenouda	Director		4,667	(11)		-	*
Officers and Directors as a Group (total of 13 persons)			1,922,675			23	%
5% Stockholders
El Coronado Holdings, LLC			580,406	(12)		6.9	%
Summit Resources, Inc.	-		617,278	(13)		7.3	%
Andreas Wawrla			724,222	(14)		8.6	%

* Represents ownership under 1%.

(1) Includes 8670,~~135~~614 shares of ~~common~~Common ~~stock~~Stock, 63,~~726~~363 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants and 145,000 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options.

(3) Includes 52,~~250~~938 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options.

(4) Includes 74,~~000~~025 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options.

~~(10) Includes 3,200 shares of common stock and 667 shares of common stock to be acquired upon the exercise of stock options.~~55

(1110) Includes 4,~~000~~933 shares of ~~common~~Common ~~stock~~Stock and ~~667~~1,333 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of stock options.

(1211) Includes ~~419~~370,~~730~~630 shares of ~~common~~Common ~~stock~~Stock, ~~and 160~~109,~~676~~978 shares of ~~common~~Common ~~stock~~Stock to be acquired upon the exercise of warrants.

61 (12) Includes 1,020,457 shares of Common Stock, 1,792,218 shares of Common Stock to be acquired upon the exercise of warrants and up to 466,667 shares of Common Stock issuable upon the optional conversion of a $1,750,000 senior secured note issued to Summit Resources. As president of Summit Resources, Inc., Mr. Antoline has voting and dispositive control over any securities owned of record by Summit Resources, Inc. Therefore, he may be deemed to beneficially own the shares of Common Stock and the shares of Common Stock to be acquired upon the exercise of warrants held of record by Summit Resources, Inc.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Described below are transactions or series of transactions that occurred from January 1, 2015 through the date of this prospectus (the “Period Reported”) between us and our executive officers, directors or the beneficial owners of 5% or more of our ~~Common~~common ~~Stock~~stock, and certain persons affiliated with or related to these persons, including family members, in which they had or will have a direct or indirect material interest in an amount that exceeds the lesser of $120,000 or 1% of the average of our total assets as of year-end for the last two completed fiscal years, other than compensation arrangements that are otherwise described under “Executive Compensation,” above, which information is incorporated herein by reference. See “Principal Stockholders,” above for information relating to outstanding options and warrants to purchase our ~~Common~~common ~~Stock~~stock held by such persons, which information is incorporated herein by reference.

During 2014, the Company received advances equal to an aggregate of $265,000 from Stanley Hostler, a former director of the Company. The Company has repaid $125,000 to Stanley Hostler. In 2015, the Company received advances equal to an aggregate of $725,000 from Stanley Hostler a former director of the Company. The Company repaid $60,000 to Stanley Hostler. In 2016, the Company received advances equal to an aggregate of 514,775, Nowhich ~~terms~~includes a promissory note of ~~repayment~~$255,000 ~~have~~that ~~been~~is ~~specified~~to onbe ~~the~~repaid ~~remaining~~to ~~aforementioned~~United Bank. The Company has repaid $2,375 of the 2016 advances. On asMarch 21, 2017, Mr. Hostler agreed to convert $957,400 of the ~~date~~indebtedness owed to him into 255,307 shares of ~~this~~Common ~~report~~Stock, 255,307 Class A Warrants and 255,307 Class B Warrants, 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.

On May 22, 2014 and October 10, 2014, the Company received advances equal to $30,000 from Stephen and Nancy Turner, our Chief Executive Officer and director of the Company and his spouse. The Company has repaid $20,000 to Mr. Turner. NoIn ~~terms~~2015, the Company received additional advances equal to an aggregate of ~~repayment~~$57,500 ~~have~~from Steve and Nancy Turner of which $7,500 has been ~~specified~~repaid. onIn 2016, the ~~remaining~~Company ~~aforementioned~~received advances equal to an aggregate ~~advance~~of as$27,664 of ~~the~~which ~~date~~$23,664 ofhas ~~this~~been ~~report~~repaid. Subsequent to December 31, 2016, Mr. Turner had advanced the company $2,200.00

During 2014, the Company received advances equal to an aggregate of $1,415,000 from 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 128,~~415,000~~300 shares of ~~Common~~common ~~Stock~~stock at an exercise price of $040.8000 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. The outstanding balance, net of discount, was $1,074,773 as of 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 121,~~080,312~~606 shares of ~~Common~~common ~~Stock~~stock at a conversion price of $012.2550 per ~~share~~ share and as an inducement to convert, warrants in aggregate of ~~540~~10,~~156~~803 to purchase shares of ~~Common~~common ~~Stock~~stock at an exercise price of $025.50 00 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 cost 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, 2015, the outstanding balance was $1,000,000 or $917,000, net of discount.~~

On March 20, 2015, the Company issued ~~Common~~common ~~Stock~~stock in connection with the conversion of $550,262 outstanding principal and accrued unpaid interest of certain convertible promissory notes (the "Notes") to Summit Resources, Inc. The Notes were converted into 882,~~041~~201,046 shares of ~~Common~~common ~~Stock~~stock determined by dividing the Notes by $612.2550 per share. In connection with the conversion of the Notes, the Summit Resources, Inc. also received a 5- year warrant to purchase 4422,~~020~~010 shares of the Company’s ~~Common~~common ~~Stock~~stock, exercisable at $1225.5000 per share.

On July 1, 2015, the Company received aggregate gross proceeds of $200,000 from one director and issued a 10% Convertible Promissory Note due on December 31, 2015. The note is convertible into Common Stock at a conversion price of $8.25 per share. The Company also issued 3,636 shares of Common Stock as commitment fee to the director with a price per share of $ 8,25.56

In 2015, the Company received advances equal to an aggregate of $~~193~~255,000 from ~~Leo~~Steve ~~Harris~~Antoline, a director of the Company. NoThe ~~terms~~Company ofrepaid ~~repayment~~$90,000 ~~have~~to ~~been~~Steve ~~specified on the aforementioned advances as of the date of this report~~Antoline.

InAs ~~2015,~~of ~~the~~December ~~Company~~31, ~~received~~2016, ~~advances~~the outstanding ~~equal~~balance owed to anSummit ~~aggregate~~was of $~~725~~1,000,000 ~~from~~or ~~Stanley Hostler a director of the Company. The Company repaid~~ $25916,~~000~~667, tonet ~~Stanley Hostler. No terms~~ of ~~repayment have been specified on the remaining aforementioned advances as of the date of this report~~discount.

OnIn ~~January~~March 302017, ~~2015,~~Summit ~~the~~and ~~Company~~Mr. ~~received~~Antoline ~~advances~~agreed ~~equal~~ to anconvert ~~aggregate~~all of ~~$57,500~~the ~~from~~remaining ~~Steve~~indebtedness and ~~Nancy~~interest ~~Turner,~~owed ~~our~~to ~~Chief~~it ~~Executive~~and ~~Officer~~him ~~and~~into ~~director~~329,915 shares of ~~the~~Common ~~Company~~Stock, 329,915 Class A Warrants and ~~his~~329,915 ~~spouse.~~Class NoB Warrants, containing identical terms to the Units of ~~repayment~~equity ~~have~~securities ~~been~~which ~~specified~~we onsold ~~the~~in ~~aforementioned~~our private ~~advances~~placement asto ofunaffiliated ~~the~~accredited ~~date~~investors ofbetween ~~this~~November ~~report~~2016 and March 31, 2017.

62 On July 1, 2015, the Company received aggregate gross proceeds of $200,000 from one director and issued a 10% Convertible Promissory Note due on December 31, 2015. The note is convertible into common stock at a conversion price of $8.25 per share. The Company also issued 90,910 shares of common stock as commitment fee to the director with a price per share of $16.50. As of the date of this prosepectus, the Company is in discussions with the related party regarding terms to pay all accrued unpaid interest in cash and convert the principal balance of the note to common stock.

In 2015, the Company received advances equal to an aggregate of $~~255~~193,000 from ~~Steve~~Leo ~~Antoline,~~Harris a director of the Company. ~~The~~In 2016, the Company ~~repaid~~received advances equal to an aggregate of $9035,000 tofrom ~~Steve~~Mr. ~~Antoline~~Harris. No ~~terms~~Subsequently, ofin ~~repayment~~March ~~have~~2017 ~~been~~Mr. ~~specified~~Harris onadvanced the Company $30,000.00. In March 2017, Mr. Harris agreed to convert all of the remaining ~~aforementioned~~indebtedness ~~advances~~owed asto him into 68,800 shares of Common Stock, 68,800 Class A Warrants and 68,800 Class B Warrants, containing identical terms to the ~~date~~Units of ~~this~~equity ~~report~~securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 31, 2017.

In 2015, the Company received advances equal to an aggregate of $72,000 from Josiah Austin, a director of the Company. No terms of repayment have been specified on the remaining aforementioned advances as of the date of this ~~report~~prospectus.

