Ener-Core (ENCR) 10-Q 18 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	6 Months Ended
	Jun. 30, 2016shares
Document and Entity Information [Abstract]
Entity Registrant Name	Ener-Core, Inc.
Entity Central Index Key	1,495,536
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,016
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	3,785,216

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 633,000	$ 2,605,000
Restricted cash	350,000	200,000
Accounts receivable	81,000
Inventory	1,770,000	747,000
Prepaid expenses and other current assets	603,000	408,000
Total current assets	3,437,000	3,960,000
Property and equipment, net	3,972,000	3,426,000
Intangibles, net	24,000	28,000
Deposits and other long term assets	28,000	143,000
Total assets	7,461,000	7,557,000
Current liabilities:
Accounts payable	2,155,000	1,629,000
Accrued expenses	757,000	657,000
Deferred revenues and customer advances	3,076,000	2,847,000
Accrued contract loss	600,000	600,000
Derivative liabilities	4,030,000	2,510,000
Convertible secured notes payable, net of discounts	4,002,000	4,110,000
Capital leases payable	20,000	26,000
Total current liabilities	14,640,000	12,379,000
Long term liabilities:
Deposits		8,000
Capital leases payable	7,000	14,000
Total liabilities	14,647,000	12,401,000
Commitments and contingencies (Note 12)
Stockholders' equity (deficit):
Preferred stock, $0.0001 par value. Authorized 50,000,000 shares; no shares issued and outstanding at June 30, 2016 and December 31, 2015
Common stock, $0.0001 par value. Authorized 200,000,000 shares; 3,785,216 and 3,089,160 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively
Additional paid-in capital	29,995,000	26,302,000
Accumulated deficit	(37,181,000)	(31,146,000)
Total stockholders' equity (deficit)	(7,186,000)	(4,844,000)
Total liabilities and stockholders' equity (deficit)	$ 7,461,000	$ 7,557,000

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common Stock, Shares, Issued	3,785,216	3,089,160
Common stock, shares outstanding	3,785,216	3,089,160

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Revenues
Cost of goods sold:
Gross profit
Operating expenses:
Selling, general, and administrative	1,051,000	1,280,000	2,318,000	2,311,000
Research and development	755,000	968,000	1,698,000	1,709,000
Total operating expenses	1,806,000	2,248,000	4,016,000	4,020,000
Operating loss	(1,806,000)	(2,248,000)	(4,016,000)	(4,020,000)
Other income (expenses):
Interest expense	(272,000)	(106,000)	(739,000)	(107,000)
Amortization of debt discount	(825,000)	(804,000)	(1,400,000)	(804,000)
Loss on exchange of warrants		(279,000)		(279,000)
Loss on modification of convertible debt			(1,429,000)
Gain (loss) on valuation of derivative liabilities	719,000	209,000	1,554,000	(82,000)
Total other income (expenses), net	(378,000)	(980,000)	(2,014,000)	(1,272,000)
Loss before provision for income taxes	(2,184,000)	(3,228,000)	(6,030,000)	(5,292,000)
Provision for income taxes	1,000		3,000
Net loss	$ (2,185,000)	$ (3,228,000)	$ (6,033,000)	$ (5,292,000)
Loss per share-basic and diluted	$ (0.59)	$ (1.34)	$ (1.84)	$ (2.26)
Weighted average common shares-basic and diluted	3,708,782	2,408,200	3,400,711	2,345,500

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows used in operating activities:
Net loss	$ (6,033,000)	$ (5,292,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	266,000	63,000
Amortization of debt discount and deferred financing fees	1,656,000	804,000
(Gain) loss on revaluation of derivative liabilities	(1,554,000)	82,000
Stock-based compensation	727,000	741,000
Loss on modification of convertible debt	1,429,000
Loss on exchange of warrants for common stock		279,000
Changes in assets and liabilities:
Accounts and other receivables		8,000
Inventory	(1,023,000)
Prepaid expenses and other current assets	(197,000)	(11,000)
Deferred revenue	123,000
Accounts payable and other current liabilities	613,000	228,000
Net cash used in operating activities	(3,993,000)	(3,098,000)
Cash flows used in investing activities:
Purchases of property and equipment	(933,000)	(1,251,000)
Net cash used in investing activities	(933,000)	(1,251,000)
Cash flows from financing activities:
Proceeds from issuance of common stock, net	2,967,000	741,000
Proceeds from note payable, net		4,669,000
Repayment of capital leases payable	(13,000)	(7,000)
Net cash provided by financing activities	2,954,000	5,403,000
Net increase (decrease) in cash and cash equivalents	(1,972,000)	1,054,000
Cash and cash equivalents at beginning of period	2,605,000	2,176,000
Cash and cash equivalents at end of period	633,000	3,230,000
Cash paid during the period for:
Income taxes
Interest	428,000	45,000
Supplemental disclosure of non-cash activities:
Capital leases for purchase of equipment		10,000
Debt discount and derivative liabilities recorded upon issuance of warrants and convertible secured notes		2,750,000
Common stock issued in exchange for warrant cancellation		885,000
Debt discount and derivative liabilities recorded for amendments of notes	1,497,000
Debt discount and derivative liabilities recorded for amendments of warrants	$ 148,000

