Atomera (ATOM) 10-K 31 Mar 17 2016 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2016	Mar. 27, 2017	Jun. 30, 2016
Document And Entity Information
Entity Registrant Name	Atomera Inc
Entity Central Index Key	1,420,520
Document Type	10-K
Trading Symbol	ATOM
Document Period End Date	Dec. 31, 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 Public Float			$ 85,851,285
Entity Common Stock, Shares Outstanding		12,104,737
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,016

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 26,718	$ 3,197
Restricted Investment	0	15
Prepaid expenses and other current assets	96	48
Total current assets	26,814	3,260
Property and equipment, net	28	15
Deferred offering costs	0	145
Security deposit	37	0
Total assets	26,879	3,420
Current liabilities:
Accounts payable	353	301
Accrued expenses	168	131
Accrued payroll related expenses	510	14
Senior secured convertible promissory notes payable, net	0	16,095
Total liabilities	1,031	16,541
Commitments and contingencies (see Note 7)
Stockholders' equity (deficit):
Preferred stock, $0.001 par value, authorized 2,500 shares; none issued and outstanding at December 31, 2016 and 2015	0	0
Common stock, $0.001 par value, authorized 47,500 shares; 12,025 shares issued and outstanding at December 31, 2016 and 1,617 issued and outstanding as of December 31, 2015	12	2
Additional paid-in capital	121,833	70,452
Subscription receivable	0	(188)
Accumulated deficit	(95,997)	(83,387)
Total stockholders' equity (deficit)	25,848	(13,121)
Total liabilities and stockholders' equity (deficit)	$ 26,879	$ 3,420

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Dec. 31, 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	0	0
Preferred stock, outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	47,500	47,500
Common stock, issued	12,025	1,617
Common stock, oustanding	12,025	1,617

Statements of Operations

Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Operating Expenses:
Research and development	$ 3,993	$ 2,022
General and administrative	5,105	3,441
Selling and marketing	901	36
Total operating expenses	9,999	5,499
Loss from operations	(9,999)	(5,499)
Other income/(expense):
Interest income	29	5
Interest expense	(2,640)	(1,930)
Loss on settlement of options and warrants	0	(2,089)
Total other expense, net	(2,611)	(4,014)
Net loss	$ (12,610)	$ (9,513)
Net loss per common share, basic and diluted	$ (2.22)	$ (7.55)
Weighted average number of common shares outstanding, basic and diluted	5,682	1,260

Statement of Stockholders' Equi

Statement of Stockholders' Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Subscription Receivable	Accumulated Deficit	Total
Beginning balance, shares at Dec. 31, 2014	1,233
Beginning balance, value at Dec. 31, 2014	$ 1	$ 66,759	$ (188)	$ (73,874)	$ (7,302)
Issuance of common stock for the settlement of options and warrants, shares issued	384
Issuance of common stock for the settlement of options and warrants, value	$ 1	2,089			2,090
Stock-based compensation		431			431
Issuance of common stock warrants		1,173			1,173
Net loss				(9,513)	(9,513)
Ending balance, shares at Dec. 31, 2015	1,617
Ending balance, value at Dec. 31, 2015	$ 2	70,452	(188)	(83,387)	(13,121)
Sale of stock, shares	3,680
Sale of stock, value	$ 4	27,596			27,600
Conversion of secured notes, shares	6,265
Conversion of secured notes, value	$ 6	23,486			23,492
Compensation in exchange for forgiveness of subscription receivable			188		188
Stock-based compensation, shares	462
Stock-based compensation		2,468			2,468
Stock option exercises, shares	1
Stock option exercises, value		4			4
Issuance of common stock warrants		1,249			1,249
Debt offering costs		(3,422)			(3,422)
Net loss				(12,610)	(12,610)
Ending balance, shares at Dec. 31, 2016	12,025
Ending balance, value at Dec. 31, 2016	$ 12	$ 121,833	$ 0	$ (95,997)	$ 25,848

Statements of Cash Flows

Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$ (12,610)	$ (9,513)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	15	10
Debt issuance cost amortization	1,526	224
Stock-based compensation	2,468	431
Non-cash warrant fair value for services rendered	0	1,016
Non-cash interest expense	1,114	1,708
Non-cash loss on option and warrant exchange	0	2,089
Compensation in exchange for settlement of subscription receivable	188	0
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(48)	(24)
Security deposit	(37)	0
Accounts payable	52	(329)
Accrued expenses	37	(13)
Accrued payroll expenses	496	14
Net cash used in operating activities	(6,799)	(4,387)
NET CASH USED IN INVESTING ACTIVITIES
Acquisition of property and equipment	(28)	(4)
Release of restricted investment	15	0
Net cash used in investing activities	(13)	(4)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured convertible promissory notes payable	0	1,097
Net proceeds from senior secured convertible promissory notes payable	5,467	6,615
Proceeds from initial public offering	27,600	0
Payment of offering costs	(2,738)	(145)
Proceeds from exercise of stock options	4	0
Net cash provided by financing activities	30,333	7,567
Net increase in cash and cash equivalents	23,521	3,176
Cash at beginning of period	3,197	21
Cash and cash equivalents at end of period	26,718	3,197
Non-cash financing activities:
Warrant issued as debt discount on secured notes	710	156
Warrant issued for underwriting of initial public offering	539	0
Conversion of secured notes into equity	$ 23,492	$ 0

1. NATURE OF OPERATIONS

1. NATURE OF OPERATIONS	12 Months Ended
	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
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).

2. LIQUIDITY AND MANAGEMENT PLA

2. LIQUIDITY AND MANAGEMENT PLANS	12 Months Ended
	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
LIQUIDITY AND MANAGEMENT PLANS	At December 31, 2016, the Company had cash and cash equivalents of approximately $26.7 million and working capital of approximately $25.8 million. The Company has not generated revenues since inception and has incurred recurring operating losses. At December 31, 2016, the Company had an accumulated deficit of approximately $96.0 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. During 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, the Company believes that it has sufficient capital to fund its current business plans and obligations over, at least, 12 months from the date of filing this Annual 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 cannot be assured. 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.