In 2015, the Company received an advance equal to $25,000 from Scott Segal, a director of the Company. NoSubsequently, ~~terms~~in ofMarch ~~repayment~~2017 ~~have~~Mr. ~~been~~Segal ~~specified~~advanced on the ~~remaining~~Company ~~aforementioned~~$50,000.00. ~~advances~~In asMarch 2017, Mr. Segal agreed to convert all of the ~~date~~indebtedness owed to him into 20,000 shares of ~~this~~Common ~~report~~Stock, 20,000 Class A Warrants and 20,000 Class B Warrants, 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 2015, the Company received advances equal to an aggregate of $30,000 from Ed Roberson, a director of the Company. NoIn ~~terms~~March of2017, ~~repayment~~Mr. ~~have~~Roberson ~~been~~agreed ~~specified~~to onconvert ~~the~~all of the remaining ~~aforementioned~~indebtedness ~~advances~~owed asto him into 8,000 shares of Common Stock, 8,000 Class A Warrants and 8,000 Class B Warrants, containing identical terms to the ~~date~~Units of ~~this~~equity ~~report~~securities which we sold in our private placement to unaffiliated accredited investors between November 2016 and March 29, 2017.

Patrick Gallagher, one of our Directors, is a Managing Director and Head of Institutional Sales of Laidlaw & Co., anthe ~~affiliate~~underwriter offor ~~the~~this ~~entity~~offering ~~that~~and ~~acted~~the as placement agent for the Company’s winter 2013, winter 2014, ~~and~~ fall 2015 private placements and the Unit offering private placement conducted between November 2016 and March 29, 2017, for which the placement agent received cash fees aggregating $1245,~~689,078~~292 and warrants to purchase an aggregate of ~~285~~149,~~919~~274 shares of Common Stock at exercise ~~prices~~price ~~between $6.25~~of ~~and~~ $123.5075, and was reimbursed for approximately $~~187~~39,500 of expenses. The ~~placement~~underwriter ~~agent~~ and its affiliates beneficially own shares of our Common Stock. See “Security Ownership of Certain Beneficial Owners and Management” and “Description of Securities—Warrants.” The ~~placement~~underwriter ~~agent~~ and its affiliates may provide investment banking and other services to us in the future.

~~For~~In ~~the~~February ~~four months ended April 30,~~ 2016, the Company’s Board of Directors authorized the conversion of an aggregate of $33,333 of accrued interest on promissory notes issued by the Company to Summit ~~Resources,~~and ~~Inc. (“Summit”)~~$8, an060 ~~affiliate~~ of ~~Steven~~account ~~Antoline,~~payable ~~who~~(or is a ~~director~~total of $41,393) by the Company to Summit, ~~and~~into $83,~~060~~311 shares of ~~accounts~~Common ~~payable~~Stock byat the rate of $12.50 per share. The transaction also included the ~~Company~~issuance of warrants to ~~Summit,~~purchase ~~into 6~~9,~~623~~000 shares of Common Stock. The atwarrants ~~the~~have ~~rate~~an exercise price of $620.2500 per share, a five-year term and do not contain an anti-dilution provision. The relative fair value of these warrants at the issuance date, and the corresponding liability recorded for these warrants at that date, was estimated at $945.

~~For~~In September 2016, the ~~four~~Company’s Board ~~months~~of ~~ended~~Directors ~~April~~authorized ~~30,~~the ~~2016~~conversion of an aggregate of $41,667 ~~the~~of ~~Company~~accrued interest on promissory notes issued ~~warrants~~ by the Company to ~~purchase~~Summit 18and $9,~~000~~781 ~~shares~~of account payable (or a total of ~~Common~~$51,448) ~~Stock~~by the Company to Summit, asinto ~~consideration~~4,116 ~~for~~shares ~~advances.~~of ~~The~~Common ~~warrants~~Stock ~~are exercisable~~ at an ~~exercise~~the ~~price~~rate of $1012.0050 per share ~~for a five year term~~.

~~For~~On ~~the~~April ~~four~~7, ~~months~~2017, ~~ended~~we ~~April~~received 30a loan of $1,750,000 ~~2016~~from Summit Resources, ~~the~~ ~~Company~~Inc., ~~received~~(“Summit”) ~~advances~~one ~~equal~~of toour principal stockholders and an ~~aggregate~~affiliate of Steve ~~$174~~Antoline,~~000~~ ~~from~~one ~~certain~~of ~~current~~our directors. ~~and~~The ~~related~~loaned ~~parties.~~amount ~~Repayment~~includes of $25500,000 ~~has~~previously ~~been~~advanced ~~made~~by onSummit ~~the aforementioned advances~~ and ~~repayment~~an of additional $471,250,000 onwill ~~prior~~be ~~advances~~advanced to us from April 2017 through July 2017. NoWe ~~terms~~issued ofto ~~repayment~~Summit ~~have~~our ~~been specified~~senior onsecured promissory note in the ~~balance~~principal amount of ~~the~~up ~~aforementioned~~to ~~advances~~$1,750,000 that is payable in monthly installments over a period of 36 months.

~~Our~~Of the loan proceeds, $31,~~000~~250,000 ~~line~~will ofbe used ~~credit~~to ~~with~~purchase ~~United Bank~~a isnew ~~unconditionally~~state-of-the-art ~~guaranteed~~mass byspectrometer ~~three~~we ofrecently ~~our~~ordered ~~directors~~ and the ~~estate~~balance of athe ~~former~~loan ~~board~~will ~~member,~~be toused ~~the~~for ~~maximum~~working capital. ~~extent~~We ~~of $750,000~~have byagreed ~~each~~to apply 30% of ~~such~~the ~~individuals.~~net Inproceeds ~~February~~(after ~~2016,~~commissions and inoffering ~~consideration~~expenses) ~~for~~we ~~their~~receive ~~agreement~~from toany ~~extend~~equity ~~their~~or equity ~~personal~~type ~~guarantees of~~financing ~~our~~to reduce and prepay the $3500,000~~,000~~ ~~line~~working ofcapital ~~credit,~~portion weof ~~agreed~~the toloan. ~~issue~~In addition, onthe aentire ~~pro-rata~~loan ~~basis,~~is subject to ~~such~~mandatory ~~directors~~prepayment ~~and~~in the ~~estate~~event ofand ~~our~~to ~~former~~the ~~board member,~~extent ~~three~~that ~~year~~we ~~warrants~~receive togross ~~purchase~~proceeds ~~120~~of $5,000,000 ~~shares~~or ofmore ~~our~~from ~~common~~any ~~stock~~subsequent public atoffering anof ~~exercise~~our ~~price $10~~securities.~~00 per share.~~

As of the date of this prospectus, we are indebted to certain members of our board of directors and the estate of a former director for loans and advances made to our Company over the past five years in the aggregate amount of $2,676,500. We anticipate paying (on a pro rata basis) out of the net proceeds of this offering $669,125, or 25% of the total $2,676,500 amount owed, commencing 30 days after our common stock begins trading on the Nasdaq Capital Market. See “Use of Proceeds”. The 75% balance of such indebtedness to our directors and their affiliates (approximately $2,007,375) would be evidenced by 6% notes due as to principal and accrued interest on a date which shall be one year from the date of this prospectus. There can be no assurance that we will be successful in completing the contemplated agreements or the terms and conditions of any such arrangements. Any such agreements may be subject to completion of this offering.57

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 the 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 agreed to waive its security interest in our accounts receivable and inventory until such time as we retire a $301,577.79 obligation to an unaffiliated third party, subject to our agreement to reaffirm Summit’s senior priority lien and security interest on all of our assets and properties, other than the specific accounts receivable and related collateral granted to such third party. On June 28, 2017, we satisfied the obligation to the unaffiliated third party and the waiver is no longer applicable.

We were able to obtain the collaboration agreement with Mass General through the efforts of certain members of PPLL, LLC (“PPLL”). 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 720,000 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 720,000 shares.

PPLL is a Delaware limited liability company whose sole managing member is WPGAT Partners, LLC. Matthew Eitner, the chief executive officer of Laidlaw & Company (UK) Ltd., and James Ahern, the head of capital markets for Laidlaw, are members of WPGAT Partners, LLC, owning 76% of the membership interests in WPGAT, LLC. Further, Matthew Eitner, in his capacity as manager of WPGAT Partners, LLC, may also be deemed to have investment discretion and voting power over the shares issuable upon conversion of the Note held by PPLL, LLC. The PPLL note contains an ownership limitation such that the holder may not convert any of such securities to the extent that such conversion would result in the holder’s beneficial ownership being in excess of 4.99% of the Company’s issued and outstanding Common Stock together with all shares owned by the holder and its affiliates. In addition, on August 25, 2017, PPLL entered into an agreement with the Company pursuant to which PPLL agreed that until January 15, 2018, they would not convert the note held by it unless and until the Company has, in addition to all shares of common stock issued and issuable to connection with the proposed Interim Financings, a sufficient number of shares of authorized common stock available to be issued to PPLL upon full conversion or exercise of their securities.

In August 2017, we received a loan agreement in the amount of $440,000 (the “Loan”) from Summit under a maximum 10% $500,000 note payable (the “Note”) on the earlier of (a) December 31, 2017, (b) our receipt of $2,500,000 or more from any subsequent private placement of securities consummated prior to December 31, 2017, or (c) the completion of the offering contemplated by this prospectus. In consideration of its making of the Loan, and in addition to interest and any other charges to be paid pursuant to this Note, the Borrower hereby grants to the Lender or its designees a seven (7) year warrant to purchase, for an initial exercise price of $3.75 per share, 1,200,000 shares of the common stock, $0.0001 par value per share.