Organization

Organization	6 Months Ended
	Jun. 30, 2016
Organization [Abstract]
Organization	Note 1—Organization Organization Ener-Core, Inc. (the “Company”, “we”, “us”, “our”), a Delaware corporation, was formed on April 29, 2010 as Inventtech, Inc. On July 1, 2013, we acquired our wholly owned subsidiary, Ener-Core Power, Inc., (formerly Flex Power Generation, Inc.), a Delaware corporation. The stockholders of Ener-Core Power, Inc. are now our stockholders and the management of Ener-Core Power, Inc. is now our management. The acquisition was treated as a “reverse merger” and our financial statements are those of Ener-Core Power, Inc. All equity amounts presented have been retroactively restated to reflect the reverse merger as if it had occurred on November 12, 2012. Effective as of September 3, 2015, we changed our state of incorporation from the State of Nevada to the State of Delaware (the “Reincorporation”), pursuant to a plan of conversion dated September 2, 2015, following approval by our stockholders of the Reincorporation at our 2015 Annual Meeting of Stockholders held on August 28, 2015. As a Delaware corporation following the Reincorporation, we are deemed to be the same continuing entity as the Nevada corporation prior to the Reincorporation, and as such continue to possess all of the rights, privileges and powers and all of the debts, liabilities and obligations of the prior Nevada corporation. Upon effectiveness of the Reincorporation, all of the issued and outstanding shares of common stock of the Nevada corporation automatically converted into issued and outstanding shares of common stock of the Delaware corporation without any action on the part of our stockholders. Concurrent with the Reincorporation, on September 3, 2015 our authorized shares increased to 250,000,000 shares of stock consisting of 200,000,000 authorized shares of common stock and 50,000,000 authorized shares of preferred stock. Reverse Merger We entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ener-Core Power, Inc. and Flex Merger Acquisition Sub, Inc., a Delaware corporation and our wholly owned subsidiary (“Merger Sub”), pursuant to which the Merger Sub merged with and into Ener-Core Power, Inc., with Ener-Core Power, Inc. as the surviving entity (the “Merger”). Prior to the Merger, we were a public reporting “shell company,” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. The Merger Agreement was approved by the boards of directors of each of the parties to the Merger Agreement. In April 2013, the pre-merger public shell company effected a 30-for-1 forward split of its common stock. All share amounts have been retroactively restated to reflect the effect of the stock split. As provided in the Contribution Agreement dated November 12, 2012 (the “Contribution Agreement”) by and among FlexEnergy, Inc. (“FlexEnergy”), FlexEnergy Energy Systems, Inc. (“FEES”), and Ener-Core Power, Inc., Ener-Core Power, Inc. was spun-off from FlexEnergy as a separate corporation. As a part of that transaction, Ener-Core Power, Inc. received all assets (including intellectual property) and certain liabilities pertaining to the Power Oxidizer business carved out of FlexEnergy. The owners of FlexEnergy did not distribute ownership of Ener-Core Power, Inc. pro rata. The assets and liabilities were transferred to us and recorded at their historical carrying amounts since the transaction was a transfer of net assets between entities under common control. On July 1, 2013, Ener-Core Power, Inc. completed the Merger with us. Upon completion of the Merger, we immediately became a public company. The Merger was accounted for as a “reverse merger” and recapitalization. As part of the Merger, 2,410,400 shares of outstanding common stock of the pre-merger public shell company were cancelled. This cancellation has been retroactively accounted for as of the inception of Ener-Core Power, Inc. on November 12, 2012. Accordingly, Ener-Core Power, Inc. was deemed to be the accounting acquirer in the transaction and, consequently, the transaction was treated as a recapitalization of Ener-Core Power, Inc. Accordingly, the assets and liabilities and the historical operations that are reflected in the financial statements are those of Ener-Core Power, Inc. and are recorded at the historical cost basis of Ener-Core Power, Inc. Our assets, liabilities and results of operations were de minimis at the time of the Merger. Reverse Stock Split The board of directors of the Company approved a reverse stock split of the Company’s authorized, issued and outstanding shares of common stock, par value $0.0001 per share, as well as the Company’s authorized shares of preferred stock, par value $0.0001 per share, of which no shares are issued and outstanding (together, the “Stock”), at a ratio of 1-for-50 (the “Reverse Stock Split”). The Reverse Stock Split became effective on July 8, 2015 (the “Effective Date”). As a result of the Reverse Stock Split, the authorized preferred stock decreased to 1,000,000 shares and the authorized common stock decreased to 4,000,000 shares. Both the preferred stock and common stock par value remained at $0.0001 per share. The number of authorized shares subsequently increased to 200,000,000 authorized shares of common stock and 50,000,000 authorized shares of preferred stock on September 3, 2015 with the Company’s reincorporation in Delaware, as described above. On the Effective Date, the total number of shares of common stock held by each stockholder of the Company were converted automatically into the number of shares of common stock equal to: (i) the number of issued and outstanding shares of common stock held by each such stockholder immediately prior to the Reverse Stock Split divided by (ii) 50. The Company issued one whole share of the post-Reverse Stock Split common stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split, determined at the beneficial owner level by share certificate. As a result, no fractional shares were issued in connection with the Reverse Stock Split and no cash or other consideration will be paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split. The Reverse Stock Split also affected all outstanding options and warrants by dividing each option or warrant outstanding by 50, rounded up to the nearest option or warrant, and multiplying the exercise price by 50 for each