3. REVERSE STOCK SPLIT

3. REVERSE STOCK SPLIT	12 Months Ended
	Dec. 31, 2016
Equity [Abstract]
REVERSE STOCK SPLIT	On December 8, 2015, the Company’s Board of Directors approved a 1-for-15 reverse split of the Company’s common stock. The reverse stock split became effective on December 11, 2015. Upon the effectiveness of the reverse stock split, (i) every 15 shares of outstanding common stock were combined into one share of common stock, (ii) the number of shares of common stock into which each outstanding option or warrant to purchase common stock is exercisable was proportionally decreased and (iii) the exercise price of each outstanding option or warrant to purchase common stock was proportionately increased. The authorized common and preferred stock shares decreased to 47.5 million and 2.5 million, respectively. The par value remained the same. All share and per share amounts have been retroactively restated to reflect the reverse stock split in the accompanying financial statements and notes.

4. SUMMARY OF SIGNIFICANT ACCOU

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2016
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Basis of presentation The financial statements are presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and reflect the financial position, results of operations and cash flows for all periods presented. Fair Value of Financial Instruments Authoritative guidance requires disclosure of the fair value of financial instruments. The Company’s financial instruments consist of cash and cash equivalents, certificate of deposits, accounts payable, and bridge loan notes payable, the carrying amounts of which approximate their estimated fair values primarily due to the short-term nature of the instruments or based on information obtained from market sources and management estimates. The Company measures the fair value of certain of its financial assets and liabilities on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value which is not equivalent to cost will be classified and disclosed in one of the following three categories: Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities. Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Cash and cash equivalents The Company maintains its operating accounts in a single reputable financial institution. The balances are insured by the U.S. Federal Deposit Insurance Corporation (“FDIC”) up to specified limits. The Company’s cash is maintained in checking accounts and money market funds with maturities of less than three months when purchased, which are readily convertible to known amounts of cash, and which in the opinion of management are subject to insignificant risk of loss in value. Restricted Investment The Company’s restricted investment consists of a certificate of deposit held as collateral to secure borrowing limits for certain corporate credit cards. As of September 2016, the Company was no longer required to maintain this certificate of deposit. The certificate of deposit was liquidated and the amounts were transferred to the Company’s operating accounts. Deferred offering costs The Company complies with the requirements of the Accounting Standards Codification (“ASC”) Topic 340, Other Assets and Deferred Costs Income Taxes In accordance with authoritative guidance, deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and tax bases of assets and liabilities using the current enacted tax rate expected to be in effect when the differences are expected to reverse. A valuation allowance is recorded on deferred tax assets unless realization is considered more likely than not. The Company evaluates its tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are not recorded as a tax benefit or expense in the current year. The Company recognizes interest and penalties, if any, related to uncertain tax positions in interest expense. No interest and penalties related to uncertain tax positions were accrued at December 31, 2016. The Company follows authoritative guidance which requires the evaluation of existing tax positions. Management has analyzed all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states, the principal state being Massachusetts. Open tax years are those that are open for examination by taxing authorities. Property and equipment Items capitalized as property and equipment are stated at cost. Maintenance and routine repairs are charged to operations when incurred, while betterments and renewals are capitalized. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets starting when the asset is placed in service. Debt Discounts Debt discounts are amortized to interest expense using the straight-line method, which approximates the interest rate method, over the earlier of the term of the related debt or their earliest date of redemption. Research and development expenses In accordance with authoritative guidance, the Company charges research and development costs to operations as incurred. Research and development expenses consist of personnel costs for the design, development, testing and enhancement of the Company’s technology, and certain other allocated costs, such as depreciation and other facilities related expenditures. Common stock warrants The Company classifies as equity any warrants that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control), (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement) or (iii) that contain reset provisions that do not qualify for the scope exception. The Company assesses classification of its common stock warrants and other freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company’s freestanding derivatives consist of warrants to purchase common stock that were issued in connection with its notes payable. The Company evaluated these warrants to assess their proper classification and determined that the common stock warrants meet the criteria for equity classification in the balance sheet. Such warrants are measured at fair value, which the Company determines using the Black-Scholes-Merton option-pricing model. 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 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. Adoption of recent accounting standards In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern In May 2015, the FASB issued ASU 2015-07, Fair Value Measurement In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Recent accounting standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Revenue Recognition Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Identifying Performance Obligations and Licensing Narrow-Scope Improvements and Practical Expedients, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, In February 2016, the FASB issued ASU No. 2016-02, which replaces the existing guidance in ASC Topic 840 Leases In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments 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)

5. BASIC AND DILUTED LOSS PER S

5. BASIC AND DILUTED LOSS PER SHARE	12 Months Ended
	Dec. 31, 2016
Earnings Per Share [Abstract]
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): Year Ended December 31, 2016 2015 Stock Options 1,515 511 Warrants 765 303 Conversion of Notes Payable – 2,230 2,280 3,044

6. PROPERTY AND EQUIPMENT

6. PROPERTY AND EQUIPMENT	12 Months Ended
	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
6. PROPERTY AND EQUIPMENT	Property and equipment consisted of the following (in thousands): December 31, 2016 2015 Computer equipment $ 60 $ 39 Laboratory equipment 55 184 Software 5 5 Office equipment 2 16 Furniture and fixtures – 1 122 245 Less: Accumulated depreciation and amortization (94 ) (230 ) $ 28 $ 15 Depreciation and amortization expense relating to property and equipment was approximately $15,000 and $10,000 for the years ended December 31, 2016 and 2015, respectively. The company depreciates computer equipment, laboratory equipment and office equipment on straight-line basis over three years. The Company amortizes software on straight-line basis over three years. During the year ended December 31, 2016, the Company disposed of property and equipment with a cost of approximately $151,000 in connection with the relocation of its Massachusetts’s office. The net book value of the assets at the time of the disposal was approximately $0.