On August 25, 2017, we entered into an agreement with PPLL and Summit, who each agreed that until January 15, 2018, they

would not convert any convertible notes held by them or exercise any warrants issued to Summit unless and until the Company has, in addition to all shares of common stock issued and issuable to connection with the proposed Interim Financings, a sufficient number of shares of authorized common stock available to be issued to to PPLL and Summit upon full conversion or exercise of their securities; and,

would waive the covenants of our Company to reserve up 139,333,333 shares of our common stock otherwise potentially issuable to PPLL and Summit.

In connection with such agreement, we committed that by not later than January 15, 2018, the Company would either consummate a reverse stock split or obtain stockholder approve to increase the 750,000,000 shares of common stock under our certificate of incorporation to provide for a sufficient number of authorized and unissued shares of common stock to accommodate the full conversion and exercise of all convertible notes and warrants held by PPLL and Summit. Failure to effect the reverse split or amendment to our certificate of incorporation is an event of default under the notes.

DESCRIPTION OF SECURITIES

The following description of our securities is only a summary, and is qualified in its entirety by reference to the actual terms and provisions of the capital stock contained in our articles of incorporation and our bylaws.

~~Reverse~~Our ~~Stock~~authorized ~~Split~~capital stock consists of 760,000,000 shares, of which 750,000,000 are designated common stock, par value $0.0001 per share and 10,000,000 are designated preferred stock, par value $0.0001 per share, all of which shares of preferred stock, subject to the next two sentences, shall remain undesignated until such time as the Board of Directors, by resolution or resolutions and the filing of a certificate pursuant to applicable laws of the State of Delaware establishes from time to time the number of shares to be included in each such series, and fixes the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.

In an attempt to implement our strategy to list our common stock of the Nasdaq Capital Market, in December 2015, our stockholders approved and authorized our board of directors to consummate a reverse split of our issued and outstanding common stock at a ratio of not less than 1-for-15 and not more than 1-for-25, with the exact reverse stock split ratio to be determined by the board in its sole discretion based upon the market price of the Company’s common stock on the date of such determination and with such reverse stock split to be effective at such time and date, if at all, as determined by the board in its sole discretion. Prior to the effective date of this offering, the board of directors intends to effect a 1-for-25 reverse stock split.

As a result of our one-for-25 reverse stock split, (i) all outstanding 133,720,519 shares of our common stock, prior to the consummation of the reverse stock split, will be reduced to 5,348,820 shares and (ii) all shares of our common stock issuable upon exercise of outstanding 76,450,269 warrants, prior to the consummation of the reverse stock split, will be reduced to 3,058,010 shares with a corresponding increase in the exercise prices of such warrants to prices ranging from $6.25 to $56.25 per share. Our common stock is held of record by approximately 526 stockholders.

Our authorized capital stock consists of 260,000,000 shares, of which 250,000,000 are designated common stock, par value $0.0001 per share and 10,000,000 are designated preferred stock, par value $0.0001 per share, all of which shares of preferred stock, subject to the next two sentences, shall remain undesignated until such time as the Board of Directors, by resolution or resolutions and the filing of a certificate pursuant to applicable laws of the State of Delaware establishes from time to time the number of shares to be included in each such series, and fixes the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.

Common Stock

The holders of our common stock are entitled to the following rights:

Voting Rights

Each share of our common stock entitles its holder to one vote per share on all matters to be voted or consented upon by the stockholders. Holders of our common stock are not entitled to cumulative voting rights with respect to the election of directors.

Dividend Rights

Subject to limitations under Delaware law and preferences that may apply to any shares of preferred stock that we may decide to issue in the future, holders of our common stock are entitled to receive ratably such dividends or other distributions, if any, as may be declared by our Board out of funds legally available therefor

Liquidation Rights

In the event of the liquidation, dissolution or winding up of our business, the holders of our common stock are entitled to share ratably in the assets available for distribution after the payment of all of our debts and other liabilities, subject to the prior rights of the holders of our preferred stock.

Other Matters

The holders of our common stock have no subscription, redemption or conversion privileges. Our common stock does not entitle its holders to preemptive rights. All of the outstanding shares of our common stock are fully paid and non-assessable. The rights, preferences and privileges of the holders of our common stock are subject to the rights of the holders of shares of any series of preferred stock which we may issue in the future.

Preferred Stock

Our authorized preferred stock consists of 10,000,000 shares of preferred stock, par value $0.0001 per share. As of the date of this ~~filing~~prospectus, no shares of preferred ~~stock~~ stock are outstanding. Our Board has the authority to issue preferred stock in one or more classes or series and to fix the designations, powers, preferences, and rights, and the qualifications, limitations or restrictions thereof including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, without further vote or action by the stockholders.

While we do not currently have any plans for the issuance of any preferred stock, the issuance of preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the common stock until the Board of Directors determines the specific rights of the holders of the preferred stock; however, these effects may include:

Restricting dividends on the common stock;

Diluting the voting power of the common stock;

Impairing the liquidation rights of the common stock; or

Delaying or preventing a change in control of the Company without further action by the stockholders.

Warrants

As of the date of this prospectus, there are warrants to purchase a total of 34,~~058~~432,~~010~~233 shares of ~~Common~~common ~~Stock~~stock outstanding at the exercise prices set forth below:

~~(i)~~· ~~186~~2,~~166~~600,141 shares of common stock at an exercise price of $63.2575 per share.

~~(ii) 343,080 shares of common stock at an exercise price of $8.13 per share.~~59

64 · 457,505 shares of common stock at an exercise price of $4.50 per share.

~~(iii)~~· ~~736~~26,~~684~~800 shares of common stock at an exercise price of $95.3800 per share.

~~(iv)~~· 4125,~~600~~000 shares of common stock at an exercise price of $105.0050 per share.

~~(v)~~· 6956,~~200~~067 shares of common stock at an exercise price of $115.2563 per share.

~~(vi)~~· 9093,~~020~~083 shares of common stock at an exercise price of $129.50 per share.

~~(vii)~~· ~~310~~55,~~492~~025 shares of common stock at an exercise price of $1510.6000 per share.

~~(viii)~~· ~~217~~150,~~263~~000 shares of common stock at an exercise price of $1812.7500 per share.

~~(ix)~~· 56296,~~600~~622 shares of common stock at an exercise price of $2013.0050 per share.

~~(x)~~· ~~762~~56,~~174~~900 shares of common stock at an exercise price of $2714.5000 per share.

~~(xi)~~· 1020,~~550~~800 shares of ~~Common~~common ~~Stock~~stock at an exercise price of $2820.00 per share.

~~(xii)~~· ~~154~~34,~~792~~600 shares of common stock at an exercise price of $5022.0030 per share.

~~(xiii)~~· 3143,~~933~~062 shares of common stock at an exercise price of $5525.00 per share.

~~(xiv)~~· 51146,~~856~~638 shares of common stock at an exercise price of $5637.2500 per share.

~~(xv)~~· 2328,~~600~~300 shares of common stock at an exercise price toof be$40.00 ~~determined~~per ~~by the Board of Directors~~share.

~~The~~· foregoing warrants do not include three year warrants we intend to issue prior to completion of this offering to three of our directors and the estate of a former director entitling such recipients to purchase up to 120234,~~000~~449 shares of common stock at an exercise price of $1055.00 per share. ~~See “Certain Relationships and Related Transactions” elsewhere in this prospectus.~~

~~Each~~· ~~$56.25~~5,275 ~~warrant~~shares isof ~~exercisable~~common stock at an exercise price of $56.2500 per share any time after the date of issuance until the earlier of (i) the closing of a firm commitment underwritten offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock for the account of the Company in which the net cash proceeds to the Company (after deduction of underwriting discounts and commissions) are at least $15,000,000 or (ii) 5:00 p.~~m. Eastern time on the fifth anniversary of the warrant issue date hereof.~~

~~Each~~· ~~$27.50~~1,966 ~~warrant~~shares ~~is exercisable for a term~~ of ~~five~~common ~~years~~stock ~~from the issue date issuance~~ at an exercise price of $27110.5000 per share.

~~2013~~Exchange ~~Warrants~~Offers

InAs ~~connection with a $7,762,321 private placement~~ of ~~620,986~~August ~~shares of common stock and five year warrants to purchase 310~~21,~~493~~ ~~shares of our common stock~~2017, we ~~issue~~were ~~warrants to~~in ~~purchase 310,493 shares of common stock (the “B Warrants”). Each B Warrant entitles the holder (to purchase from~~default ~~time~~in topayment ~~time the number~~ of ~~shares~~approximately ~~of common stock equal to 50% of the number of shares purchased by the holder in the 2013 offering~~$2, at085,400 ~~an exercise price~~ of ~~$18.75~~outstanding ~~per~~notes ~~share.~~and ~~The B Warrant contains a cashless exercise provision~~debentures.