option or warrant outstanding. Description of the Business We design, develop, and manufacture products based on proprietary technologies that aim to expand the operating range of gaseous fuel while improving emissions, which technologies we refer to collectively as “Power Oxidation” or “Power Oxidizer”. Our products aim to expand power generation into previously uneconomical markets while, at the same time, reduce gaseous emissions from industrial processes that contribute to air pollution and climate change. The Power Oxidizer integrates with a gas turbine and generator to create a Powerstation. Our products, the EC250 and the Ener-Core Powerstation KG2-3G/GO (“KG2”), are complete systems consisting of our designed and patented Power Oxidizer, integrated with a gas turbine and generator. Our Power Oxidizers have been designed to operate on fuels from 100% combustible gas down to concentrations of 5% or less combustible gas content. Our Powerstation products have applications in landfills, distilleries, wastewater treatment plants, as well as numerous industrial processes, and offers our customers two distinct value propositions: the destruction of low quality waste gases with no harmful emissions and the generation of energy from a renewable and low-cost fuel source. We have deployed the EC250 product commercially in landfill applications are currently developing our second commercial product, the KG2 Powerstation, or KG2, which will combine our Power Oxidizer with a two megawatt gas turbine developed by Dresser-Rand a.s., a subsidiary of Dresser-Rand Group Inc. (“Dresser-Rand”). In 2015, we completed system layout and analytic models integrating our Power Oxidizer with the turbine and, to date in 2016, we have constructed a fully operational KG2 unit to be used in final technical tests expected to be completed in the third quarter of 2016, after which time we expect that the initial KG2 unit will be sold. We have orders for the first two commercial KG2 units, which are expected to ship in 2016. On June 29, 2016, we entered into a Commercial License and Manufacturing Agreement with Dresser-Rand (the “CMLA”), which will become effective upon the successful completion of the technical test and which will transition the KG2 manufacturing to Dresser-Rand. Once effective, each KG2 unit sold will generate for us a non-refundable license fee. Until the test is successfully completed, our existing CLA (as defined below) remains in effect. We sell our EC250 product directly and through distributors in two countries, the United States and Netherlands, and sell the KG2 product directly and through Dresser-Rand’s commercial sales team. Going Concern Our consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. Since our inception, we have made a substantial investment in research and development to develop the Power Oxidizer, have successfully deployed an EC250 field test unit at the U.S. Army base at Fort Benning, Georgia, and installed and commissioned our first commercial unit in the Netherlands in the second quarter of 2014. In November 2014, we signed a Commercial License Agreement with Dresser-Rand (as amended, the “CLA”) to incorporate our Power Oxidizer into Dresser-Rand’s 1.75MW turbine. In August 2015, the CLA became a mutually binding agreement due to the satisfaction of certain binding conditions contained in the CLA. On June 29, 2016 we signed the CMLA. The CMLA becomes binding and will supersede the CLA after the satisfaction of the final technical milestone under the CLA, which we expect to occur in the third quarter of 2016. We have sustained recurring net losses and negative cash flows since inception and have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Despite capital raises of $5.8 million in April and May 2015, $2.5 million in December 2015, and $3.0 million in April 2016, we expect to require additional sources of capital to support the Company’s growth initiatives. We must secure additional funding to continue as a going concern and execute our business plan. Management’s plan is to obtain capital sufficient to meet our operating expenses by seeking additional equity and/or debt financing. The cash and cash equivalents balance (excluding restricted cash) on June 30, 2016 and December 31, 2015 was approximately $0.6 million and $2.6 million, respectively. In April 2016, management began taking steps to reduce our operational cash burn through a combination of staff reductions and reductions of outside service providers. We expect to implement additional cost savings through reduced overhead costs later in 2016 as well as reduced non-recurring costs and capital expenditures related to our efforts to develop the 2MW KG2 Powerstation. We expect that the $0.6 million of cash and cash equivalents as of June 30, 2016 and receipts on customer billings will continue to fund our working capital needs, general corporate purposes, and related obligations into the third quarter of 2016 at our reduced spending levels. However, we expect to require significantly more cash for working capital and as financial security to support our growth initiatives beginning in the third quarter of 2016 and beyond. We will pursue raising additional equity and/or debt financing to fund our operations and product development. If future funds are raised through issuance of stock or debt, these securities could have rights, privileges, or preferences senior to those of our common stock and debt covenants that could impose restrictions on our operations. Any equity or convertible debt financing will likely result in additional dilution to our current stockholders. We cannot make any assurances that any additional financing, including the proposed registered offering, will be completed on a timely basis, on acceptable terms or at all. Our inability to successfully raise capital in a timely manner will adversely impact our ability to continue as a going concern. If our business fails or we are unable to raise capital on a timely basis, our investors may face a complete loss of their investment. The accompanying consolidated financial statements do not give effect to any adjustments that might be necessary if we were unable to meet our obligations or continue operations as a going concern.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2016