7. COMMITMENTS AND CONTINGENCIE

7. COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	Operating leases In November 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 expired on November 30, 2016. In October 2016, the Company entered into lease agreement for approximately 200 square feet of office space in Cambridge, Massachusetts. The lease with monthly payments of $2,074 per month commenced on October 24, 2016. The lease is a month to month and can be cancelled with a 30 day notice. In January 2016, the Company entered into a 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 $12,395 per month, which will increase to $13,074 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 2017 $ 156 2018 13 Total $ 169 Licensing agreement In December 2006, the Company entered into licensing agreement with ASM International, NV, a semiconductor OEM located in Almere, The Netherlands, pursuant to which ASM has granted to the Company a non-exclusive, worldwide license to make, and sublicense others to make, semiconductor devices using certain ASM patents. The ASM license restricts the Company and its sublicensees from using the ASM licensed rights in the manufacture of EPI machines or any other machines used to manufacture semiconductors. The ASM license is coterminous with patents licensed by ASM, which expires on January 8, 2019, and requires the Company to pay ASM a royalty of 5% of net royalty revenue, generally defined as gross royalty revenue less certain customer offsets and credits, from the sale of any product incorporating the ASM licensed patents not manufactured on ASM equipment and a royalty of 2.5% of net revenue from the sale of any product incorporating ASM licensed patents manufactured on ASM equipment. All semiconductor devices incorporating the Company’s MST ®

8. NOTES PAYABLE

8. NOTES PAYABLE	12 Months Ended
	Dec. 31, 2016
Debt Disclosure [Abstract]
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 (the “2015 NSC 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 of $7.362 per share, subject to adjustment to an exercise price equal to the conversion price of the Secured Notes when such conversion price became determinable. The number of shares issuable upon exercise of the 2015 NSC Warrant was initially set at 100,144 shares of the Company’s common stock, subject to later adjustment to a number of shares equal to 10% of the shares issuable upon conversion of the Secured Notes. The brokerage commissions are being amortized as interest expense over the life of the loan. 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 accrued 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 were automatically convertible into common stock in the event of an IPO of the Company and were 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 were convertible 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 year ended December 31, 2016 and 2015, the interest expense on the Secured Notes was approximately $2.6 million and $1.9 million, respectively. On August 10, 2016, 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 (50% of the price of shares sold in to the public in the IPO, as provided in the terms of the Secured Notes). The determination of the conversion price and number of shares issuable upon conversion of the Secured Notes triggered an adjustment to the 2015 NSC Warrant, increasing the number of shares issuable by 96,458 (to a total of 196,502 shares) and setting the exercise price at $3.75 per share. The modification of the number of shares issuable and exercise price of the 2015 NSC Warrant increased its fair value resulting in addition interest expense recognized in August, 2016 (See Note 11). At December 31, 2015, the senior secured convertible promissory notes payable consisted of the following (in thousands): Senior Notes $ 14,750 Accrued interest 1,670 Debt Discount (325 ) Senior secured convertible promissory notes payable, net $ 16,095

9. RELATED PARTY TRANSACTIONS

9. RELATED PARTY TRANSACTIONS	12 Months Ended
	Dec. 31, 2016
Related Party Transactions [Abstract]
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 statement of operations for the year ended December 31, 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 years ended December 31, 2016 and 2015, a director, who is also a shareholder of the Company, was paid $3,000 and $10,000, respectively, for his work as a consultant for the Company. A director and shareholder of the Company is a partner of a law firm that serves as legal counsel for the Company. During the years ended December 31, 2016 and 2015, this law firm billed the Company $2,000 and approximately $34,000, respectively for the reimbursement of expenses. Included in accounts payable on the accompanying balance sheets at December 2016 and 2015, is $0 and approximately $1,000, respectively, owed to this law firm.

10. STOCKHOLDERS' EQUITY

10. STOCKHOLDERS' EQUITY	12 Months Ended
	Dec. 31, 2016
Equity [Abstract]
10. STOCKHOLDERS' EQUITY	The Company is authorized to issue to up 2,500,000 shares of preferred stock, $.001 par value. As of December 31, 2016, no shares have been authorized and no shares are issued and outstanding. Preferred stock may rank prior to common stock with respect to dividends rights, liquidation preferences, or both, and may have full or limited voting rights. As of December 31, 2016, the Company has reserved 2.7 million shares of common stock for stock options and warrants. During October 2015, the Company offered all option holders as of December 31, 2014 a one-time opportunity to exchange their options for shares of restricted common stock in a ratio of two options for one share of restricted common stock regardless of exercise price. The offer resulted in 166,230 options converting to 83,115 shares of restricted common stock on December 7, 2015. The Company recorded a loss of approximately $428,000 on this exchange based on the incremental increase in value of the options after the exchange compared to before the exchange. During October 2015, the Company offered all warrant holders as of December 31, 2014 a one-time opportunity to exchange their warrants for shares of common stock in a ratio of two warrants for one share of common stock regardless of exercise price. The offer resulted in 601,861 warrants converting to 300,930 shares of common stock on December 7, 2015. The Company recorded a loss of approximately $1.7 million on this exchange based on the incremental increase in value of the warrants after the exchange compared to before the exchange. In August 2016, the Company closed its IPO of 3,680,000 shares of common stock at a public offering price of $7.50 per share. In accordance with the terms of the Secured Notes, all principal plus accrued interest (totaling approximately $23.5 million) converted automatically upon consummation of the IPO into 6,264,659 shares (see Note 8).