In ~~the event that prior to the expiration of such purchase rights by exercise or by the terms of the B Warrant~~addition, ~~(i)~~ the ~~Company~~anti-dilution ~~effects any merger or consolidation of the~~provisions ~~Company~~contained ~~with or into another person, (ii) the Company effects any sale of all or substantially all of its assets~~ in ~~one~~many ~~or a series~~ of ~~related~~our ~~transactions,~~outstanding ~~(iii)~~securities ~~any~~between ~~tender~~2013 ~~offer~~and or2017 ~~exchange~~has ~~offer~~created ~~(whether~~significant byderivative ~~the~~liabilities ~~Company or another person) is completed pursuant to which holders of common stock are permitted to tender or exchange their shares~~ for ~~other~~our ~~securities, cash or property or (iv) the~~ Company ~~effects any reclassification of the common stock or any compulsory share exchange pursuant to which the common stock~~. isAs ~~effectively converted into or exchanged for other securities, cash or property (each a “Fundamental Transaction”), then, upon any subsequent exercise~~ of ~~the~~December ~~B Warrant~~31, ~~the B Warrant Holder shall have the right to receive~~2016, ~~for~~such ~~each~~derivative Bliability ~~Warrant~~has ~~Share that would have~~ been ~~issuable~~calculated ~~upon such exercise immediately prior~~ to ~~the~~be ~~occurrence~~in ofexcess ~~such Fundamental Transaction, the number~~ of ~~shares of common stock of the successor or acquiring corporation or of the Company~~$3, ~~if it is the surviving corporation~~100,000 and ~~any~~ ~~additional~~increases ~~consideration (the “Alternate Consideration”) receivable~~ as awe ~~result~~sell ~~of such merger, consolidation or~~additional ~~disposition~~warrants. ofSuch ~~assets~~derivative byliability adirectly ~~holder~~impacts ofand ~~the~~reduces ~~number~~our ofstockholders’ ~~shares~~equity ~~of common stock for~~ which ~~the~~could Bmaterially ~~Warrant~~and ~~is exercisable immediately prior~~adversely toaffect ~~such~~our ~~event.~~ability ~~For~~in ~~purposes of any such exercise,~~ the ~~determination~~future ~~of the B Warrant exercise price shall be appropriately adjusted~~ to ~~apply~~qualify to ~~such~~list ~~Alternate~~our ~~Consideration based on the amount of Alternate Consideration issuable in respect of one share of~~ common stock infor ~~such~~trading ~~Fundamental~~on ~~Transaction, and~~ the ~~Company~~Nasdaq ~~shall~~Capital ~~apportion~~Market ~~the~~or Bother ~~Warrant exercise price among the Alternate Consideration~~comparable innational asecurities ~~reasonable manner reflecting the relative value of any different components of the Alternate Consideration~~exchange.

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

~~2013~~· ~~Placement~~Offered ~~Agent~~to ~~Warrants~~the holder(s) of all $2,270,438 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 prospectus, an aggregate of $2,254,281 of the 2016 20% OID Debentures were exchanged for $2,3466,995 of new 20% OID Debentures due September 30, 2017, and the parties to the exchange offer received an additional 49,779 shares of our common stock. The remaining $16,406 of our 20% original discount debentures that were not exchanged for new 20% OID Debentures are currently in default and there can be no assurance that the 3 holders of such defaulted debentures will agree to accept our exchange offer.

In 2013, in connection with the 2013 winter offering, the Company agreed to issue to Laidlaw & Company (UK) Ltd., as the Placement Agent, and or its designee(s) warrants (the “2013 Placement Agent Warrants”) equal to 10% (ten percent) of the shares of common stock and shares underlying the Investor Warrants sold in the 2013 Offering. The 2013 Placement Agent Warrants shall have an exercise price equal to the lowest price per share of the shares or Investor Warrants. The 2013 Placement Agent Warrants will otherwise contain the same terms as the Investor Warrants including that the 2013 Placement Agent Warrants shall not be callable for five years, shall contain a cashless exercise provision and registration rights in respect of the shares of common stock underlying the 2013 Placement Agent Warrants, and shall have a strike price of $6.25 per share.60

~~2014~~· ~~Private~~Offered ~~Placement~~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 $4.50 per share for each of the 2,069,952 shares of Common Stock issued and issuable to them in the 2013 Offering (approximately 517,488 additional warrants) which would contain no weighted average or full ratchet anti-dilution provisions, plus (b) exchange all of the outstanding 2013 A Warrants, and 2013 B Warrants issued in the 2013 offering (approximately 155,246 warrants) for one additional share of our common stock (the “2013 Exchange Offer”). As of the date of this prospectus, 116 of the purchasers of our securities in the 2013 offering accepted the exchange offer, resulting in the issuance of 123,251 additional shares of common stock and warrants to purchase 410,838 shares of common stock.

~~During~~· Offered to the ~~fourth~~72 ~~quarter~~holders of ~~2014~~our ~~and~~common ~~the first~~stock ~~quarter~~and ofwarrants ~~2015,~~issued in the ~~Company~~2016-17 ~~raised $7~~offering,~~415,552~~ ~~from~~an ~~the~~opportunity ~~sale~~under Section 3(a)(9) of ~~approximately~~the ~~74.151~~Securities ~~units~~Act of ~~its~~1933, ~~securities~~as inamended, ato ~~private placement~~exchange ~~offering~~all ~~that~~of ~~included~~their ~~three~~2016-~~year~~17 ~~warrants~~Class toA ~~purchase~~Warrants ~~8,000~~and ~~shares~~2016-17 ofClass ~~our~~B ~~common~~Warrants ~~stock~~for at1.5 anshares ~~exercise price~~ of ~~$9.50 per~~Common ~~share.~~Stock ~~Commencing~~for ateach ~~any~~2016-17 ~~time~~Class ~~after~~A ~~the~~Warrant ~~date~~and on2016-17 ~~which~~Class ~~closing~~B ~~bid~~Warrant ~~price~~(the of“2016-17 ~~our~~Exchange ~~common~~Offer”). ~~stock~~Accordingly, ~~remains~~each at$10,000 orUnit ~~over~~that ~~$25.00~~represented ~~per~~2,667 ~~share for~~shares atof ~~least~~common ~~twenty~~stock, ~~consecutive~~plus ~~trading days~~2,667 ~~the~~of ~~Company~~2016-17 ~~will~~Class ~~have~~A ~~the~~Warrants ~~right~~and 2,667 ~~upon~~of 452016-17 ~~days’~~Class ~~notice~~B toWarrants ~~the~~would ~~warrant~~be ~~holder given~~exchanged ~~not~~for ~~later~~1,396,954 ~~than~~shares 45of ~~trading~~Common ~~days~~Stock, ~~after~~representing ~~the~~(a) ~~date~~558,781 onshares ~~which~~of ~~the~~Common ~~price~~Stock, ~~condition~~plus is(ii) ~~satisfied~~840,839 toadditional ~~redeem~~shares ~~the~~of ~~number~~common ~~warrant~~stock ~~shares at~~issued ain ~~price~~lieu of ~~$6.25~~the ~~per~~2016-17 ~~share,~~Class ~~but~~A inWarrants noand ~~event~~2016-17 ~~earlier~~Class ~~than~~B 45Warrants. ~~days~~As ~~following~~of the date of ~~the~~this ~~receipt~~prospectus, by70 ~~the holder~~ of the ~~redemption notice.~~purchasers ~~Any portion~~ of aour ~~warrant~~securities ~~that~~in isthe ~~subject~~2016-17 tooffering accepted the ~~redemption~~exchange ~~that~~offer isresulting ~~not~~in ~~exercised~~the byissuance ~~the~~of ~~redemption~~822,172 ~~date~~additional ~~will~~shares noof ~~longer be~~common ~~exercisable~~stock.

~~The~~· ~~Company~~Entered ~~also~~into ~~issued~~agreements awith ~~warrant~~certain related parties, including members of our board of directors, to ~~Laidlaw &~~convert ~~Company~~approximately ~~(UK)~~$2,651,719 ~~Ltd.~~of our indebtedness and accrued interest of $92,319 asowed ~~placement~~to ~~agent~~such inindividuals ~~this~~into ~~offering~~738,410 shares of our common stock and 738,410 Class A Warrants to purchase shares of our common stock at an ~~aggregate~~exercise price of ~~124~~4.50 per share,~~166~~ and 738,410 Class B Warrants to purchase shares of ~~Common~~our ~~Stock~~common stock at an exercise price ~~equal~~of to $65.2563 per share, all upon the same terms as the Units of equity securities offered in our 2016-17 Offering. In July 2017, these related parties accepted the terms of the 2016-2017 Exchange Offer referred to above, as a result of which they were issued and aggregate of 1,097,615 additional shares of common stock in lieu of their Class A Warrants and Class B Warrants. As of the date of this prospectus, the balance of the related party debt is $2,068,994. See "Certain Relationships and Related Transactions" elsewhere in this prospectus.

~~2015~~As ~~Short-term~~a ~~Convertible~~result ~~Debenture~~of acceptances, we received in the above exchange offers, we believe that we will be able to significantly reduce our derivative liability. In such connection, we intend to engage an outside consulting firm to calculate the amount of such derivative liability reduction based upon and ~~Placement~~following ~~Agent~~the issuance ~~Warrants~~of our unaudited June 30, 2017 balance sheet.

On May 22, 2015, the Company entered into a Subscription Agreement with one accredited investor, pursuant to which the Company received an aggregate gross proceeds of $2,000,000 for the sale of an 20% original issue discount unsecured convertible debenture (the “Debenture”) due November 22, 2015. The Company issued (a) the Debenture with a principal amount of $2,500,000 that bears interest at a rate of 10% per annum, and (b) a three-year warrant to purchase up to 300,000 shares of Common Stock at an exercise price of $8.25.

In connection with the Debenture, the Company paid to a FINRA registered broker dealer that acted as the placement agent an aggregate of approximately $440,000 in cash compensation, representing fees and an expense allowance. In addition, the Company issued a warrant to purchase an aggregate of 62,000 shares of Common Stock to the placement agent at exercise price equal to $6.25 per share.