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 2—Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include our accounts and our wholly-owned subsidiary, Ener-Core Power, Inc. All significant intercompany transactions and accounts have been eliminated in consolidation. All monetary amounts are rounded to the nearest $000, except certain per share amounts. The accompanying financial statements have been prepared in accordance with GAAP. Reclassifications Certain amounts in the 2015 consolidated condensed financial statements have been reclassified to conform to the current year presentation. These reclassifications have no effect on previously reported net loss. Segments We operate in one segment. All of our operations are located domestically. Use of Estimates The preparation of financial statements in conformity with GAAP requires 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 items subject to such estimates and assumptions include but are not limited to: collectability of receivables; the valuation of certain assets, useful lives, and carrying amounts of property and equipment, equity instruments and share-based compensation; provision for contract losses; valuation allowances for deferred income tax assets; valuation of derivative liabilities; and exposure to warranty and other contingent liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Foreign Currency Adjustments Our functional currency for all operations worldwide is the U.S. dollar. Nonmonetary assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at exchange rates in effect at the end of the year. Income statement accounts are translated at average rates for the year. At June 30, 2016 and December 31, 2015, we did not hold any foreign currency asset or liability amounts. Gains and losses resulting from foreign currency transactions are reported as other income in the period they occurred. Concentrations of Credit Risk Cash and Cash Equivalents We maintain our non-interest bearing transactional cash accounts at financial institutions for which the Federal Deposit Insurance Corporation (“FDIC”) provides insurance coverage of up to $250,000. For interest bearing cash accounts, from time to time, balances exceed the amount insured by the FDIC. We have not experienced any losses in such accounts and believe we are not exposed to any significant credit risk related to these deposits. At June 30, 2016, we had $456,000 in excess of the FDIC limit. We consider all highly liquid investments available for current use with an initial maturity of three months or less and are not restricted to be cash equivalents. We invest our cash in short-term money market accounts. Restricted Cash Collateral Account Under a credit card processing agreement with a financial institution that was entered in 2013, we are required to maintain funds on deposit with the financial institution as collateral. The amount of the deposit, which is at the discretion of the financial institution, was $50,000 on June 30, 2016 and December 31, 2015. Dresser-Rand Escrow Account Under the CLA, prepaid license fee payments of $400,000 per quarter are to be paid by Dresser-Rand into an escrow account with a financial institution beginning August, 2015. Dresser-Rand is allowed to withdraw up to $125,000 per quarter from this escrow account for qualified engineering expenses incurred by Dresser-Rand under the terms and conditions of the CLA. Through June 30, 2016, Dresser-Rand has funded $800,000 and has withdrawn $375,000. The balance in the escrow account was $300,000 and $150,000 on June 30, 2016 and December 31, 2015, respectively. The Company is allowed to withdraw funds from the escrow account after completion of additional technical milestones, expected to be completed in the third quarter of 2016. See also Note 7—Deferred Revenues and Customer Advances. Accounts Receivable Our accounts receivable are typically from credit worthy customers or, for international customers are supported by guarantees or letters of credit. For those customers to whom we extend credit, we perform periodic evaluations of them and maintain allowances for potential credit losses as deemed necessary. We generally do not require collateral to secure accounts receivable. We have a policy of reserving for uncollectible accounts based on our best estimate of the amount of probable credit losses in existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2016, one customer accounted for all of our accounts receivable. Accounts Payable As of June 30, 2016 and December 31, 2015, three and five vendors, respectively, collectively accounted for approximately 33% and 50% of our total accounts payable. Inventory Inventory, which consists of raw materials, is stated at the lower of cost or net realizable value, with cost being determined by the average-cost method, which approximates the first-in, first-out method. At each balance sheet date, we evaluate our ending inventory for excess quantities and obsolescence. This evaluation primarily includes an analysis of forecasted demand in relation to the inventory on hand, among consideration of other factors. Based upon the evaluation, provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the respective inventories. At June 30, 2016 and December 31, 2015, we did not have a reserve for slow-moving or obsolete inventory. Property and Equipment Property and equipment are stated at cost, and are being depreciated using the straight-line method over the estimated useful lives of the related assets, ranging from three to ten years. