Atomera (ATOM) 10-Q 19 Sep 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Sep. 14, 2016
Document And Entity Information
Entity Registrant Name	Atomera Inc
Entity Central Index Key	1,420,520
Document Type	10-Q
Trading Symbol	ATMR
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		12,002,331
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,016

Condensed Balance Sheets (Unaud

Condensed Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current Assets:
Cash	$ 5,267	$ 3,197
Restricted Investment	15	15
Prepaid expenses and other current assets	111	48
Total current assets	5,393	3,260
Property and equipment, net	23	15
Deferred offering costs	234	145
Security Deposit	37
Total assets	5,687	3,420
Current liabilities:
Accounts payable	420	301
Accrued expenses	309	145
Senior secured convertible promissory notes payable, net	22,872	16,095
Total liabilities	23,601	16,541
Stockholders' deficit:
Preferred stock, $0.001 par value, authorized 2,500 shares; none issued and outstanding at June 30, 2016 and December 31, 2015
Common stock, $0.001 par value, authorized 47,500 shares; issued and outstanding 1,617 shares at June 30, 2016 and December 31, 2015, respectively	2	2
Additional paid-in capital	70,556	70,452
Subscription receivable		(188)
Accumulated deficit	(88,472)	(83,387)
Total stockholders' deficit	(17,914)	(13,121)
Total liabilities and stockholders' deficit	$ 5,687	$ 3,420

Condensed Balance Sheets (Unau3

Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized	2,500	2,500
Preferred stock, issued
Preferred stock, outstanding
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	47,500	47,500
Common stock, issued	1,617	1,617
Common stock, oustanding	1,617	1,617

Condensed Statements of Operati

Condensed Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Operating Expenses:
Research and development	$ 867	$ 576	$ 1,813	$ 1,096
General and administrative	893	440	1,754	2,139
Selling and marketing	91		210	11
Total operating expenses	1,851	1,016	3,777	3,246
Loss from operations	(1,851)	(1,016)	(3,777)	(3,246)
Other income/(expense):
Interest expense, net	(746)	(561)	(1,308)	(792)
Net loss:	$ (2,597)	$ (1,577)	$ (5,085)	$ (4,038)
Net loss per common share, basic and diluted (in dollars per share)	$ (1.61)	$ (1.28)	$ (3.14)	$ (3.27)
Weighted average number of common shares outstanding, basic and diluted (in shares)	1,617	1,233	1,617	1,233

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$ (5,085)	$ (4,038)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	6	5
Debt issuance cost amortization	429	224
Stock-based compensation	104	344
Non-cash warrant fair value for services rendered		1,016
Non-cash interest expense	881	571
Compensation in exchange for settlement of subscription receivable	188
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(63)	(21)
Security deposit	(37)
Accounts payable	119	(419)
Accrued expenses	164	(57)
Net cash used in operating activities	(3,294)	(2,375)
NET CASH USED IN INVESTING ACTIVITIES
Acquisition of property and equipment	(14)	(2)
Net cash used in investing activities	(14)	(2)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured convertible promissory notes payable		1,097
Net proceeds from senior secured convertible promissory notes payable	5,467	6,615
Payment of offering costs	(89)
Net cash provided by financing activities	5,378	7,712
Net increase in cash	2,070	5,335
Cash at beginning of period	3,197	21
Cash at end of period	$ 5,267	$ 5,356

NATURE OF OPERATIONS

NATURE OF OPERATIONS	6 Months Ended
	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NATURE OF OPERATIONS	1. Nature of Operations Atomera Incorporated (“Atomera” or the “Company”) was incorporated in the state of Delaware in March 2007 under the name MEARS Technologies, Inc. and is engaged in the development, commercialization and licensing of proprietary processes and technologies for the semiconductor industry. On January 12, 2016, the Company changed its name to Atomera Incorporated. The Company is in the development stage, having not yet started planned principal operations, and is devoting substantially all of its efforts toward technology research and development. The Company has primarily financed operations through private placements of equity and debt securities and the Company’s Initial Public Offering (the “IPO”) which was consummated on August 10, 2016 (see Note 10).