11. WARRANTS

11. WARRANTS	12 Months Ended
	Dec. 31, 2016
Equity [Abstract]
WARRANTS	On February 9, 2015, the Company issued a five-year warrant to purchase 198,767 shares of common stock at $0.15 per share to Liquid Patent Advisors, LLC (formerly known as Liquid Patent Consulting, LLC) (“LPC”). The warrant represented consideration for business, strategic and intellectual property development to be performed during 2015. The fair value of the warrant was determined to be approximating $1.0 million and was recorded as consulting expense and is included in general and administrative expenses in the statement of operations in year ended December 31, 2015. During July 2015, the exercise price for 188,829 shares of common stock was modified to an exercise price of $0.87 per share. The modification resulted in a decrease in the fair value of the warrant; such decrease is not recognized under authoritative guidance. As a result of the conversion of the Secured Notes to common stock on August 10, 2016, the 2015 NSC Warrant was adjusted in accordance with its terms (See Note 5). This adjustment consisted of (i) an increase in the number of shares issuable upon exercise of the warrant by 96,458 to a total of 196,602 (10% of the common shares issued upon conversion of the Secured Notes) and (ii) modified the per-share exercise price of the original warrant issued to $3.75. The adjustment increased the fair value of the warrant by approximately $710,000 and was recorded as additional interest expense in the year ended December 31, 2016 in the statement of operations. The modified warrant expires at the same time as the original warrant, March 17, 2020. On August 4, 2016, the Company issued a five-year warrant to purchase 368,000 shares of common stock at $9.375 per share to NSC in consideration for underwriting the Company’s IPO in August 2016. The fair value of these warrants was determined to be approximately $539,000 and is included as a charge to additional paid-in capital as of December 31, 2016 as a deferred offering cost. The Company estimated the fair value of warrants using the Black-Scholes option pricing model. The fair value of warrants was estimated using the following weighted-average assumptions: Year Ended December 31, 2016 2015 Weighted average exercise price: $ 7.42 $ 2.57 Weighted average grant date fair value: $ 2.49 $ 3.92 Assumptions: Expected volatility 43.1% 43.94% Weighted average expected term (in years) 2.2 5.0 Risk-free interest rate 0.6% 1.5% Expected dividend yield 0.0% 0.0% 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. A summary of warrant activity for the years ended December 31, 2016 is as follows (shares in thousands except per share and contractual term): Number of Shares Weighted- Average Exercise Prices Weighted-Average Remaining Contractual Term (In Years) Outstanding at January 1, 2016 303 $ 3.41 Issued 464 $ 8.21 Expired (2 ) $ 33.75 Outstanding and exercisable at December 31, 2016 765 $ 5.75 3.9 The warrants outstanding at December 31, 2016 had an intrinsic value of approximately $1.8 million based on a per-share stock price of $6.75 as of December 31, 2016.

12. STOCK BASED COMPENSATION

12. STOCK BASED COMPENSATION	12 Months Ended
	Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
STOCK BASED COMPENSATION	The Company granted options under an Employee Option Plan (the “Old Plan”), which authorized the granting of options to employees, directors and consultants to purchase common stock. Option grants are no longer authorized under the Old Plan which had 1,370 vested options outstanding at December 31, 2014 and no vested options outstanding at December 31, 2015. On March 14, 2007, the Company’s stockholders approved the 2007 Equity Incentive Plan (the “2007 Plan”). Generally, stock options vest and become exercisable over a two to four-year period from the date of grant; however during 2015 and 2016 certain options granted provided for immediate vesting or were milestone based. Stock options expire no later than ten years after the grant date. In addition, non-vested shares that are released from or reacquired by the Company from outstanding awards under the 2007 Plan become available for grant under the 2007 Plan and may be reissued as new awards. The 2007 Plan is authorized to issue up to 1,222,306 shares as of December 31, 2016. The following table summarizes the stock-based compensation expense recorded in the Company’s results of operations during the years ended December 31, 2016 and 2015 for stock options and restricted stock (in thousands): Year Ended December 31, 2016 2015 Research and development $ 157 $ 137 General and administrative 1,893 294 Selling and Marketing 418 – $ 2,468 $ 431 As of December 31, 2016, there was approximately $5.5 million 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 2.2 years. 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. The Company estimates the fair value of each option award using the Black-Scholes-Merton option pricing model. Forfeitures are recognized when realized. 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 Company has decided to early adopt ASU 2016-09 in the fourth quarter of 2016 and has elected to recognizing forfeitures as they occur rather than estimate their forfeiture rate. The fair value of employee stock options issued was estimated using the following weighted-average assumptions: Year Ended December 31, 2016 2015 Weighted average exercise price: $ 7.47 $ 6.06 Weighted average grant date fair value: $ 3.50 $ 2.14 Assumptions: Expected volatility 44.1% 43.94% Weighted average expected term (in years) 5.8 5.4 Risk-free interest rate 1.46% 1.5% Expected dividend yield 0.0% 0.0% 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. Prior to the Company’s IPO in August 2016, 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. The following table summarizes stock option activity during the year ended December 31, 2016 (in thousands except exercise prices and contractual terms): Number of Shares Weighted- Average Exercise Prices Weighted-Average Remaining Contractual Term (In Years) Intrinsic Value Outstanding at January 1, 2016 511 $ 7.05 Granted 1,011 $ 7.47 Exercised (1 ) $ 5.70 Expired (6 ) $ 31.61 Outstanding at December 31, 2016 1,515 $ 7.21 8.8 $ 382 Exercisable at December 31, 2016 480 $ 7.48 8.5 $ 125 During the year ended December 31, 2016, the Company granted options under its 2007 Plan to purchase 1,011,265 shares of its common stock to its employees. The fair value of these options was approximately $3.5 million. In August 2016, the Company issued 440,364 shares of restricted stock as a management bonus for completing the IPO, with a fair value of approximately $3.5 million to be amortized over the vesting period. The following table summarizes all restricted stock activity during year ended December 31, 2016 (in thousands except per share data): Number of Shares Weighted- Average Grant Date Fair Value Outstanding at January 1, 2016 – – Granted 462 $ 8.07 Cancelled – – Outstanding non-vested shares at December 31, 2016 462 $ 8.07 During April 2016, the Board of Directors of the Company resolved that upon the completion of an IPO the 2007 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 Plan.

13. 401K PLAN

13. 401K PLAN	12 Months Ended
	Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract]
13. 401K PLAN	During 2002, the Company established a plan under Section 401(k) of the Internal Revenue Code (the 401(k) Plan). The 401(k) Plan covers substantially all of its employees who have attained 18 years of age. Employees may elect to contribute part of their annual compensation to the 401(k) Plan, up to the maximum deferral allowance for individuals by the Internal Revenue Service under Code Section 401(k), and the Company may make a matching contribution. During 2016 and 2015, there were no matching contributions made by the Company.