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the cost and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are reflected in the consolidated statements of operations. Deposits Deposits primarily consist of amounts incurred or paid in advance of the receipt of fixed assets or are deposits for rent and insurance. Accrued Warranties Accrued warranties represent the estimated costs that will be incurred during the warranty period of our products. We make an estimate of expected costs that will be incurred by us during the warranty period and charge that expense to the consolidated statement of operations at the date of sale. We also reevaluate the estimate at each balance sheet date and if the estimate is changed, the effect is reflected in the consolidated statement of operations. We had no warranty accrual at December 31, 2015 or June 30, 2016. We expect that most terms for future warranties of our Powerstations and Oxidizers will be one to two years depending on the warranties provided and the products sold. Accrued warranties for expected expenditures within one year are classified as current liabilities and as non-current liabilities for expected expenditures for time periods beyond one year. Deferred Rent We record deferred rent expense, included in accrued expenses, which represents the temporary differences between the reporting of rental expense on the financial statements and the actual amounts remitted to the landlord. The deferred rent portion of lease agreements are leasing inducements provided by the landlord. Also, tenant improvement allowances provided are recorded as a deferred rent liability and recognized ratably as a reduction to rent expense over the lease term. As of June 30, 2016 we had $7,000 of deferred rent, recorded in accrued liabilities. Intangible Assets Our intangible assets represent intellectual property acquired during the reverse merger. We amortize our intangible assets with finite lives over their estimated useful lives. Impairment of Long-Lived Assets We account for our long-lived assets in accordance with the accounting standards which require that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical carrying value of an asset may no longer be appropriate. We consider the carrying value of assets may not be recoverable based upon its review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. As of June 30, 2016 and December 31, 2015, we do not believe there have been any impairments of our long-lived assets. There can be no assurance, however, that market conditions will not change or demand for our products will continue, which could result in impairment of long-lived assets in the future. Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, convertible notes, derivative liabilities, and capital lease liabilities. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2016 and December 31, 2015. The carrying amounts of short-term financial instruments are reasonable estimates of their fair values due to their short-term nature or proximity to market rates for similar items. We determine the fair value of our financial instruments based on a three-level hierarchy established for fair value measurements under which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy: ● Level 1: Valuations based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Currently, we classify our cash and cash equivalents as Level 1 financial instruments. ● Level 2: Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. We do not currently have any accounts under Level 2. ● Level 3: Valuations based on inputs that require inputs that are both significant to the fair value measurement and unobservable and involve management judgment (i.e., supported by little or no market activity). Currently, we classify our warrants and conversion options accounted for as derivative liabilities as Level 3 financial instruments. If the inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial security’s hierarchy level is based upon the lowest level of input that is significant to the fair value measurement. Derivative Financial Instruments The Company issues derivative financial instruments in conjunction with its debt and equity offerings and to provide additional incentive to investors and placement agents. The Company uses derivative financial instruments in order to obtain the lowest cash cost-source of funds. Derivative liabilities are recognized in the consolidated balance sheets at fair value based on the criteria specified in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) topic 815-40 “ Derivatives and Hedging—Contracts in Entity’s own Equity The Company issued detachable common stock warrants and secured debt with a conversion feature in April and May 2015 and amended existing debt to add a conversion feature in December 2015. The Company issued additional common stock warrants with price reset provisions in December 2015, February 2016, and March 2016. These embedded derivatives and detachable warrants were evaluated under ASC topic 815-40. We determined that the warrants and embedded conversion feature for the April 2014 issuance, the conversion feature for the 2015 issuances, and the warrants issued with price reset provisions should be accounted for as derivative liabilities. We determined that the detachable warrants associated with the 2015 issuance on the issuance date should not be accounted for as derivative liabilities. Warrants and the debt conversion features determined to be derivative liabilities were bifurcated from the debt host and are classified as liabilities on the consolidated balance sheet. Warrants not determined to be derivative liabilities were recorded to debt discount and paid-in capital. The Company records the warrants and embedded derivative liabilities at fair value and adjusts the carrying value of the common stock warrants and embedded derivatives to their estimated fair value at each reporting date with the increases or decreases in the fair value of such warrants and derivatives at each reporting date, recorded as a gain or (loss) in the consolidated statements of operations. The 2015 detachable warrants determined not to be derivative liabilities were recorded to debt discount with a corresponding entry to paid-in capital. Revenue Recognition We generate revenue from the sale of our clean power energy systems and from consulting services. Revenue is recognized when there is persuasive evidence of an arrangement, product delivery and acceptance have occurred, the sales price is fixed or determinable and collectability of the resulting receivable is reasonable assured. Amounts billed to clients for shipping and handling are classified as sales of product with related costs incurred included in cost of sales. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related revenue is recorded. We defer any revenue for which the services have not been performed or are subject to refund until such time that we and our customer jointly determine that the services have been performed or no refund will be required. Revenues under long-term construction contracts are generally recognized using the completed-contract method of accounting. Long-term construction-type contracts for which reasonably dependable estimates cannot be made or for which inherent hazards make estimates difficult are accounted for under the completed-contract method. Revenues under the completed-contract method are recognized upon substantial completion—that is acceptance by the customer, compliance with performance specifications demonstrated in a factory acceptance test or similar event. Accordingly, during the period of contract performance, billings and costs are accumulated on the balance sheet, but no profit or income is recorded before completion or substantial completion of the work. Anticipated losses on contracts are recognized in full in the period in which losses become probable and estimable. Changes in estimate of profit or loss on contracts are included in earnings on a cumulative basis in the period the estimate is changed. As of June 30, 2016 and December 31, 2015, we had a $600,000 provision for contract losses for both periods presented. Research and Development Costs Research and development costs are expensed as incurred. Research and development costs were $755,000 and $968,000 for the three months ended June 30, 2016 and 2015, respectively, and were $1,698,000 and $1,709,000 for the six months ended June 30, 2016 and 2015, respectively. Share-Based Compensation We maintain an equity incentive plan and record expenses attributable to the awards granted under the equity incentive plan. We amortize share-based compensation from the date of grant on a weighted average basis over the requisite service (vesting) period for the entire award. We account for equity instruments issued to consultants and vendors in exchange for goods and services at fair value. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant’s or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. In accordance with the accounting standards, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, we record the fair value of the fully vested, non-forfeitable common stock issued for future consulting services as prepaid expense in our consolidated balance sheets. Income Taxes We account for income taxes under FASB ASC 740 “Income Taxes.” Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that we will not realize tax assets through future operations. Earnings (Loss) per Share Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional common shares were dilutive. Options and warrants to purchase approximately 1.6 million and 0.5 million common shares were outstanding at June 30, 2016 and 2015, respectively, but were excluded from the computation of diluted loss per share due to the anti-dilutive effect on net loss per share. All share and per share amounts in the table below have been adjusted to reflect the 1-for-50 reverse split of our issued and outstanding common stock on July 8, 2015, retroactively. Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net loss $ (2,185,000 ) $ (3,228,000 ) $ (6,033,000 ) $ (5,292,000 ) Weighted average number of common shares outstanding: Basic and diluted 3,708,782 2,408,200 3,400,711 2,345,500 Net loss attributable to common stockholders per share: Basic and diluted $ (0.59 ) $ (1.34 ) $ (1.84 ) $ (2.26 ) Comprehensive Income (Loss) We have no items of other comprehensive income (loss) in any period presented. Therefore, net loss as presented in our Consolidated Statements of Operations equals comprehensive loss. Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). In April 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing (“ASU 2016-10”). ASU 2014-09, with additional guidance and clarification from ASU 2016-10, provides a framework for addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. ASU 2016-10 provides additional guidance specific to licensing and royalty revenue recognition. ASU 2014-09 is effective beginning with the calendar year ended December 31, 2017. The Company has not yet assessed the impact ASU 2014-09 will have upon adoption on its financial position, results of operations or cash flows. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires that an entity’s management evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Certain disclosures are necessary in the footnotes to the financial statements in the event that conditions or events raise substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter and early application is permitted. The Company has not yet assessed the impact ASU 2014-15 will have upon adoption. In November 2014, the FASB issued ASU 2014-16—Derivatives and Hedging: Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. ASU 2014-16 clarifies how current GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. ASU 2014-16 became effective for the interim and annual periods beginning after December 15, 2015. There was no impact to any prior periods presented as a result of adopting ASU 2014-16. In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. ASU 2015-03 became effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years and early application is permitted. The Company elected to adopt ASU 2015-03 beginning with the interim period ended June 30, 2015. There was no impact to any prior periods presented as a result of adopting ASU 2015-03. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. ASU 2015-11 requires that entities measure inventory at the lower of cost and net realizable value. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years and early application is permitted. The Company has not yet assessed the impact ASU 2015-11 will have upon adoption. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that entities’ deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for fiscal years beginning after December 15, 2017 and interim periods within annual periods beginning after December 15, 2018. The Company has not yet assessed the impact ASU 2015-17 will have upon adoption. In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842). ASU 2016-2 affects any entity entering into a lease and changes the accounting for operating leases to require companies to record an operating lease liability and a corresponding right-of-use lease asset, with limited exceptions. ASU 2016-2 is effective for fiscal years beginning after December 15, 2019 and interim periods with annual periods beginning after December 15, 2010. Early adoption is allowed. The Company has not yet assessed the impact ASU 2016-2 will have upon adoption.