2015 Private Placement Warrants

Between August 27, 2015 and December 22, 2015, the Company completed a private placement offering (the “Fall 2015 Offering”) of units of common stock and three year warrants to purchase common stock of the Company. A total of $1,422,500 of gross proceeds was raised in the Fall 2015 Offering, consisting of the sale of 227,600 shares of common stock at a purchase price of $6.25 per share and warrants to purchase 113,800 shares of common stock at an exercise price of $9.38 per share. Laidlaw & Company (UK) Ltd., as placement agent in the Fall 2015 Offering, received a warrant to purchase an aggregate of 29,640 shares of common stock at an exercise price of $9.38 per share.

2016 Bridge Notes

In March 2016, the Company sold $655,000 principal amount of original issue discount unsecured note due six months from funding and providing an estimated 23% yield to maturity (the “March 2016 Bridge Note”) to one accredited investor, pursuant to which the Company received an aggregate gross proceeds of $500,000. The March 2016 Bridge Note does not accrue additional interest and included legal fees of $5,000, which was added to the principal amount. The Company also issued to the investor an aggregate of 4,347 shares of our common stock and five year warrants to purchase up to 65,500 additional shares of common stock at an exercise price of $18.75, subject to adjustment in certain events as provided therein.

If we fail to pay the March 2016 Bridge Note on or before their maturity date or otherwise commit an event of default, as defined in the Bridge Note, the holders may convert the outstanding principal amount of the March 2016 Bridge Notes into our common stock at a conversion price initially equal to 70% of the lowest closing bid price for the common stock in the twenty trading days immediately preceding the conversion, subject to adjustment in certain events as provided therein.

In connection with our sale of the March 2016 Bridge Note, the Company paid to Laidlaw & Company (UK) Ltd., who acted as the placement agent, an aggregate of approximately $60,000 in cash compensation, representing fees and an expense allowance. In addition, we issued to the placement agent (or its designees) a five-year warrant to purchase an aggregate of approximately 19,650 shares of our common stock at an exercise price of $6.25 per share.

Convertible Debt

As of the date of this prospectus, the Company has $400,000 in outstanding convertible debt, subject to conversion into approximately 40,242 shares of Common Stock and comprised of the following:

(i) $200,000 in convertible debt issued in April 2012 to the West Virginia Jobs Investment Trust Board as part of an original 3-month note in the amount of $400,000, as amended. The note bears interest at 10% providing for monthly interest-only payments starting May 2012 through June 2012, then final interest and principal payments due July 2012. The note includes a stock warrant for 3,555 shares. On June 18, 2012, the West Virginia Jobs Investment Trust Board signed an addendum to the note agreeing to extend the maturity date by 90 days to October 15, 2012. On March 11, 2013, the West Virginia Jobs Investment Trust Board approved an additional deferral of principal and interest until May 15, 2013 and reduced the price of converting into common shares to $12.50 per share. Subsequently the West Virginia Jobs Investment Trust Board further extended the maturity date until October 15, 2013. In November 2013 the West Virginia Jobs Investment Trust Board was paid $100,000 and the final $100,000 of the principal amount had its maturity date extended to January 15, 2014. On March 31, 2016 the West Virginia Jobs Investment Trust Board and the Company entered into a Loan Modification and Warrant Issuance Agreement, providing for certain amendments and modifications to the original April 2012 debenture, including but not limited to, the following: (i) an increase in the amount of convertible debt from $100,000 in principal under the original note to $200,000 in principal to be subjected to optional conversion into an aggregate of 16,000 shares of our Common Stock, (ii) an amendment to the notes maturity date and payment of the final $100,000 cash payment of the principal amount to be extended from March 31, 2016 to September 30, 2016.

(ii) $200,000, plus accrued and unpaid interest, in convertible debt issued on July 1, 2015 to Josiah Austin, a director of the Company. The Company received aggregate gross proceeds of $200,000 from Mr. Austin and issued a 10% Convertible Promissory Note due on December 31, 2015. The $200,000 principal indebtedness, plus accrued and unpaid interest, is convertible into Common Stock at a conversion price of $8.25 per share. Prior to the reverse split, the Company also issued 4,546 shares of Common Stock as commitment fee to the director with a price per share of $8.25. On February 26, 2015, the Company and Mr. Austin entered into an agreement to extend the maturity date of the convertible note from January 31, 2016 to March 31, 2016.

Related Party Debt

As of the date of this prospectus, we are indebted to certain members of our board of directors and the estate of a former director for loans and advances made to our Company over the past five years in the aggregate amount of $2,676,500. We intend to repay (on a pro-rata basis) out of the net proceeds of this offering $ 669,125, or 25% of the total of $2,676,500 of related party advances from such persons, which payment shall be made 30 days after our common stock begins trading on the Nasdaq Capital Markets. See “Use of Proceeds”. We are currently in discussions with such persons or their representatives to pay the $2,007,375 balance of such indebtedness by the issuance of 6% interest-bearing notes due as to principal and accrued interest on a date which shall be one year following the date of this prospectus. There can be no assurance that we will be successful in completing the contemplated agreements or the terms and conditions of any such arrangements. Any such agreements may be subject to completion of this offering.

Pre-Emptive Rights

(i) An aggregate of 21,100 shares of the Company’s common stock are subject to full ratchet anti-dilution rights in the event the Company issues any shares of common stock less than $50.00 per share until October, 2015 at the latest requiring the Company to issue an additional number of shares to such holders as may be required so that the purchase price paid for the shares shall be equal to the subsequent lower purchase price at which shares were issued by the Company; provided however, that shares shall not be issued at a purchase price that is less than $1.00 per share. As of the date hereof, the Company has issued 21,100 additional shares of common stock to such holders in accordance with this provision at the $25.00 floor price and is therefore not obligated to issue any additional shares of common stock to such holders.

An additional 10,550 shares of common stock underlying outstanding warrants are also subject to full ratchet price protection, expiring October, 2015 which provide that if the Company issues or sells additional shares of common stock, for consideration that is less than $50.00, on the date of and immediately prior to the issuance or sale, the exercise price, then in effect, will be reduced concurrently with the issuance or sale to a price equal to the lowest price per share at which any additional share of common stock is issued or sold; provided, however, that in no event shall the exercise price be reduced to a price that is less than $28.00 per share.

(ii) Pursuant to the terms of the 2013 Offering, an aggregate of 620,986 shares of the Company’s common stock are subject to full ratchet anti-dilution rights until the earlier of (1) five years from the closing date on which the purchaser received the securities or (2) the date on which any purchaser no longer owns shares of common stock sold in the 2013 Offering, if the Company issues or sells any shares of common stock or any Common Stock Equivalent pursuant to which shares may be acquired at a price less than $12.50 per share (the “Base Price”) (subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction) (each a “Dilutive Issuance”), the Company shall be required to issue additional shares of common stock to each purchaser, for no additional consideration, in an amount sufficient such that the pro rata portion of the Purchase Price paid by such purchaser for the shares of common stock then held, when divided by the total number of shares of common stock then held by such purchaser plus those shares of common stock issued as a result of the Dilutive Issuance will equal the Base Price. As a result of the 2013 Offering, the Company issued 620,986 additional shares of common stock.

Additionally, the exercise price of the B Warrants issued in the 2013 Offering will be reduced on a weighted average basis if common stock may be acquired at a price less than the Base Price, until December 2014 and December 2018, respectively. As a result, the Company reduced the exercise price to $6.25, respectively, assuming the Maximum Offering Amount plus the overallotment option exercised in full.

(iii) In connection with the 2014 Offering, the Company has agreed to adjust the exercise price of the warrant to purchase 132,113 shares of common stock issued to the 2014 Placement Agent in connection with the 2013 Offering to an exercise price of $6.25 per share.

Governing Documents that May Have an Antitakeover Effect

Certain provisions of our ~~Second~~Certificate ~~Amended~~of ~~and~~Incorporation, ~~Restated~~as ~~Articles~~amended, ofand ~~Incorporation~~our Second Amended and ~~our~~Restated Bylaws (the “Bylaws”), which are discussed below could discourage or make it more difficult to accomplish a proxy contest, change in our management or the acquisition of control by a holder of a substantial amount of our voting stock.

Our ~~Second~~Certificate ~~Amended and Restated Articles~~ of Incorporation ~~provide~~provides that our Board has the authority to issue preferred stock in one or more classes or series and fix such designations, powers, preferences and rights and the qualifications thereof without further vote by our stockholders. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of ~~our~~the ~~company~~Company without further action by the stockholders and may adversely affect the voting and other rights of the holders of our common stock.

Our ~~By-laws~~Bylaws limit the ability to call special meetings of the stockholders to the Chairman of the Board, or the Chief Executive Officer, or, if there is no Chairman or Chief Executive Officer, then by the ~~president~~President. The stockholders have no right to request or call a special meeting; however, any action of stockholders required to be taken at any annual or special meeting, may be taken without a meeting, and ~~cannot~~without ~~take~~prior ~~action~~notice, byprovide that the written consent is signed by the holders of majority of the total voting power of outstanding shares of stock of the Company entitled to vote.