LIQUIDITY AND MANAGEMENT PLANS

LIQUIDITY AND MANAGEMENT PLANS	6 Months Ended
	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
LIQUIDITY AND MANAGEMENT PLANS	2. LIQUI DITY At June 30, 2016 the Company had cash of approximately $5.3 million, a working capital deficit of approximately $18.2 million and Senior Secured Convertible Notes (the “Secured Notes”) with a principal and interest balance of approximately $22.9 million. The Company has not generated revenues since inception and has incurred recurring operating losses. At June 30, 2016 the Company had an accumulated deficit of approximately $88.5 million. In August 2016 the Company completed its IPO of 3,680,000 shares of common stock, raising net proceeds of approximately $24.7 million. In connection with the completion of the IPO, the Secured Notes automatically converted into 6,264,659 shares of common stock, thus extinguishing the debt associated with the Secured Notes. During the second half of 2016 and in 2017, the Company’s operating plans include increased headcount in research and development and sales and business development. Based on the funds it has available as of the date of the filing of this report, including proceeds of its IPO, the Company believes that it has sufficient capital to fund its current business plans over, at least, 12 months from the date of filing this quarterly report, and to enable one or more customers to license and qualify its technology and start full-scale industrial production of devices that incorporate the Company’s technology. However, as a development stage company the Company is subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays in a new business. Accordingly, the Company may require additional capital, the receipt of which there can be no assurance. In the event the Company requires additional capital, there can be no guarantee that funds will be available on commercially reasonable terms, if at all.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3. Summary of Significant Accounting Policies Basis of presentation The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, since they are interim financial statements, the accompanying condensed financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the Company’s financial position and the results of operations for the periods presented have been included. Interim results are not necessarily indicative of results for a full year. The condensed financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2015 which are included in the Company’s final IPO prospectus filed with the SEC Pursuant to Rule 424(b)(4) of the Securities Act of 1933 on August 8, 2016. Deferred offering costs The Company complies with the requirements of the ASC 340, Other Assets and Deferred Costs Stock-based compensation The Company computes stock-based compensation in accordance with authoritative guidance. The Company uses the Black-Scholes-Merton option-pricing model to determine the fair value of its stock options. The Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of the common stock of the Company, expected life of stock options, the expected volatility and the expected risk-free interest rate, among others. These assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally outside the control of the Company. As a result, if other assumptions had been used, stock-based compensation cost, as determined in accordance with authoritative guidance, could have been materially impacted. Furthermore, if the Company uses different assumptions on future grants, stock-based compensation cost could be materially affected in future periods. The Company accounts for the fair value of equity instruments issued to non-employees using either the fair value of the services received or the fair value of the equity instrument, whichever is considered more reliable . Use of estimates The preparation of condensed financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include the fair value of stock-based compensation and warrants, valuation allowance against deferred tax assets and related disclosures. Actual results could differ from those estimates. Recent accounting pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases Leases In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718), On August 26, 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force),

BASIC AND DILUTED LOSS PER SHAR

BASIC AND DILUTED LOSS PER SHARE	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
BASIC AND DILUTED LOSS PER SHARE	4. BASIC AND DILUTED LOSS PER SHARE Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares and dilutive share equivalents outstanding for the period, determined using the treasury-stock and if-converted methods. Since the Company has had net losses for all periods presented, all potentially dilutive securities are anti-dilutive. Accordingly, basic and diluted net loss per share are equal. The following potential common stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive (in thousands): June 30, 2016 2015 Stock Options 538 388 Warrants 301 905 Conversion of Notes Payable 6,203 4,180 7,042 5,473