Inventory

Inventory	6 Months Ended
	Jun. 30, 2016
Inventory [Abstract]
Inventory	Note 3—Inventory Inventory primarily consists of Powerstation parts used as raw materials for the Company’s EC250 and KG2 orders. Inventory totaled $1,770,000 and $747,000 as of June 30, 2016 and December 31, 2015, respectively. The Company had no inventory reserve during 2016 or 2015.

Prepaid Expenses and Other Curr

Prepaid Expenses and Other Current Assets	6 Months Ended
	Jun. 30, 2016
Prepaid Expenses and Other Current Assets [Abstract]
Prepaid expenses and other current assets	Note 4—Prepaid expenses and other current assets Prepaid expenses and other current assets consisted of the following: June 30, 2016 (unaudited) December 31, 2015 Prepaid rent $ 27,000 $ 27,000 Prepaid insurance 20,000 40,000 Prepaid other 279,000 140,000 Prepaid professional fees 49,000 — Current portion – deferred financing fees for LOC 228,000 228,000 Total $ 603,000 $ 408,000

Property and Equipment, Net

Property and Equipment, Net	6 Months Ended
	Jun. 30, 2016
Property and Equipment, Net [Abstract]
Property and Equipment, Net	Note 5—Property and Equipment, Net Property and equipment, net consisted of the following: June 30, 2016 (unaudited) December 31, 2015 Machinery and equipment $ 4,844,000 $ 4,042,000 Office furniture and fixtures 217,000 217,000 Computer equipment and software 174,000 169,000 Total cost 5,235,000 4,428,000 Less accumulated depreciation (1,263,000 ) (1,002,000 ) Net $ 3,972,000 $ 3,426,000 Assets recorded under capital leases and included in property and equipment in our balance sheets consist of the following: June 30, 2016 (unaudited) December 31, Machinery and equipment $ 27,000 $ 27,000 Computer equipment and software 60,000 46,000 Total assets under capital lease 87,000 73,000 Less accumulated amortization (60,000 ) (46,000 ) Net assets under capital lease $ 27,000 $ 27,000 Depreciation expense for the three and six months ended June 30, 2016 and 2015 consisted of the following: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Research and development $ 103,000 $ 64,000 $ 203,000 $ 94,000 General and administrative 29,000 29,000 58,000 58,000 $ 132,000 $ 93,000 $ 261,000 $ 152,000 Amortization of assets under capital lease was $6,000 and $6,000 for the three months ended June 30, 2016 and 2015, respectively, and $12,000 and $12,000 for the six months ended June 30, 2016 and 2015, respectively.

Accrued Expenses

Accrued Expenses	6 Months Ended
	Jun. 30, 2016
Accrued Expenses [Abstract]
Accrued Expenses	Note 6—Accrued Expenses Accrued expenses consisted of the following: June 30, (unaudited) December 31, Accrued professional fees $ 256,000 $ 205,000 Accrued vacation & paid time off 345,000 333,000 Accrued expense reports 10,000 46,000 Accrued board of directors fees 80,000 13,000 Accrued interest 50,000 50,000 Accrued other 16,000 10,000 Total accrued expenses $ 757,000 $ 657,000

Deferred Revenues and Customer

Deferred Revenues and Customer Advances	6 Months Ended
	Jun. 30, 2016
Deferred Revenues and Customer Advances [Abstract]
Deferred revenues and customer advances	Note 7—Deferred revenues and customer advances Deferred revenues and customer advances consist of balances billed on existing customer contracts for which the revenue cycle is not complete. Customer advances on equipment sales represent down payments and progress payments under the terms and conditions of equipment sales of our Power Oxidizer and Powerstation units. Prepaid license fees represent payments of license fees by Dresser-Rand into an escrow account. Deferred revenues and customer advances consisted of the following: June 30, (unaudited) December 31, 2015 Customer advances on equipment sales $ 2,776,000 $ 2,572,000 Prepaid license fees 300,000 275,000 Total deferred revenues and customer advances $ 3,076,000 $ 2,847,000