14. INCOME TAXES

14. INCOME TAXES	12 Months Ended
	Dec. 31, 2016
Income Tax Disclosure [Abstract]
14. INCOME TAXES	The income/(loss) before provision for income taxes consisted of the following (in thousands): Year Ended December 31, 2016 2015 Domestic $ (12,610 ) $ (9,513 ) International – – Total $ (12,610 ) $ (9,513 ) The Company had no income tax expense due to operating losses incurred for the year ended December 31, 2016. The Company accounts for income taxes in accordance with ASC 740, which requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a full valuation allowance. The Company’s deferred tax assets are as follows (in thousands): Year Ended December 31, 2016 2015 Deferred tax assets: Net operating loss carryforwards $ 19,431 $ 8,982 Tax credit 695 999 Fixed assets and intangibles 3,239 11,158 Stock compensation 1,302 2,725 Accruals and other 152 672 Total deferred tax assets $ 24,819 $ 24,536 Valuation allowance (24,819 ) (24,536 ) Net deferred tax asset $ – $ – The Company has decided to early adopt ASU 2016-09 in the fourth quarter of 2016 and has elected to recognizing forfeitures as they occur rather than estimate their forfeiture rate. The ASU 2016-09 is considered to be effective from the beginning of the year of adoption. In the year of adoption, ASU 2016-09 requires that the cumulative effect adjustment be recorded to retained earnings. Due to the full valuation allowance, there is no cumulative effect adjustment to record. Excess windfall net operating loss carryforwards are converted into deferred tax net operating losses with a corresponding increase in valuation allowance as of the beginning of 2016; the year of adoption. Net operating losses and tax credit carryforwards as of December 31, 2016, are as follows (in thousands): Amount Expiration in years Net operating losses, federal $ 53,418 2027-2036 Net operating losses, state $ 24,188 2030-2036 Tax credits, federal $ 744 2027-2036 Tax credits, state $ 583 2022-2031 The effective tax rate of the Company’s provision (benefit) for income taxes differs from the federal statutory rate as follows: Year ending December 31, 2016 2015 Statutory rate 34.00% 34.00% State rate (9.63)% 4.76% Non-deductible items (2.72)% (5.96)% Change in valuation allowance (16.93)% (33.20)% Change in tax credits (2.82)% 0.40% Non-deductible interest expense (1.90)% – Total – – Utilization of U.S. net operating losses and tax credit carryforwards may be limited by “ownership change” rules, as defined in Section 382 of the Internal Revenue Code. Similar rules may apply under state tax laws. The Company has not conducted a study to-date to assess whether a limitation would apply under Section 382 of the Internal Revenue Code as and when it starts utilizing its net operating losses and tax credits. The Company will continue to monitor activities in the future. In the event the Company previously experienced an ownership change, or should experience an ownership change in the future, the amount of net operating losses and research and development credit carryovers available in any taxable year could be limited and may expire unutilized. The Company establishes reserves for uncertain tax positions based on the largest amount that is more-likely-than-not to be sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2016 and December 31, 2015, respectively, the Company has no accrued interest or penalties related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. In the normal course of business, the Company is subject to examination by their respective taxing authorities. The Company is not currently under audit by the Internal Revenue Service or other similar state or local authority. All tax years remain effectively open to examination by major taxing jurisdictions to which the Company is subject to due to net operating loss and credit carryforwards. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits from December 31, 2015 to December 31, 2016 (in thousands): 2016 2015 January 1 – unrecognized tax benefits $ – $ – Increases – prior year tax positions 463 – Increases – current year tax positions 47 – December 31 - unrecognized tax benefits $ 510 $ – The following table summarizes the activity in the Company’s Valuation Allowance and Qualifying Accounts for the years ended December 31, 2016 and 2015 (in thousands): Balance at Beginning of Year Additions Deductions Balance at End of Year Deferred tax assets valuation allowance Year ended December 31, 2016 $ 24,536 $ 11,296 $ 11,013 $ 24,819 Year ended December 31, 2015 $ 21,378 $ 3,163 $ 5 $ 24,536

15. LEGAL MATTERS

15. LEGAL MATTERS	12 Months Ended
	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
15. LEGAL MATTERS	To the best of the Company’s knowledge, based on information currently available, the Company is not subject to any pending legal proceedings.

4. SUMMARY OF SIGNIFICANT ACC22

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2016
Accounting Policies [Abstract]
Basis of presentation	Basis of presentation The financial statements are presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and reflect the financial position, results of operations and cash flows for all periods presented.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Authoritative guidance requires disclosure of the fair value of financial instruments. The Company’s financial instruments consist of cash and cash equivalents, certificate of deposits, accounts payable, and bridge loan notes payable, the carrying amounts of which approximate their estimated fair values primarily due to the short-term nature of the instruments or based on information obtained from market sources and management estimates. The Company measures the fair value of certain of its financial assets and liabilities on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value which is not equivalent to cost will be classified and disclosed in one of the following three categories: Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities. Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Cash and cash equivalents	Cash and cash equivalents The Company maintains its operating accounts in a single reputable financial institution. The balances are insured by the U.S. Federal Deposit Insurance Corporation (“FDIC”) up to specified limits. The Company’s cash is maintained in checking accounts and money market funds with maturities of less than three months when purchased, which are readily convertible to known amounts of cash, and which in the opinion of management are subject to insignificant risk of loss in value.
Restricted Investment	Restricted Investment The Company’s restricted investment consists of a certificate of deposit held as collateral to secure borrowing limits for certain corporate credit cards. As of September 2016, the Company was no longer required to maintain this certificate of deposit. The certificate of deposit was liquidated and the amounts were transferred to the Company’s operating accounts.
Deferred offering costs	Deferred offering costs The Company complies with the requirements of the Accounting Standards Codification (“ASC”) Topic 340, Other Assets and Deferred Costs
Income Taxes	Income Taxes In accordance with authoritative guidance, deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and tax bases of assets and liabilities using the current enacted tax rate expected to be in effect when the differences are expected to reverse. A valuation allowance is recorded on deferred tax assets unless realization is considered more likely than not. The Company evaluates its tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are not recorded as a tax benefit or expense in the current year. The Company recognizes interest and penalties, if any, related to uncertain tax positions in interest expense. No interest and penalties related to uncertain tax positions were accrued at December 31, 2016. The Company follows authoritative guidance which requires the evaluation of existing tax positions. Management has analyzed all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states, the principal state being Massachusetts. Open tax years are those that are open for examination by taxing authorities.
Property and equipment	Property and equipment Items capitalized as property and equipment are stated at cost. Maintenance and routine repairs are charged to operations when incurred, while betterments and renewals are capitalized. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets starting when the asset is placed in service.
Debt Discounts	Debt Discounts Debt discounts are amortized to interest expense using the straight-line method, which approximates the interest rate method, over the earlier of the term of the related debt or their earliest date of redemption.
Research and development expenses	Research and development expenses In accordance with authoritative guidance, the Company charges research and development costs to operations as incurred. Research and development expenses consist of personnel costs for the design, development, testing and enhancement of the Company’s technology, and certain other allocated costs, such as depreciation and other facilities related expenditures.
Common stock warrants	Common stock warrants The Company classifies as equity any warrants that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control), (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement) or (iii) that contain reset provisions that do not qualify for the scope exception. The Company assesses classification of its common stock warrants and other freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company’s freestanding derivatives consist of warrants to purchase common stock that were issued in connection with its notes payable. The Company evaluated these warrants to assess their proper classification and determined that the common stock warrants meet the criteria for equity classification in the balance sheet. Such warrants are measured at fair value, which the Company determines using the Black-Scholes-Merton option-pricing model.
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 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.
Adoption of recent accounting standards	Adoption of recent accounting standards In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern In May 2015, the FASB issued ASU 2015-07, Fair Value Measurement In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718),
Recent accounting standards	Recent accounting standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Revenue Recognition Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Identifying Performance Obligations and Licensing Narrow-Scope Improvements and Practical Expedients, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, In February 2016, the FASB issued ASU No. 2016-02, which replaces the existing guidance in ASC Topic 840 Leases In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments 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)