NOTES PAYABLE

NOTES PAYABLE	6 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
NOTES PAYABLE	5. NOTES PAYABLE From January 9, 2015 through February 5, 2015, the Company issued promissory notes to certain investors in the aggregate principal amount of approximately $1.1 million. On March 17, 2015, the Company issued Senior Secured Convertible Notes (the “Secured Notes”) to certain investors under which the Company borrowed approximately $7.4 million. National Securities Corporation (“NSC”) acted as placement agent and the Company paid brokerage commissions to NSC of approximately $785,700 and issued to NSC a warrant to purchase ten percent of the common shares issuable upon conversion of Secured Notes in the principal amount of $7,372,557 at an exercise price equal to the conversion price of the Secured Notes. The brokerage commissions are being amortized as interest expense over the life of the loan. During the three and six months ended June 30, 2016, the Company recognized interest expense of approximately $131,000 and $325,000 related to the brokerage commissions which is included in interest expenses in the condensed statements of operations. The Company also issued a warrant to NSC in connection with this financing. In addition, on March 17, 2015, the Company exchanged all of its existing unsecured convertible promissory notes for Secured Notes with an aggregate principal balance of approximately $7.3 million. The total closing represented $14.75 million. The Secured Notes were due on May 31, 2016 and accrue interest at a rate of 10% per annum, except in any event of default in which case the interest rate shall be 12% per annum. During March 2016, the maturity date of the Secured Notes was extended to May 31, 2017. All other terms of the Secured Notes remained the same. The Secured Notes automatically convert to common stock in the event of an IPO of the Company and are optionally convertible upon a subsequent placement of equity other than an IPO or at the discretion of the note holder. Based on the method of conversion, the Secured Notes are converted into common stock at the Conversion Price, as defined in the agreement. During April 2016, the Company issued additional Secured Notes in the aggregate principal amount of approximately $5,958,000. These notes have the same terms as the previous Secured Notes and mature on May 31, 2017. NSC acted as placement agent and the Company paid NSC a brokerage commission in the amount of ten percent of the proceeds from the Secured Notes placed by NSC, or approximately $438,000, and issued to NSC a warrant to purchase ten percent of the common shares issuable upon conversion of Secured Notes in the principal amount of approximately $4.4 million at an exercise price equal to the conversion price of the Secured Notes. In June 2016, and prior to any exercise of the warrant, NSC elected to cancel the warrant in full and for no consideration. During the three months and six months ended June 30, 2016, the interest expense on the Secured Notes was approximately $748,000 and $1.3 million, respectively. During the three and six months ended June 30, 2015, the interest expense on the Secured Notes was approximately $562,000 and $795,000, respectively. On August 10, 2016, in connection with the Company’s IPO, all Secured Notes were converted into common stock (see Note 10). At June 30, 2016 and December 31, 2015, the Secured Notes payable consisted of the following (in thousands): June 30, 2016 December, 31, 2015 Senior Notes $ 20,708 $ 14,750 Accrued interest 2,551 1,670 Debt Discount (387 ) (325 ) Senior secured convertible promissory notes payable, net $ 22,872 $ 16,095

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
	Jun. 30, 2016
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	6. Related Party Transactions On January 14, 2005, the Company executed a Secured Promissory Note (the “Promissory Note”) with an officer of the Company. Under the Promissory Note, the officer borrowed $187,500 from the Company. The Promissory Note bore interest at a fixed rate of 3.76% per annum, with interest-only payments due annually through the maturity date of January 14, 2014. In December 2015, the Company agreed to extend the term of the note to January 14, 2019, subject to acceleration in the event of the sale of the sale or liquidation of the Company, bankruptcy or like event. Effective January 2016 the Company cancelled the outstanding principal of the note in the amount of $187,500. The cancellation of this note was recognized as a bonus to the officer and included in general and administrative expenses in the accompanying condensed statement of operations for the six month period ended June 30, 2016. As of the date of the cancellation of the Promissory Note, there was accrued and unpaid interest under the note in the amount of approximately $7,000, which amount has been repaid by the officer. In return for the cancellation of the note, the officer was required to reimburse the Company for withholding taxes payable by the Company, in the amount of approximately $14,000. During the three and six month periods ended June 30, 2016, a director, who is also a shareholder of the Company, was paid $0 and $3,000, respectively, for his work as a consultant for the Company. The director was also paid $2,000 and $4,000 for similar work during the three and six months ended June 30, 2015, respectively. A director and shareholder of the Company is a partner of a law firm that serves as legal counsel for the Company. During the three months ended June 30, 2016 and 2015, this law firm billed the Company approximately $2,000 and $13,000, respectively. During the six months ended June 30, 2016 and 2015, the Company was billed approximately $2,000 and $32,000, respectively. Included in accounts payable on the accompanying condensed balance sheets at June 30, 2016 and December 31, 2015, is $0 and approximately $1,000, respectively owed to this law firm. Pursuant to the Company’s agreement with this law firm, the firm will either reimburse the Company or pay on its behalf out-of-pocket costs and expenses (continue with sentence as indicated) associated with a patent infringement lawsuit brought by the Company (See Part II, Item 1 of this report), including any award for attorney’s fees and costs sought by the defendant in that lawsuit.

WARRANTS

WARRANTS	6 Months Ended
	Jun. 30, 2016
Equity [Abstract]
WARRANTS	7. WARRANTS A summary of warrant activity for the six months ended June 30, 2016 is as follows (shares in thousands): Number of Weighted- Weighted-Average Outstanding at January 1, 2016 303 $ 3.41 Issued — — Expired (2 ) $ 33.75 Outstanding at June 30, 2016 301 $ 2.03 3.7 The warrants outstanding at June 30, 2016 had an intrinsic value of approximately $1.2 million based on a per share stock price of $5.70.