Our ~~By-laws~~Bylaws provide that ~~our~~the ~~Board~~removal ~~shall~~of a director from the Board, with cause, must be ~~classified~~by ~~into~~affirmative ~~three~~vote ~~classes.~~of ~~Each~~not ~~director~~less ~~shall~~than ~~hold~~a ~~office~~majority ~~for~~of the voting power of our issued and outstanding stock entitled to vote generally in the election of directors (voting as a ~~three-year~~single ~~term~~class), orexcluding ~~until~~stock ~~the~~entitled to ~~next~~vote ~~annual~~only ~~meeting~~upon the happening of ~~stockholders at~~a ~~which~~fact ~~his~~or event unless such fact or ~~her~~event ~~successor~~shall have occurred, is ~~elected~~required ~~and~~to ~~qualified~~remove a director from the Board with or without cause.

Our By-laws provide that the removal of a director from the Board, with or without cause, must be by affirmative vote of not less than 2/3 of the voting power of our issued and outstanding stock entitled to vote generally in the election of directors (voting as a single class), excluding stock entitled to vote only upon the happening of a fact or event unless such fact or event shall have occurred, is required to remove a director from the Board with or without cause.

Representative’s Warrant

We have agreed to issue to the representative of the underwriters in this offering a warrant to purchase an estimated 155,000 shares of our common stock at a per share exercise price equal to 125% of the per share public offering price. A complete description of the warrant is included in the “Underwriting – Representative’s Warrant” section of this prospectus.

Transfer Agent and Registrar

Our transfer agent and registrar is Island Stock Transfer, located at 15500 Roosevelt Blvd, Clearwater, FL 33760. Its telephone number is 1-727-289-0010.

Listing

We intend to apply to list our common stock on the Nasdaq Capital Market under the symbol “PRGB.” There can be no assurance that our application to list our shares will be approved by the Nasdaq Capital Market.

SHARES ELIGIBLE FOR FUTURE SALE

There is not currently an established U.S. trading market for our common stock. We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of our common stock, including shares issued upon exercise of outstanding warrants, in the public market after this offering, could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities.

All of the shares of common stock and shares of common stock issuable upon exercise of warrants, when sold pursuant to this prospectus, will be freely tradable, except that any shares acquired by our affiliates, as that term is defined in Rule 144 under the Securities Act, may only be sold in compliance with the limitations described below. As of ~~March~~June 3130, ~~2016~~2017, our directors and executive officers held a total of approximately 1,~~922~~751,~~675~~ 126 shares or approximately 3122.19% of the common stock outstanding as of that date.

~~Selling~~7,972,679 ~~Stockholder~~shares ~~Prospectus~~of our outstanding common stock that are not registered under the registration statement of which this prospectus is a part and have not been registered under another registration statement will be deemed restricted securities as defined under Rule 144. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration promulgated under the Securities Act. Subject to the provisions of Rule 144, all of the outstanding shares of common stock that are currently restricted are available for sale in the public market under Rule 144.

As explained in the Explanatory Note to the registration statement of which this prospectus forms a part, the registration statement of which this prospectus forms a part also contains a prospectus (the “Selling Stockholders Prospectus”) to be used in connection with the potential resale by certain selling stockholders of up to an aggregate of 530,119 additional shares of our common stock, which shares (including 211,230 shares issuable upon exercise of outstanding warrants) may not be resold by such selling stockholders until at least 90 days following the date of this prospectus. We will not receive any of the net proceeds from the sale of shares by any of the selling stockholders. The shares of common stock being registered under the Selling Stockholder Prospectus permit public resales of such shares, and the selling stockholders may offer the shares for resale from time to time pursuant to the Selling Stockholder Prospectus. The selling stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act of 1933, as amended, or pursuant to another effective registration statement covering those shares.

________ shares of our outstanding common stock that are not registered under the registration statement of which this prospectus is a part and have not been registered under another registration statement will be deemed restricted securities as defined under Rule 144. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration promulgated under the Securities Act. Subject to the provisions of Rule 144, all of the outstanding shares of common stock that are currently restricted are available for sale in the public market under Rule 144.

For information about shares of common stock issuable upon the exercise of options and warrants, see “Description of Securities.”

In general, under Rule 144 as currently in effect, a person, or group of persons whose shares are required to be aggregated, who is deemed to have been an affiliate at any time during the three months preceding a sale, who has beneficially owned shares that are restricted securities as defined in Rule 144 for at least six months is entitled to sell, within any three-month period commencing 90 days after the date of this prospectus, a number of shares that does not exceed 1% of the then outstanding shares of our common stock.

Sale under Rule 144 by affiliates, whether of restricted or non-restricted shares, include requirements for current public information about the Company; selling the shares pursuant to broker transactions; and limitations on the number of shares sold within a three-month period.

In addition, a person who is not deemed to have been one of our affiliates at any time during the 90 days preceding a sale and who has beneficially owned shares of our common stock for at least six months, including the holding period of any prior owner, except if the prior owner was one of our affiliates, would be entitled to sell all of their shares, provided the availability of current public information about our company. To the extent that shares were acquired from one of our affiliates, a person’s holding period for the purpose of effecting a sale under Rule 144 would commence on the date the shares were acquired from the affiliate.

UNDERWRITING

Laidlaw & Company (UK) Ltd. is acting as the book running manager of the offering and as the representative of the underwriters named below (the “Representative”). Subject to the terms and conditions set forth in an underwriting agreement among us and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the number of shares of common stock set forth opposite its name below.

Underwriters		Number of Shares
Laidlaw & Company (UK) Ltd.

Total

Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the shares sold under the underwriting agreement if any of these shares are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. The underwriters are not obligated to purchase the shares of common stock covered by the underwriters’ over-allotment option described below.

The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Commissions and Discounts

The ~~representative~~Representative has advised us that the underwriters propose to offer directly to the public the ~~3,100,000~~_________ shares purchased pursuant to the underwriting agreement at the initial public offering price set forth on the cover page of this prospectus and to certain securities dealers at the initial public offering price less a concession not in excess of [$ ] per share. After the offering, the representative may change the offering price and other selling terms.

The following table shows the per share and total underwriting discount to be paid to the underwriters by us atbased on an initial per share offering price of $5.5000, the midpoint of the price range set forth on the cover page of this prospectus. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.

Per
Share

Total Without
Over-Allotment
Option

Total With
Over-Allotment
Option

Public offering price

Underwriting discounts and commissions

Non-accountable expense allowance

Proceeds, before expenses, to us

We have agreed to pay a non-accountable expense allowance to the ~~representative~~ Representative of the underwriters equal to 1% of the gross proceeds received in this offering; however, an allowance shall not be paid in connection with the over-allotment option if the over-allotment option is exercised. WeAn ~~have paid an~~ expense deposit of $2540,000 is to ~~the~~be ~~representative~~made ofto the ~~underwriters~~Representative, which will be applied against accountable expenses that will be paid by us to the representative in connection with this offering, which advance will be refunded to us to the extent not actually incurred by the representative in the event this offering is terminated. We have also agreed to pay the ~~representative’s~~all expenses relating to the offering, including, but not limited to, (1a) all ~~actual~~ filing fees ~~incurred~~relating to inthe ~~connection~~registration ~~with~~of the ~~review~~securities ofto ~~this~~be sold in the offering bywith the ~~Financial~~SEC; ~~Industry~~(b) ~~Regulatory~~all ~~Authority,~~actual ~~Inc.,~~FINRA orfiling fees associated with the review of the Offering by FINRA,; (2c) all fees and expenses relating to the listing of ~~our~~such ~~shares~~Securities ~~of common stock~~ on the ~~Nasdaq~~NASDAQ ~~Capital~~ Stock Market,; (3d) all actual fees, expenses and disbursements relating to background checks of ~~our~~the Company’s officers and directors ~~in an amount not to exceed $____ per individual~~; ~~and $_____ in the aggregate,~~ (4e) all ~~actual~~ fees, expenses and disbursements relating to the registration, ~~qualification~~ or ~~exemption~~qualification of ~~the~~such ~~shares~~Securities ofunder ~~common~~the ~~stock~~“blue sky” ~~being~~securities ~~offered~~laws byof ~~this~~such ~~prospectus~~states ~~under~~and ~~state~~other ~~securities~~jurisdictions ~~laws,~~as orLaidlaw ~~“blue~~may ~~sky” laws,~~reasonably ordesignate ~~under~~(including, ~~the~~without ~~securities~~limitation, all ~~laws~~filing ofand ~~foreign~~registration ~~jurisdictions~~fees)); ~~designated by the representative,~~ (5f) all ~~actual~~ fees, expenses and disbursements relating to the registration, qualification or exemption of ~~our~~such ~~shares~~Securities ~~of common stock~~ under the securities laws of such foreign jurisdictions as the ~~representative~~Representative may reasonably designate,; (6g) the costs of all mailing and printing of the underwriting documents as(including, without limitation, the ~~representative~~underwriting ~~may~~agreement, any ~~reasonably~~Blue ~~deem~~Sky ~~necessary~~Surveys and, (7if appropriate, any Agreement Among Underwriters, Selected Dealers’ Agreement, Underwriters’ Questionnaire and Power of Attorney) , Registration Statements, Prospectuses and all ~~fees~~amendments, supplements and ~~expenses~~exhibits ofthereto and as many preliminary and final Prospectuses as the Representative of may reasonably deem necessary; (h) the ~~underwriters’~~costs ~~including~~of preparing, printing and delivering certificates representing the securities; (i) fees and expenses of the ~~representative’s~~transfer ~~legal~~agent ~~counsel;~~for ~~provided,~~the ~~that~~common ~~all such~~stock; ~~fees~~(j) stock transfer and/or ~~expenses~~stamp ~~(including~~taxes, ~~background~~if ~~checks~~any, ofpayable upon the ~~Company’s~~transfer ~~officers~~of ~~and~~securities ~~directors)~~from ~~shall~~the ~~not~~Company ~~exceed~~to ~~$130,000,~~the Representative; (8k) the fees and expenses of the Company’s accountants,; ~~and~~ (9l) the legal fees and expenses and fees and expenses of any other agents and representatives of the Company incurred as a result of the offering; (m) all fees and expenses of the Representative, including, without limitation, its legal fees and expenses, all such fees not to exceed $125,000 in the aggregate and (n) all fees, expenses and disbursements relating to background checks of the Company’s officers and directors in an amount not to exceed $5,000 in the aggregate.