5. BASIC AND DILUTED LOSS PER23

5. BASIC AND DILUTED LOSS PER SHARE (Tables)	12 Months Ended
	Dec. 31, 2016
Earnings Per Share [Abstract]
Schedule of potential common stock equivalents not included in the calculation of diluted net loss per common share	Year Ended December 31, 2016 2015 Stock Options 1,515 511 Warrants 765 303 Conversion of Notes Payable – 2,230 2,280 3,044

6. PROPERTY AND EQUIPMENT (Tabl

6. PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	December 31, 2016 2015 Computer equipment $ 60 $ 39 Laboratory equipment 55 184 Software 5 5 Office equipment 2 16 Furniture and fixtures – 1 122 245 Less: Accumulated depreciation and amortization (94 ) (230 ) $ 28 $ 15

7. COMMITMENTS AND CONTINGENC25

7. COMMITMENTS AND CONTINGENCIES (Tables)	12 Months Ended
	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Schedule of future minimum lease payments required under operating leases	Years ending December 31, Amount 2017 $ 156 2018 13 Total $ 169

8. NOTES PAYABLE (Tables)

8. NOTES PAYABLE (Tables)	12 Months Ended
	Dec. 31, 2016
Debt Disclosure [Abstract]
Schedule of notes payable	Senior Notes $ 14,750 Accrued interest 1,670 Debt Discount (325 ) Senior secured convertible promissory notes payable, net $ 16,095

11. WARRANTS (Tables)

11. WARRANTS (Tables)	12 Months Ended
	Dec. 31, 2016
Equity [Abstract]
Schedule of assumptions	Year Ended December 31, 2016 2015 Weighted average exercise price: $ 7.42 $ 2.57 Weighted average grant date fair value: $ 2.49 $ 3.92 Assumptions: Expected volatility 43.1% 43.94% Weighted average expected term (in years) 2.2 5.0 Risk-free interest rate 0.6% 1.5% Expected dividend yield 0.0% 0.0%
Schedule of warrant activity	Number of Shares Weighted- Average Exercise Prices Weighted-Average Remaining Contractual Term (In Years) Outstanding at January 1, 2016 303 $ 3.41 Issued 464 $ 8.21 Expired (2 ) $ 33.75 Outstanding and exercisable at December 31, 2016 765 $ 5.75 3.9

12. STOCK BASED COMPENSATION (T

12. STOCK BASED COMPENSATION (Tables)	12 Months Ended
	Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of stock-based compensation expense	Year Ended December 31, 2016 2015 Research and development $ 157 $ 137 General and administrative 1,893 294 Selling and Marketing 418 – $ 2,468 $ 431
Schedule of weighted-average assumptions	Year Ended December 31, 2016 2015 Weighted average exercise price: $ 7.47 $ 6.06 Weighted average grant date fair value: $ 3.50 $ 2.14 Assumptions: Expected volatility 44.1% 43.94% Weighted average expected term (in years) 5.8 5.4 Risk-free interest rate 1.46% 1.5% Expected dividend yield 0.0% 0.0%
Schedule of stock option activity	Number of Shares Weighted- Average Exercise Prices Weighted-Average Remaining Contractual Term (In Years) Intrinsic Value Outstanding at January 1, 2016 511 $ 7.05 Granted 1,011 $ 7.47 Exercised (1 ) $ 5.70 Expired (6 ) $ 31.61 Outstanding at December 31, 2016 1,515 $ 7.21 8.8 $ 382 Exercisable at December 31, 2016 480 $ 7.48 8.5 $ 125
Schedule of restricted stock option activity	Number of Shares Weighted- Average Grant Date Fair Value Outstanding at January 1, 2016 – – Granted 462 $ 8.07 Cancelled – – Outstanding non-vested shares at December 31, 2016 462 $ 8.07

14. INCOME TAXES (Tables)

14. INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Net income/(loss) before provision for income taxes table	Year Ended December 31, 2016 2015 Domestic $ (12,610 ) $ (9,513 ) International – – Total $ (12,610 ) $ (9,513 )
Schedule of deferred tax assets	Year Ended December 31, 2016 2015 Deferred tax assets: Net operating loss carryforwards $ 19,431 $ 8,982 Tax credit 695 999 Fixed assets and intangibles 3,239 11,158 Stock compensation 1,302 2,725 Accruals and other 152 672 Total deferred tax assets $ 24,819 $ 24,536 Valuation allowance (24,819 ) (24,536 ) Net deferred tax asset $ – $ –
Schedule of net operating losses	Amount Expiration in years Net operating losses, federal $ 53,418 2027-2036 Net operating losses, state $ 24,188 2030-2036 Tax credits, federal $ 744 2027-2036 Tax credits, state $ 583 2022-2031
Schedule of effective income tax rates	Year ending December 31, 2016 2015 Statutory rate 34.00% 34.00% State rate (9.63)% 4.76% Non-deductible items (2.72)% (5.96)% Change in valuation allowance (16.93)% (33.20)% Change in tax credits (2.82)% 0.40% Non-deductible interest expense (1.90)% – Total – –
Schedule of unrecognized tax benefits	2016 2015 January 1 – unrecognized tax benefits $ – $ – Increases – prior year tax positions 463 – Increases – current year tax positions 47 – December 31 - unrecognized tax benefits $ 510 $ –
Activity in the Valuation Allowance and Qualifying Accounts	Balance at Beginning of Year Additions Deductions Balance at End of Year Deferred tax assets valuation allowance Year ended December 31, 2016 $ 24,536 $ 11,296 $ 11,013 $ 24,819 Year ended December 31, 2015 $ 21,378 $ 3,163 $ 5 $ 24,536