STOCK OPTION PLAN

STOCK OPTION PLAN	6 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
STOCK OPTION PLAN	8. STock Option plan A summary of the activity under the Employee Stock Option Plan and 2007 Equity Incentive Plan for the six months ended June 30, 2016 is as follows (shares in thousands): Number of Weighted- Weighted-Average Intrinsic Value Outstanding at January 1, 2016 511 $ 7.05 Granted 27 $ 5.70 Cancelled — — Outstanding at June 30, 2016 538 $ 6.98 8.96 — Exercisable at June 30, 2016 202 $ 9.11 8.36 — Vested and expected to vest at June 30, 2016 522 $ 7.02 8.95 — During the six months ended June 30, 2016, the Company granted options under its Employee Stock Option Plan to purchase 26,776 shares of its common stock to its employees. The fair value of these options was approximately $71,000. No options were issued in the three months ended June 30, 2016. The total number of options available for grant was 75,124 as of June 30, 2016. The following table summarizes the stock-based compensation expense recorded in the Company’s results of operations during the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months ended Six Months ended 2016 2015 2016 2015 Research and development $ 1 $ 22 $ 10 $ 99 General and administrative 46 9 94 245 $ 47 $ 31 $ 105 $ 344 The Company records compensation expense for employee awards with graded vesting using the straight-line method. The Company records compensation expense for nonemployee awards with graded vesting using the accelerated expense attribution method. The Company recognizes compensation expense over the requisite service period applicable to each individual award, which generally equals the vesting term. Estimated prospective forfeitures are incorporated in the determination of compensation cost to be recognized. The Company applied an expected forfeiture rate of 4.77% to non-vested stock options for which expense was recognized during the three and six month periods ended June 30, 2016 and 2015. The Company estimates the fair value of each option award using the Black-Scholes-Merton option pricing model. The Company estimated the fair value of employee and non-employee stock options using the Black-Scholes option pricing model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service periods of the respective awards. The weighted-average grant date fair value of options granted during the six months ended June 30, 2016 was $2.64. The fair value of employee stock options was estimated using the following weighted-average assumptions: Assumptions: Expected volatility 46.54 % Weighted average expected term (in years) 6.12 Risk-free interest rate 1.62 % Expected dividend yield 0 % The risk-free interest rate was obtained from U.S. Treasury rates for the applicable periods. The Company’s expected volatility was based upon the historical volatility for industry peers and used an average of those volatilities. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The dividend yield considers that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future. The fair value of the common stock was determined by the board of directors based on a variety of factors, including valuations prepared by third parties, the Company’s financial position, the status of development efforts within the Company, the current climate in the marketplace and the prospects of a liquidity event, among others. As of June 30, 2016, there was approximately $636,000 of total unrecognized compensation expense related to non-vested share-based compensation arrangements that are expected to vest. This cost is expected to be recognized over a weighted-average period of 1.7 years.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	9. commitments and contingencies Incentive Bonus During September 2015, the Board of Directors resolved to pay an incentive bonus to certain directors and officers contingent upon the Company being listed on the NASDAQ stock exchange before May 31, 2016 (subsequently extended to May 31, 2017 by the Board of Directors during February 2016) in connection with an initial public offering (IPO) with net proceeds of at least $15 million and a post-IPO valuation of at least $50 million and that the directors and officers continue to be in service with the Company until the IPO is closed. If these circumstances are met, a total bonus of approximately $1.7 million will be paid to employees in the form of common stock, convertible at the greater of the IPO price to the public or $3.681 per share. These incentive agreements also provide that an officer or director may continue to be eligible for the incentive bonus if their service with the Company terminates without cause or the officer or director resigns with good reason. Operating Leases On November 5, 2014, the Company entered into a lease agreement for the use of 1,730 square feet of office space in Wellesley Hills, Massachusetts. The lease with monthly payments of $4,613 commenced on December 1, 2014 and expires on November 30, 2016. On January 19, 2016, the Company entered into a real estate lease agreement for a 3,396 square foot office facility in Los Gatos, California as its new corporate headquarters. The lease commenced on February 1, 2016 and expires on January 31, 2018. The lease rate is approximately $12,000 per month, which will increase to approximately $13,000 per month commencing February 1, 2017. Approximate future minimum lease payments required under the operating leases are as follows (in thousands): Years ending December 31, Amount Remaining period in 2016 $ 98 2017 156 2018 13 Total $ 267 Officer Compensation In January 2016, the Company entered into employment agreements with three officers. The agreements call for an annual base salary of $250,000 and a bonus of up to 30% of base salary for one officer and annual base salaries of $220,000 and a bonus of up to 15% of base salary for the other two officers. In the event of involuntary termination, each officer is entitled to six months of severance pay. In June 2016, the Company terminated one of the officers effective as of June 30, 2016. The severance expense related to this termination is included in general and administration expense of the condensed statements of operation for the three and six months ended June 30, 2016. In February 2016, the Company entered into an employment agreement with an officer. The agreement calls for an annual base salary of $225,000 and a bonus of up to 30% of base salary. In the event of involuntary termination, the officer is entitled to six months of severance pay .