70 The expenses of the offering, not including the underwriting discount, are estimated at approximately $1,160,000 and are payable by us.

The expenses of the offering, not including the underwriting discount, are estimated at approximately $856,500 and are payable by us.

Option to Purchase Additional Shares

We have granted an option to the underwriters, exercisable for 45 days after the date of this prospectus, to purchase up to ~~465,000~~_______ additional shares at the public offering price, less the underwriting discount. If the underwriters exercise this option, each underwriter will be obligated, subject to conditions contained in the underwriting agreement, to purchase a number of additional shares proportionate to that underwriter’s initial amount reflected in the above table.

Representative’s ~~Warrant~~Warrants

We have ~~agreed~~granted to ~~issue to~~ the ~~representative~~Representative ofor ~~the~~its ~~underwriters~~designees asfive ~~additional~~year ~~compensation~~warrants ~~a warrant~~ to purchase ~~the~~up ~~aggregate~~to ~~of % of~~_______ ~~the~~ shares ~~sold in this offering, excluding the over-allotment option. The shares issuable upon exercise~~ of ~~the~~our ~~warrant~~common ~~are identical~~stock ~~to those offered by this prospectus. The warrant is exercisable for cash or on a cashless basis~~ at aan ~~per~~initial ~~share~~ exercise price ~~equal~~of to $__5.50, or ~~125~~110% of the ~~public~~initial ~~offering price~~ per share ~~in this~~ offering ~~commencing~~price ~~on a date which is six months from the effective date~~ of ~~the~~our registration statement of which this prospectus forms a part and expiring on the date which is five years after the effective date of the registration statement of which this prospectus forms a part in compliance with FINRA Rule 5110(f)(2)(G). The warrant and the shares of common stock ~~underlying~~ (the ~~warrant~~“Representative’s ~~have been deemed compensation by FINRA and are, therefore, subject to a 180-day lock-up pursuant to Rule 5110(g~~Warrants”)~~(1) of FINRA~~. ~~The representative (or permitted assignees under FINRA Rule 5110(g)(1))~~ Such ~~will~~Representative’s ~~not~~Warrants ~~sell,~~are ~~transfer,~~exercisable ~~assign,~~commencing ~~pledge~~12 ormonths hypothecate the warrant or the shares of common stock underlying the warrant, nor will it engage in any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the warrant or the underlying shares of common stock for a period of 180 days after the ~~effective~~ date of ~~the registration statement of which~~ this prospectus ~~forms a part~~. In addition, the warrant provides for registration rights upon request, under certain circumstances. The demand registration right provided in connection with the warrant commences on the six month anniversary of the effective date of the registration statement of which this prospectus forms a part and terminates on the fifth anniversary of the effective date of the registration statement of which this prospectus forms a part. The piggyback registration right provided in connection with the warrant terminates seven years after the effective date of the registration statement of which this prospectus forms a part in compliance with FINRA Rule 5110(f)(2)(G). We will bear all fees and expenses attendant to registering the shares of common stock issuable upon exercise of the warrant, other than underwriting commissions incurred and payable by the holder of the warrant and the expenses of any legal counsel selected by the holder to represent it in connection with the sale of the shares of common stock underlying the warrant. The exercise price and number of shares issuable upon exercise of the warrant may be adjusted in certain circumstances, including in the event of a stock dividend or our reclassification, reorganization, combination or consolidation. However, the warrant exercise price or underlying shares will not be adjusted for issuances of common stock at a price below the warrant exercise price.

Lock-Up Agreements

~~In addition~~We, ~~we,~~ and all of our directors and executive officers, and holders of 5% or more of our outstanding securities have agreed that, for a period of 180 days after the date of this prospectus, subject to certain limited exceptions described below, we and they will not, directly or indirectly, without the prior written consent of the ~~representative~~Representative of the underwriters, (1) offer, sell, pledge or otherwise transfer or dispose of any shares of common stock (including, without limitation, shares of common stock that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and shares of common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for common stock, (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of common stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or other securities, in cash or otherwise, or publicly announce an intention to do either of the foregoing, (3) engage in any short selling of any shares of common stock, or (4) make any demand for or exercise any right with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common stock or any of our other securities.

These lock-up restrictions will not apply to: (1) bona fide gifts, as long as such donee agrees to be bound by the terms of the lock-up agreement, (2) transfers pursuant to a valid domestic order or divorce decree or settlement or by will, other testamentary document or intestate succession upon the death of the holder, as long as such transferee agrees to be bound by the terms of the lock-up agreement, (3) transfers to any family member or any trust for the direct or indirect benefit of the holder or the immediate family of the holder, so long as such transferee agrees to be bound by the terms of the lock-up agreement and so long as any such transfer does not involve a disposition for value, (4) transfers as part of a transfer or distribution by the holder to its stockholders, members, partners, beneficiaries or other equity holders, so long as the holder is a corporation, limited liability company, partnership, trust or other business, and so long as such transferee agrees to be bound by the terms of the lock-up agreement and any such transfer or distribution does not involve a disposition for value, (5) transfers to us pursuant to the vesting of or exercise by the holder of any equity incentive awards issued pursuant to our stock option or incentive plans as disclosed in this prospectus, on a “cashless” or “net exercise” basis, so long as the shares of our common stock received upon such exercise will remain subject to the restrictions set forth in the lock-up agreement, (6) transfers to us pursuant to any contractual arrangement that provides for the repurchase of the holder’s shares of our common stock or such other securities by us or in connection with the termination of the holder’s employment or other service relationship with us, or (7) transfers pursuant to a bona fide third party tender offer, merger, consolidation or other similar transaction made to all holders of our capital stock involving a change in control of our company.

The Representative of the underwriters may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time. When determining whether or not to release common stock and other securities from lock-up agreements, the representative of the underwriters will consider, among other factors, the holder’s reasons for requesting the release, the number of shares of common stock and other securities for which the release is being requested and market conditions at the time.

At least three business days before the effectiveness of any release or waiver of any of the restrictions described above with respect to an officer or director of the Company, the Representative of the underwriters will notify us of the impending release or waiver and we have agreed to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver.

Right of First Refusal

Laidlaw & Company (UK) Ltd. shall have a right of first refusal, for a period of twelve (12) months after the date this offering is completed, to act as underwriter, placement agent, financial advisor or in any other similar capacity, on the customary terms and conditions of Laidlaw & Company (UK) Ltd., in the event we retain or otherwise use (or seek to retain or use) the services of an investment bank to pursue an offering of our securities (in addition to this offering) or engage in a merger, acquisition, or equivalent transaction (each, a “Subject Transaction”).

The representative of the underwriters may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time. When determining whether or not to release common stock and other securities from lock-up agreements, the representative of the underwriters will consider, among other factors, the holder’s reasons for requesting the release, the number of shares of common stock and other securities for which the release is being requested and market conditions at the time.

At least three business days before the effectiveness of any release or waiver of any of the restrictions described above with respect to an officer or director of the Company, the representative of the underwriters will notify us of the impending release or waiver and we have agreed to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver.

Indemnification

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.

Stabilization, Short Positions and Penalty Bids

The representative may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Exchange Act:

Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

A short position involves a sale by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriters in excess of the number of shares they are obligated to purchase is not greater than the number of shares that they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares and/or purchasing shares in the open market. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through their option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions.

Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of the common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the Nasdaq Capital Market or otherwise and, if commenced, may be discontinued at any time.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor any of the underwriters make any representation that the representative will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Electronic Distribution

A prospectus in electronic format may be made available on the websites maintained by one or more underwriters or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares of common stock to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to underwriters and selling group members that may make Internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information on the underwriters’ websites and any information contained in any other website maintained by the underwriters is not part of this prospectus or the registration statement of which this prospectus forms a part.

Other Relationships

From time to time, certain of the underwriters and their affiliates have provided, and may provide in the future, various advisory, investment and commercial banking and other services to us in the ordinary course of business, for which they have received and may continue to receive customary fees and commissions. However, except as disclosed in this prospectus, we have no present arrangements with any of the underwriters for any further services.

Offer Restrictions Outside the United States

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, or the Relevant Member States, with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, or the Relevant Implementation Date, our securities will not be offered to the public in that Relevant Member State prior to the publication of a prospectus in relation to the securities that has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that, with effect from and including the Relevant Implementation Date, an offer of securities may be made to the public in that Relevant Member State at any time:

to any legal entity that is a qualified investor as defined in the Prospectus Directive;

to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the manager for any such offer; or

in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3(2) of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of common shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the common shares to be offered so as to enable an investor to decide to purchase or subscribe the common shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State. The expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

We have not authorized, and do not authorize the making of, any offer of shares through any financial intermediary on our behalf, other than offers made by the underwriters with a view to the final placement of the shares as contemplated by this prospectus. Accordingly, no purchaser of the securities, other than the underwriters, is authorized to make any further offer of the shares on our or the underwriters’ behalf.