2. LIQUIDITY AND MANAGEMENT P30

2. LIQUIDITY AND MANAGEMENT PLANS (Details Narrative) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash and cash equivalents	$ 26,718	$ 3,197	$ 21
Working capital	25,800
Accumulated deficit	$ (95,997)	$ (83,387)
IPO [Member]
Number of shares issued	3,680
Net proceeds from IPO	$ 24,700

4. SUMMARY OF SIGNIFICANT ACC31

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Deferred offering costs	$ 0	$ 145
Additional paid-in-capital deferred offering costs	$ 3,422

5. BASIC AND DILUTED LOSS PER32

5. BASIC AND DILUTED LOSS PER SHARE (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Number of anti-dilutive common stock	2,280	3,044
Stock Options [Member]
Number of anti-dilutive common stock	1,515	511
Warrants [Member]
Number of anti-dilutive common stock	765	303
Conversion Of Notes Payable [Member]
Number of anti-dilutive common stock	0	2,230

6. PROPERTY AND EQUIPMENT (Deta

6. PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Property and equipment, gross	$ 122	$ 245
Accumulated depreciation and amortization	(94)	(230)
Property and equipment, net	28	15
Computer Equipment [Member]
Property and equipment, gross	60	39
Laboratory equipment [Member]
Property and equipment, gross	55	184
Software [Member]
Property and equipment, gross	5	4
Office furniture [Member]
Property and equipment, gross	2	16
Furniture and Fixtures [Member]
Property and equipment, gross	$ 0	$ 1

6. PROPERTY AND EQUIPMENT (De34

6. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Depreciation and amortization expense	$ 15	$ 10
Estimated useful lives of property	3 years
Estimated useful live of software	3 years
Property disposed [Member]
Property disposed cost	$ 151
Property disposed, net book value	$ 0

7. COMMITMENTS AND CONTINGENC35

7. COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	Dec. 31, 2016USD ($)
Commitments and Contingencies Disclosure [Abstract]
Future minimum operating lease payment 2017	$ 156
Future minimum operating lease payment 2018	13
Total future minimum payments due	$ 169

7. COMMITMENTS AND CONTINGENC36

7. COMMITMENTS AND CONTINGENCIES (Details Narrative) - Office Space [Member]	12 Months Ended
	Dec. 31, 2016USD ($)
Lease Agreement [Member] | Massachusetts (Wellesley Hills) [Member]
Monthly lease payment	$ 4,613
Frequency of payment	Monthly
Lease expiration date	Nov. 30, 2016
Lease Agreement [Member] | Cambridge, MA [Member]
Monthly lease payment	$ 2,074
Frequency of payment	monthly
Real Estate Lease Agreement [Member] | California (Los Gatos) [Member]
Monthly lease payment	$ 12,395
Frequency of payment	Monthly
Lease expiration date	Jan. 31, 2018

8. NOTES PAYABLE (Details)

8. NOTES PAYABLE (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Senior notes		$ 14,750
Accrued interest		1,670
Debt discount		(325)
Senior secured convertible promissory notes payable, net	$ 0	$ 16,095

8. NOTES PAYABLE (Details Narra

8. NOTES PAYABLE (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Proceeds from issuance of notes payable	$ 5,958
Payment of debt issuance costs	438
Interest expense	2,600	$ 1,900
Debt converted, amount converted	$ 23,500
Debt converted, shares issued	6,264,659
Debt converted, conversion price	$ 3.75
Warrant issued	196,502

9. RELATED PARTY TRANSACTIONS (

9. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Director and Shareholder [Member]
Consulting expense	$ 3	$ 10
Promissory Note [Member] | Officer [Member]
Due from Officers or Stockholders	0	187
Interest income receivable, related party		7
Bonus to Officer [Member] | Officer [Member]
General and administrative expenses	187
Withholding tax reimbursed	14
Legal Counsel [Member] | Director and Shareholder [Member]
Accounts payable, related parties	0	1
Legal fees	$ 2	$ 34

10. STOCKHOLDERS' EQUITY (Detai

10. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Shares reserved for options and warrants	2,700,000
Debt converted, amount converted	$ 23,500
Debt converted, shares issued	6,264,659
IPO [Member]
Debt converted, amount converted	$ 23,500
Debt converted, shares issued	6,264,659
Options converted [Member]
Options converted		166,230
Stock issued upon conversion, shares issued		83,115
Loss on exchange		$ 428
Warrants converted [Member]
Stock issued upon conversion, shares issued		300,930
Loss on exchange		$ 1,700
Warrants converted		601,861

11. WARRANTS (Details Assumptio

11. WARRANTS (Details Assumptions) - Warrants [Member] - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Weighted average exercise price	$ 7.42	$ 2.57
Weighted average grant date fair value per share	$ 2.49	$ 3.92
Expected volatility	43.10%	43.94%
Weighted average expected term (in years)	2 years 2 months 12 days	5 years
Risk-free interest rate	0.60%	1.50%
Expected dividend yield	0.00%	0.00%

11. WARRANTS (Details Warrant A

11. WARRANTS (Details Warrant Activity) - Warrants [Member]	12 Months Ended
	Dec. 31, 2016$ / sharesshares
Warrants and Rights Note Disclosure, Shares Outstanding [Roll Forward]
Outstanding at beginning | shares	303,000
Issued | shares	464,000
Expired | shares	(2,000)
Outstanding at ending | shares	765,000
Warrants and Rights Note Disclosure, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning | $ / shares	$ 3.41
Issued | $ / shares	8.21
Expired | $ / shares	33.75
Outstanding at ending | $ / shares	$ 5.75
Warrants and Rights Note Disclosure, Weighted Average Remaining Contractual Term [Roll Forward]
Outstanding at ending	3 years 10 months 24 days