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2016
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	10. Subsequent Events Initial Public Offering The registration statement on Form S-1 for the Company’s IPO was declared effective by the SEC on August 4, 2016. On August 10, 2016, the Company consummated the IPO of 3,680,000 shares of common stock (which included 480,000 shares issued pursuant to the underwriter’s overallotment option) at a price per share of $7.50 and received from the underwriter net proceeds of approximately $24.7 million (net of underwriter’s discount of approximately $2.3 million and offering expenses of approximately $570,000). Stock Incentive Plan Amendment and Form S-8 Registration Statement During April 2016, the Board of Directors of the Company resolved that upon the completion of an IPO the 2007 Stock Incentive Plan shall be amended to increase common shares issuable thereunder to 3,199,447 shares of common stock, representing 20% of the total issued and outstanding shares of Common Stock on a fully-diluted basis immediately after the IPO. On August 12, 2016 the Company filed a registration statement on Form S-8 (which became effective upon filing) for the registration of 3,199,447 shares of common stock pursuant to the 2007 Equity Incentive Plan. Incentive Bonus In July 2016, the Company and certain officers and directors with whom the Company had agreed to grant certain incentive share bonuses (Note 9) agreed to cancel the share bonuses in return for the Company’s agreement to grant each recipient, upon the close of the Company’s initial public offering, shares of the Company’s restricted common stock pursuant to restricted stock agreements. The restricted stock agreements provided that the Company will issue to the recipients an aggregate of 440,364 shares of the Company’s common stock and that all shares remain subject to forfeiture, until the prescribed vesting date, in the event the recipient fails to remain in service to the Company for any reason other than the Company’s termination without cause or the recipient’s resignation for good reason. The restricted stock agreements provide that the award shall be fully vested on the one year anniversary of the date of grant. Effective August 10, 2016, coincident with the closing of the IPO, the Company issued the 440,364 shares pursuant to the restricted stock agreements. Conversion of Secured Notes Upon consummation of the IPO, all principal and accrued interest due under the Secured Notes, totaling approximately $23.5 million converted into 6,264,659 shares of common stock of the Company, which was based on a conversion price of $3.75, in accordance with the terms of the Secured Notes.

SUMMARY OF SIGNIFICANT ACCOUN16

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Basis of presentation	Basis of presentation The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, since they are interim financial statements, the accompanying condensed financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the Company’s financial position and the results of operations for the periods presented have been included. Interim results are not necessarily indicative of results for a full year. The condensed financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2015 which are included in the Company’s final IPO prospectus filed with the SEC Pursuant to Rule 424(b)(4) of the Securities Act of 1933 on August 8, 2016.
Deferred offering costs	Deferred offering costs The Company complies with the requirements of the ASC 340, Other Assets and Deferred Costs
Stock-based compensation	Stock-based compensation The Company computes stock-based compensation in accordance with authoritative guidance. The Company uses the Black-Scholes-Merton option-pricing model to determine the fair value of its stock options. The Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of the common stock of the Company, expected life of stock options, the expected volatility and the expected risk-free interest rate, among others. These assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally outside the control of the Company. As a result, if other assumptions had been used, stock-based compensation cost, as determined in accordance with authoritative guidance, could have been materially impacted. Furthermore, if the Company uses different assumptions on future grants, stock-based compensation cost could be materially affected in future periods. The Company accounts for the fair value of equity instruments issued to non-employees using either the fair value of the services received or the fair value of the equity instrument, whichever is considered more reliable .
Use of estimates	Use of estimates The preparation of condensed financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include the fair value of stock-based compensation and warrants, valuation allowance against deferred tax assets and related disclosures. Actual results could differ from those estimates.
Recent accounting pronouncements	Recent accounting pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases Leases In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718), On August 26, 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force),