United Kingdom

Our securities may not be offered or sold and will not be offered or sold to any persons in the United Kingdom other than persons whose ordinary activities involve acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses and in compliance with all applicable provisions of the Financial Services and Markets Act 2000, or FSMA, with respect to anything done in relation to our securities in, from or otherwise involving the United Kingdom.

In addition, each underwriter:

has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act of 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to us; and

has complied with, and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the securities in, from or otherwise involving the United Kingdom.

Australia

No prospectus or other disclosure document (as defined in the Corporations Act 2001 (Cth) of Australia, or the Corporations Act) in relation to the securities has been or will be lodged with the Australian Securities & Investments Commission, or the ASIC. This document has not been lodged with ASIC and is only directed to certain categories of exempt persons. Accordingly, if you receive this document in Australia:

(1) you confirm and warrant that you are either:

(a) a “sophisticated investor” under section 708(8)(a) or (b) of the Corporations Act;

(b) a “sophisticated investor” under section 708(8)(c) or (d) of the Corporations Act and that you have provided an accountant’s certificate to us which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and related regulations before the offer has been made;

(d) a “professional investor” within the meaning of section 708(11)(a) or (b) of the Corporations Act, and to the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act, any offer made to you under this document is void and incapable of acceptance; and

(2) you warrant and agree that you will not offer any of the securities for resale in Australia within 12 months of those securities being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act.

Hong Kong

The securities may not be offered or sold in Hong Kong by means of any document other than (1) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), (2) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (3) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Japan

The securities offered in this prospectus have not been and will not be registered under the Financial Instruments and Exchange Law of Japan. The securities have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan (including any corporation or other entity organized under the laws of Japan), except (i) pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (1) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (2) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (3) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

Where the securities are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, shares, notes and units of shares and notes of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except:

–

to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, notes and units of shares and notes of that corporation or such rights and interest in that trust are acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA;

–

where no consideration is or will be given for the transfer; or

–

where the transfer is by operation of law.

Switzerland

The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or the SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the securities or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, us, or the securities have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the shares.

Canada

Resale Restrictions

The distribution of our securities in Canada is being made only in the provinces of Ontario, Quebec, Alberta, British Columbia and Manitoba on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of common stock are made. Any resale of the common stock in Canada must be made under applicable securities laws which may vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common stock.

Representations of Purchasers

By purchasing securities in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to us and the dealer from whom the purchase confirmation is received that:

the purchaser is entitled under applicable provincial securities laws to purchase the securities without the benefit of a prospectus qualified under those securities laws as it is an “accredited investor” as defined under National Instrument 45-106—Prospectus and Registration Exemptions;

the purchaser is a “Canadian permitted client” as defined in National Instrument 31-103—Registration Requirements and Exemptions, or as otherwise interpreted and applied by the Canadian Securities Administrators;

where required by law, the purchaser is purchasing as principal and not as agent;

the purchaser has reviewed the text above under “—Resale Restrictions”; and

the purchaser acknowledges and consents to the provision of specified information concerning the purchase of the securities to the regulatory authority that by law is entitled to collect the information, including certain personal information. For purchasers in Ontario, questions about such indirect collection of personal information should be directed to Administrative Support Clerk, Ontario Securities Commission, Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8 or on (416) 593-3684.

Rights of Action—Ontario Purchasers

Under Ontario securities legislation, certain purchasers who purchase any securities offered by this prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of the securities, for rescission against us in the event that this prospectus contain a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the securities. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the securities. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us. In no case will the amount recoverable in any action exceed the price at which the securities were offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we will have no liability. In the case of an action for damages, we will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the common stock as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.

EXPERTS

Schneider Downs & Co., Inc., an independent registered public accounting firm, audited our financial statements for the years ended December 31, ~~2015~~2016 and ~~2014~~2015, as set forth in report appearing herein. We have included our financial statements in this prospectus and elsewhere in the registration statement in reliance on the reports of Schneider Downs & Co., Inc., given on their authority as experts in accounting and auditing.

LEGAL MATTERS AND INTERESTS OF NAMED EXPERTS

The validity of the securities being offered by this prospectus will be passed upon for us by CKR Law LLP, New York, New York. CKR Law LLP holds a Company note in the amount of $308,439 issued in payment of legal fees accrued through 2016. Such note will convert into 72,574 shares of our common stock upon completion of this offering. Certain legal matters in connection with this offering will be passed upon for the underwriters by Sichenzia Ross ~~Friedman~~ Ference Kesner, LLP, New York, New York.

77 68

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act, with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and our shares of common stock that we are offering in this prospectus. We are subject to the informational requirements of the Exchange Act and file annual, quarterly and current reports and other information with the SEC. You can read our filings over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington, D.C., 20549, on official business days during the hours of 10 a.m. to 3 p.m. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facility. In addition, you can find more information about us on our website at https://proteabio.com.

78 69

PREFACE STATEMENT TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following consolidated financial statements of Protea Biosciences Group, Inc. and subsidiaries are presented in draft form. We expect to be in a position to issue the following draft report, in the form presented, aton the date of effectiveness pending Protea’s Board of Directors ~~approval~~effecting of the reverse-stock ~~split~~ split as presented in Note 1615 to the consolidated financial statements and subject to normal subsequent event procedures in accordance with AU Section 560 “Subsequent Events.”

~~May~~August 2729, ~~2016~~2017

/s/ SCHNEIDER DOWNS & CO., INC.

Pittsburgh, PA

79 70

PROTEA BIOSCIENCES GROUP, INC.

~~INDEX~~Table TOof ~~CONSOLIDATED FINANCIAL STATEMENTS~~Contents

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets - December 31, 2015 and 2014	F-3
Consolidated Balance Sheets - December 31, 2016 and 2015	F-3
Consolidated Statements of Operations - For the Years Ended December 31, 2015 and 2014	F-4
Consolidated Statements of Operations - For the Years Ended December 31, 2016 and 2015	F-4
Consolidated Statements of Stockholders’ Equity (Deficit) - For the Years Ended December 31, 2015 and 2014	F-5
Consolidated Statements of Stockholders’ Equity (Deficit) - For the Years Ended December 31, 2016 and 2015	F-5
Consolidated Statements of Cash Flows - For the Years Ended December 31, 2015 and 2014	F-7
Consolidated Statements of Cash Flows - For the Years Ended December 31, 2016 and 2015	F-7
Notes to Consolidated Financial Statements	F-8
Consolidated Balance Sheets – March 31, 2016 (unaudited) and December 31, 2015	F-31
Consolidated Statements of Operations - For the Three Months Ended March 31, 2016 (unaudited) and for the Year Ended December 31, 2015	F-32
Consolidated Statements of Stockholders’ Equity (Deficit) - For the Consolidated Statements of Operations - For the Three Months Ended March 31, 2016 (unaudited) and for the Year Ended December 31, 2015	F-33
Consolidated Statements of Cash Flows - For the Consolidated Statements of Operations - For the Three Months Ended March 31, 2016 (unaudited) and for the Year Ended December 31, 2015	F-34
Notes to Consolidated Financial Statements	F-35

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Protea Biosciences Group, Inc.

We have audited the accompanying consolidated balance sheets of Protea Biosciences Group, Inc. and subsidiaries (the Company) as of December 31, ~~2015~~2016 and ~~2014~~2015, and the related consolidated statements of operations and comprehensive loss, ~~cash flows and~~ shareholders’ equity (deficit), for each of the years in ~~the~~ the two-year period ended December 31, ~~2015~~2016. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Protea Biosciences Group, Inc. as of December 31, ~~2015~~2016 and ~~2014~~2015, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, ~~2015~~2016, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements~~, the~~ the Company’s products are being developed and have not generated significant revenues. As a result, the Company has suffered recurring losses and its liabilities exceed its assets. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

__________________________

Pittsburgh, Pennsylvania

~~March~~April 1614, ~~2016~~ 2017 (except for the effect of the reverse stock split discussed in Note 1615 to the financial statements, as to which the ~~date~~dates is ~~_______~~_________ __, ~~2016~~2017)

F-2

PROTEA BIOSCIENCES GROUP, INC.

Consolidated Balance Sheets

See Accompanying Notes to Financial Statements

	December 31, 2015		December 31, 2014
	December 31, 2016		December 31, 2015
ASSETS
Current Assets:
Cash and cash equivalents	$	678,~~450~~720	$	~~322~~6,~~877~~450
Trade accounts receivable, net		195,823		273,914
Accounts receivable, less allowance for doubtful accounts of $7,000 and $3,900 as of December 31, 2016 and December 31, 2015, respectively		436,933		195,823
Other receivables		-		119,230
Inventory		92,244		111,087
Inventory		111,087		161,301
Prepaid expenses		121,027		98,231
Prepaid expenses		98,231		54,022
Total current assets		728,924		411,591
Total current assets		411,591		931,344
Property and equipment, net		2,466,125		2,626,907

Filing Compare · Protea Biosciences Group, Inc.