11. WARRANTS (Details Narrative

11. WARRANTS (Details Narrative) - Warrants [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Warrants issued	464,000
Warrant intrinsic value	$ 1,800
Liquid Patent [Member]
Warrants issued		198,767
NSC Warrant [Member]
Warrants issued	196,602
Fair value adjustment of warrants issued	$ 710
NSC Warrant [Member] | IPO [Member]
Warrants issued	368,000
Fair value adjustment of warrants issued	$ 539

12. STOCK BASED COMPENSATION (D

12. STOCK BASED COMPENSATION (Details Compensation Expense) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Allocated stock-based compensation	$ 2,468	$ 431
Research and Development [Member]
Allocated stock-based compensation	157	137
General and Administrative [Member]
Allocated stock-based compensation	1,893	294
Selling and Marketing [Member]
Allocated stock-based compensation	$ 418	$ 0

12. STOCK BASED COMPENSATION 45

12. STOCK BASED COMPENSATION (Details Assumptions) - Options [Member] - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Weighted average exercise price	$ 7.47	$ 6.06
Weighted average grant date fair value	$ 3.50	$ 2.14
Expected volatility	44.10%	43.94%
Weighted average expected term (in years)	5 years 9 months 18 days	5 years 4 months 24 days
Risk-free interest rate	1.46%	1.50%
Expected dividend yield	0.00%	0.00%

12. STOCK BASED COMPENSATION 46

12. STOCK BASED COMPENSATION (Details Stock Option Activity) - Options [Member] $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016USD ($)$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding, beginning balance | shares	511
Options granted | shares	1,011
Options exercised | shares	(1)
Options expired | shares	(6)
Options outstanding, ending balance | shares	1,515
Options exercisable | shares	480
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Prices [Roll Forward]
Weighted average exercise price, options outstanding beginning balance | $ / shares	$ 7.05
Weighted average exercise price, options granted | $ / shares	7.47
Weighted average exercise price, options exercised | $ / shares	5.70
Weighted average exercise price, options expired | $ / shares	31.61
Weighted average exercise price, options outstanding, ending balance | $ / shares	7.21
Weighted average exercise price, options exercisable | $ / shares	$ 7.48
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted-Average Remaining Contractual Term [Roll Forward]
Weighted average remaining contractual term, options outstanding	8 years 9 months 18 days
Weighted average remaining contractual term, options exercisable	8 years 6 months
Share-based Compensation Arrangement by Share-based Payment Award, Options, Intrinsic Value [Roll Forward]
Intrinsic value, options outstanding ending balance | $	$ 382
Intrinsic value, options exercisable | $	$ 125

12. STOCK BASED COMPENSATION 47

12. STOCK BASED COMPENSATION (Details - Restricted stock) - Restricted Stock [Member]	12 Months Ended
	Dec. 31, 2016$ / sharesshares
Number of shares
Restricted stock outstanding, beginning balance	0
Restricted stock granted	462,000
Restricted stock cancelled	0
Restricted stock outstanding, ending balance	462,000
Weighted-Average Grant Date Fair Value
Restricted stock outstanding, beginning balance | $ / shares	$ 0
Restricted stock granted | $ / shares	8.07
Restricted stock outstanding, ending balance | $ / shares	$ 8.07

12. STOCK BASED COMPENSATION 48

12. STOCK BASED COMPENSATION (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Unrecognized compensation expense	$ 5,500
Unrecognized compensation weighted average period	2 years 2 months 12 days
Options [Member]
Options vested and outstanding	1,515,000	511,000
Options granted	1,011,000
Restricted Stock [Member]
Restricted stock issued	440,364
Old Plan [Member]
Options vested and outstanding		0	1,370,000
2007 Equity Incentive Plan [Member]
Shares authorized for issuance under plan	1,222,306
Options granted	1,011,265
Fair value of options granted	$ 3,500

13. 401K PLAN (Details Narrativ

13. 401K PLAN (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]
Company contributions to pension plan	$ 0	$ 0

14. INCOME TAXES (Details)

14. INCOME TAXES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Net income/(loss) before provision for income taxes	$ (12,610)	$ (9,513)
Domestic [Member]
Net income/(loss) before provision for income taxes	(12,610)	(9,513)
International [Member]
Net income/(loss) before provision for income taxes	$ 0	$ 0

14. INCOME TAXES (Details - Def

14. INCOME TAXES (Details - Deferred tax assets) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets:
Net operating loss carryforwards	$ 19,431	$ 8,982
Tax credit	695	999
Fixed assets and intangibles	3,239	11,158
Stock compensation	1,302	2,725
Accruals and other	152	672
Total deferred tax assets	24,819	24,536
Valuation allowance	(24,819)	(24,536)	$ (21,378)
Net deferred tax asset	$ 0	$ 0

14. INCOME TAXES (Details - NOL

14. INCOME TAXES (Details - NOL) $ in Thousands	12 Months Ended
	Dec. 31, 2016USD ($)
Federal [Member]
Net operating loss	$ 53,418
Net operating loss expiration dates	2027-2036
Tax credits	$ 744
Tax credits expiration dates	2027-2036
State [Member]
Net operating loss	$ 24,188
Net operating loss expiration dates	2030-2036
Tax credits	$ 583
Tax credits expiration dates	2022-2031

14. INCOME TAXES (Details - Eff

14. INCOME TAXES (Details - Effective rate)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Statutory rate	34.00%	34.00%
State rate	(9.63%)	4.76%
Non-deductible items	(2.72%)	(5.96%)
Change in valuation allowance	(16.93%)	(33.20%)
Change in tax credits	(2.82%)	0.40%
Non-deductible interest expense	(1.90%)	0.00%
Total	0.00%	0.00%

14. INCOME TAXES (Details - Unr

14. INCOME TAXES (Details - Unrecognized tax benefits) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Unrecognized tax benefit, beginning balance	$ 0	$ 0
Increase - prior year tax position	463	0
Decrease - current year tax position	47	0
Unrecognized tax benefit, ending balance	$ 510	$ 0

14. INCOME TAXES (Details - D55

14. INCOME TAXES (Details - Deferred valuation allowance) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Deferred tax asset valuation allowance, beginning balance	$ 24,536	$ 21,378
Additions	11,296	3,163
Deductions	11,013	5
Deferred tax asset valuation allowance, ending balance	$ 24,819	$ 24,536