BASIC AND DILUTED LOSS PER SH17

BASIC AND DILUTED LOSS PER SHARE (Tables)	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
Schedule of potential common stock equivalents not included in the calculation of diluted net loss per common share	The following potential common stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive (in thousands): June 30, 2016 2015 Stock Options 538 388 Warrants 301 905 Conversion of Notes Payable 6,203 4,180 7,042 5,473

NOTES PAYABLE (Tables)

NOTES PAYABLE (Tables)	6 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Schedule of secured notes payable	At June 30, 2016 and December 31, 2015, the Secured Notes payable consisted of the following (in thousands): June 30, 2016 December, 31, 2015 Senior Notes $ 20,708 $ 14,750 Accrued interest 2,551 1,670 Debt Discount (387 ) (325 ) Senior secured convertible promissory notes payable, net $ 22,872 $ 16,095

WARRANTS (Tables)

WARRANTS (Tables)	6 Months Ended
	Jun. 30, 2016
Equity [Abstract]
Schedule of warrant activity	A summary of warrant activity for the six months ended June 30, 2016 is as follows (shares in thousands): Number of Weighted- Weighted-Average Outstanding at January 1, 2016 303 $ 3.41 Issued — — Expired (2 ) $ 33.75 Outstanding at June 30, 2016 301 $ 2.03 3.7

STOCK OPTION PLAN (Tables)

STOCK OPTION PLAN (Tables)	6 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of stock option activity	A summary of the activity under the Employee Stock Option Plan and 2007 Equity Incentive Plan for the six months ended June 30, 2016 is as follows (shares in thousands): Number of Weighted- Weighted-Average Intrinsic Value Outstanding at January 1, 2016 511 $ 7.05 Granted 27 $ 5.70 Cancelled — — Outstanding at June 30, 2016 538 $ 6.98 8.96 — Exercisable at June 30, 2016 202 $ 9.11 8.36 — Vested and expected to vest at June 30, 2016 522 $ 7.02 8.95 —
Schedule of stock-based compensation expense	The following table summarizes the stock-based compensation expense recorded in the Company’s results of operations during the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months ended Six Months ended 2016 2015 2016 2015 Research and development $ 1 $ 22 $ 10 $ 99 General and administrative 46 9 94 245 $ 47 $ 31 $ 105 $ 344
Schedule of weighted-average assumptions	The fair value of employee stock options was estimated using the following weighted-average assumptions: Assumptions: Expected volatility 46.54 % Weighted average expected term (in years) 6.12 Risk-free interest rate 1.62 % Expected dividend yield 0 %

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	6 Months Ended
	Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Schedule of future minimum lease payments required under operating leases	Approximate future minimum lease payments required under the operating leases are as follows (in thousands): Years ending December 31, Amount Remaining period in 2016 $ 98 2017 156 2018 13 Total $ 267

LIQUIDITY AND MANAGEMENT PLANS

LIQUIDITY AND MANAGEMENT PLANS (Details Narrative) - USD ($) $ in Thousands	Aug. 10, 2016	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Cash		$ 5,267	$ 3,197	$ 5,356	$ 21
Working capital deficit		18,200
Senior secured convertible promissory notes payable, net		22,872	16,095
Accumulated deficit		(88,472)	$ (83,387)
Senior Secured Convertible Notes [Member]
Senior secured convertible promissory notes payable, net		$ 22,872
Subsequent Event [Member] | Senior Secured Convertible Notes [Member]
Number of shares issued upon debt conversion	6,264,659
Subsequent Event [Member] | Initial Public Offering [Member]
Number of shares issued	3,680,000
Net proceeds from transaction	$ 24,700

SUMMARY OF SIGNIFICANT ACCOUN23

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Deferred offering costs	$ 234	$ 145

BASIC AND DILUTED LOSS PER SH24

BASIC AND DILUTED LOSS PER SHARE (Details) - shares shares in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Number of anti-dilutive common stock	7,042	5,473
Stock Options [Member]
Number of anti-dilutive common stock	538	388
Warrants [Member]
Number of anti-dilutive common stock	301	905
Conversion Of Notes Payable [Member]
Number of anti-dilutive common stock	6,203	4,180

NOTES PAYABLE (Details)

NOTES PAYABLE (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Apr. 30, 2016	Dec. 31, 2015
Senior secured convertible promissory notes payable, net	$ 22,872		$ 16,095
Senior Secured Convertible Notes [Member]
Senior Notes	20,708
Accrued interest	2,551
Debt Discount	(387)
Senior secured convertible promissory notes payable, net	$ 22,872
10% Senior Secured Convertible Notes Due May 31, 2017 [Member]
Senior Notes		$ 5,958	14,750
Accrued interest			1,670
Debt Discount			(325)
Senior secured convertible promissory notes payable, net			$ 16,095

NOTES PAYABLE (Details Narrativ

NOTES PAYABLE (Details Narrative) - USD ($)	Mar. 17, 2015	Apr. 30, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Feb. 05, 2015
Notes Payable [Member] | Investors [Member]
Debt face value								$ 1,100,000
10% Senior Secured Convertible Notes Due May 31, 2017 [Member] | National Securities Corporation [Member]
Brokerage commissions paid	$ 785,700
Percentage of warrant to purchase	10.00%
10% Senior Secured Convertible Notes Due May 31, 2017 [Member] | National Securities Corporation [Member] | Interest Expense [Member]
Brokerage commissions paid			$ 131,000		$ 325,000
10% Senior Secured Convertible Notes Due May 31, 2017 [Member] | Unsecured Convertible Promissory Notes
Debt exchanged value to secured debt	$ 7,300,000
10% Senior Secured Convertible Notes Due May 31, 2017 [Member] | Investors [Member]
Previously debt face value	7,400,000
Debt face value	$ 147,500,000
Default interest rate	12.00%
Debt original maturity date	May 31, 2016
Debt beneficial conversion feature	$ 7,372,557
10% Additional Senior Secured Convertible Notes Due May 31, 2017 [Member]
Brokerage commissions paid		$ 438,000
Percentage of warrant to purchase		10.00%
Debt face value		$ 5,958,000					$ 14,750,000
Debt beneficial conversion feature		$ 4,400,000
Senior Secured Convertible Notes [Member]
Debt face value			20,708,000		20,708,000
Interest expense			$ 748,000	$ 562,000	$ 1,300,000	$ 795,000

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	Jan. 14, 2016	Jan. 31, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Director (Shareholder of the Company) [Member]
Related party transaction amount			$ 0	$ 2,000	$ 3,000	$ 4,000
Director & Shareholder [Member] | Law Firm [Member]
Related party transaction amount			2,000	$ 2,000	13,000	$ 32,000
Accounts payable			$ 0		$ 0		$ 1,000
3.76% Secured Convertible Notes Due January 14, 2019 [Member] | Officer [Member]
Loan receivable face value	$ 187,500
Loan receivable original maturity date	Jan. 14, 2014
Loan receivable cancelled value		$ 187,500
Proceeds from interest received		7,000
Loan receivable reimburse withholding taxes payable		$ 14,000

WARRANTS (Details)

WARRANTS (Details) shares in Thousands	6 Months Ended
	Jun. 30, 2016$ / sharesshares
Warrants and Rights Note Disclosure, Shares Outstanding [Roll Forward]
Outstanding at beginning | shares	303
Issued | shares
Expired | shares	(2)
Outstanding at ending | shares	301
Warrants and Rights Note Disclosure, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning | $ / shares	$ 3.41
Issued | $ / shares
Expired | $ / shares	33.75
Outstanding at ending | $ / shares	$ 2.03
Warrants and Rights Note Disclosure, Weighted Average Remaining Contractual Term [Roll Forward]
Outstanding at ending	3 years 8 months 12 days

WARRANTS (Details Narrative)

WARRANTS (Details Narrative) $ / shares in Units, $ in Thousands	Jun. 30, 2016USD ($)$ / shares
Equity [Abstract]
Warrant intrinsic value | $	$ 1,200
Warrant stock price (in dollars per share) | $ / shares	$ 5.70

STOCK OPTION PLAN (Details)

STOCK OPTION PLAN (Details)	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning | shares	511,000
Granted | shares	26,776
Cancelled | shares
Outstanding at ending | shares	538,000
Exercisable at ending | shares	202,000
Vested and expected to vest at ending | shares	522,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Prices [Roll Forward]
Outstanding at beginning | $ / shares	$ 7.05
Granted | $ / shares	5.70
Cancelled | $ / shares
Outstanding at ending | $ / shares	6.98
Exercisable at ending | $ / shares	9.11
Vested and expected to vest at ending | $ / shares	$ 7.02
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted-Average Remaining Contractual Term [Roll Forward]
Outstanding at ending	8 years 11 months 16 days
Exercisable at ending	8 years 4 months 10 days
Vested and expected to vest at ending	8 years 11 months 12 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Intrinsic Value [Roll Forward]
Outstanding at ending | $
Exercisable at ending | $
Vested and expected to vest at ending | $

STOCK OPTION PLAN (Details 1)

STOCK OPTION PLAN (Details 1) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Allocated stock-based compensation	$ 47	$ 31	$ 104	$ 344
Research and Development [Member]
Allocated stock-based compensation	1	22	10	99
General and Administrative [Member]
Allocated stock-based compensation	$ 46	$ 9	$ 94	$ 245

STOCK OPTION PLAN (Details 2)

STOCK OPTION PLAN (Details 2)	6 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Expected volatility	46.54%
Weighted average expected term (in years)	6 years 1 month 13 days
Risk-free interest rate	1.62%
Expected dividend yield	0.00%

STOCK OPTION PLAN (Details Narr

STOCK OPTION PLAN (Details Narrative) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of options granted | shares	26,776
Number of options available for grant | shares	75,124
Fair value of option granted | $	$ 71,000
Percentage of expected forfeiture rate on nonvested shares	4.77%
Weighted average grant date fair value (in dollars per share) | $ / shares	$ 2.64
Total unrecognized compensation expense related to non-vested option | $	$ 636
Unrecognized compensation expense weighted-average period	1 year 8 months 12 days

COMMITMENTS AND CONTINGENCIES34

COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	Jun. 30, 2016USD ($)
Commitments and Contingencies Disclosure [Abstract]
Remaining period in 2016	$ 98
2,017	156
2,018	13
Total	$ 267

COMMITMENTS AND CONTINGENCIES35

COMMITMENTS AND CONTINGENCIES (Details Narrative)	Feb. 01, 2017USD ($)	Jan. 19, 2016USD ($)ft²	Nov. 05, 2014USD ($)ft²	Feb. 29, 2016USD ($)	Jan. 31, 2016USD ($)	Sep. 30, 2015USD ($)$ / shares
Bonus payable						$ 1,700,000
Share price (in dollars per share) | $ / shares						$ 3.681
Lease Agreement [Member] | Massachusetts (Wellesley Hills) [Member] | Office Space [Member]
Area of land | ft²			1,730
Monthly rent expense			$ 4,613
Lease expiration date			Nov. 30, 2016
Real Estate Lease Agreement [Member] | California (Los Gatos) [Member] | Office Space [Member]
Area of land | ft²		3,396
Monthly rent expense		$ 12,000
Lease expiration date		Jan. 31, 2018
Real Estate Lease Agreement [Member] | California (Los Gatos) [Member] | Office Space [Member] | Subsequent Event [Member]
Monthly rent expense	$ 13,000
Employment Agreements [Member] | First Officer [Member]
Annual base salary					$ 250,000
Maximum percentage of bonus based on annual base salary					30.00%
Employment Agreements [Member] | Second Officer [Member]
Annual base salary					$ 220,000
Maximum percentage of bonus based on annual base salary					15.00%
Employment Agreements [Member] | Third Officer [Member]
Annual base salary					$ 220,000
Maximum percentage of bonus based on annual base salary					15.00%
Employment Agreements [Member] | Fourth Officer [Member]
Annual base salary				$ 225,000
Maximum percentage of bonus based on annual base salary				30.00%
Initial Public Offering [Member]
Description of initial public offering						An initial public offering (IPO) with net proceeds of at least $15 million and a post-IPO valuation of at least $50 million and that the directors and officers continue to be in service with the Company until the IPO is closed.

SUBSEQUENT EVENTS (Details Narr

SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	Aug. 10, 2016	Aug. 12, 2016	Sep. 30, 2015
Share price (in dollars per share)			$ 3.681
Amendment 2007 Stock Incentive Plan [Member]
Revised number of shares authorized		3,199,447
Percentge of total issued and outstanding common shares		20.00%
Subsequent Event [Member] | Restricted Stock Agreements [Member]
Number of shares issued	440,364
Subsequent Event [Member] | Senior Secured Convertible Notes [Member]
Number of shares issued upon debt conversion	6,264,659
Debt original conversion amount	$ 23,500
Debt conversion price (in dollars per share)	$ 3.75
Subsequent Event [Member] | Initial Public Offering [Member]
Number of shares issued	3,680,000
Net proceeds from transaction	$ 24,700
Underwriter's discount	2,300
Offering expenses	$ 570
Subsequent Event [Member] | Over-Allotment Option [Member]
Number of shares issued	480,000
Share price (in dollars per share)	$ 7.50