Convertible Secured Notes Payab

Convertible Secured Notes Payable	6 Months Ended
	Jun. 30, 2016
Secured Notes Payable [Abstract]
Secured Notes Payable	Note 8—Convertible Secured Notes Payable Convertible Secured Notes payable consisted of the following as of June 30, 2016 (unaudited): Notes Debt Offering Costs Net Ending balance—December 31, 2015 $ 5,000,000 $ (791,000 ) $ (99,000 ) $ 4,110,000 Amortization of debt discount and deferred financing costs — 1,497,000 40,000 1,537,000 Additional debt discount—March warrants — (1,497,000 ) — (1,497,000 ) Additional debt discount—February warrants — (148,000 ) — (148,000 ) Ending balance—June 30, 2016 5,000,000 (939,000 ) (59,000 ) 4,002,000 Less: Current Portion $ (5,000,000 ) $ 939,000 $ 59,000 $ (4,002,000 ) Long Term Portion $ — $ — $ — $ — Secured Notes During the year ended December 31, 2015, the Company sold senior secured promissory notes with an aggregate principal amount of $5.0 million (the “Notes”) in two separate tranches. The two tranches of the Notes were identical, other than the issuance date and the term of the respective Note tranches and the term of the related detachable warrants, described in greater detail below. On April 23, 2015, the Company closed the first tranche representing $3.1 million in aggregate principal amount of Notes issued in a private placement to seven institutional investors and on May 7, 2015 the Company closed the second tranche, representing $1.9 million in aggregate principal amount of Notes to four institutional investors. The Company received total gross proceeds of $5.0 million, less transaction expenses of $0.3 million consisting of legal costs and placement agent fees. The Notes bear interest at a rate of 12% per year, payable monthly, and are set to mature on the two-year anniversary of the issuance dates of the Notes on April 23, 2017 and May 7, 2017 for the first and second tranches, respectively. At the discretion of each investor, a 100% of the Notes may be exchanged for shares of the Company’s common stock. The Notes may be repaid by the Company at any time unless the Notes are in default. The Notes are secured by substantially all assets of the Company and provide for specified events of default, including: (i) failure to pay principal and interest when due, and (ii) failure to effectuate a reverse stock split on or prior to the three-month anniversary of the first tranche of Notes. The Notes previously required the Company to consummate a Qualified Public Offering on or prior to the six-month anniversary of the first tranche of Notes. This default condition, however, was amended as described in greater detail below. Any event of default may be waived by the holders of at least a majority of the aggregate principal amount of Notes, which must include a specified holder under specified circumstances. Upon the occurrence of an event of default, the interest rate immediately increases to 18% per annum and the Notes become convertible at a price per share equal to 85% of the average of the five lowest volume weighted average prices of the Company’s common stock during a 15 consecutive trading day period immediately prior to the applicable conversion date. Each holder may require us to redeem the Notes at a price equal to 115% of the sum of portion of the principal to be redeemed plus accrued and unpaid interest thereon and any accrued and unpaid late charges, if any, with respect to such principal and interest (the “Conversion Amount”) being redeemed (a) upon our default under the Notes, or (b) if we enter into a merger or consolidation, or sell or assign all or substantially all of our assets. In addition, at any time from and after the date that is the eighteen-month anniversary of the original issuance date of the Notes, each holder shall have the right, in its sole and absolute discretion, at any time or times, to require that we redeem all or any portion of the Conversion Amount of its Note then outstanding at a price equal to 100% of the Conversion Amount of the portion of the Note being redeemed. At any time after the issuance of the Notes, other than (i) at any time during which an event of default has occurred and is continuing or (ii) from the time we publicly announce a Qualified Public Offering through and including the date that is thirty days immediately following the consummation of such Qualified Public Offering, we have the right to redeem all or any portion of the Conversion Amount then remaining under the Notes, (a “Company Optional Redemption”); provided, that the aggregate Conversion Amount under Notes being redeemed shall be at least $500,000, or such lesser amount that is then outstanding under the Notes. The conversion price for such Company Optional Redemption shall be a price equal to 100% of the Conversion Amount of the Notes being redeemed. The Notes were originally issued with detachable warrants to purchase 219,785 shares of the Company’s common stock, exercisable for five years with an exercise price of $12.50 per share. The Company evaluated the accounting of the detachable warrants and determined that the warrants should not be accounted for as derivative liabilities. Between May 2015 and December 2015, the Company and certain investors holding the requisite number of conversion shares and warrant shares underlying the Notes and warrants issued in April 2015 and May 2015 executed several amendments to the Securities Purchase Agreements dated April 22, 2015 and May 7, 2015, respectively, related to the extension of the debt covenants. Effective as of December 30, 2015, the Company executed a Fourth Amendment to Securities Purchase Agreement dated April 22, 2015, and a Third Amendment to Securities Purchase Agreement dated May 7, 2015 (collectively, the “December Amendments”), each with certain investors holding the requisite number of conversion shares and warrant shares underlying the Notes and warrants issued in April 2015 and May 2015 pursuant to the referenced purchase agreements. The December Amendments (i) extended the deadline to March 31, 2016 for the Company’s consummation of a firm commitment underwritten public offering registered under the Securities Act and related listing of its Common Stock on a national securities exchange, (ii) provided for the issuance of additional five-year warrants (the “Additional Warrants”), exercisable for ten shares of Common Stock per $1,000 of outstanding principal of the Notes held by each buyer pursuant to the April 2015 and May 2015 purchase agreements, each with an exercise price of $12.50 per share, subject to adjustment as set forth within the Additional Warrants, issuable in tranches triggered by certain Company actions as set forth in the December Amendments and (iii) authorized the Company, prior to January 31, 2016, to issue to one or more investors up to an aggregate of $1,000,000 principal amount of senior secured notes, on the terms and subject to the restrictions set forth in the December Amendments. An initial tranche of Additional Warrants to purchase up to 50,000 shares of the Company’s common stock became issuable and were issued in conjunction with the execution of the December Amendments (the “December Additional Warrants”). The December Amendments also amended the terms of the Notes to allow for the remaining 50% to be converted under the same terms as the original 50%, as described above. The modification for the additional conversion feature was accounted for as a debt extinguishment. The Company accelerated the original debt discount to other expense – debt extinguishment and recorded additional debt discounts consisting of $609,000 for the fair value of the beneficial conversion feature and $182,000 for the fair value of the December Warrants issued. On February 2, 2016, the Company failed to conclude its public offering and issued Additional Warrants to purchase up to 50,000 shares of the Company’s common stock on the same terms as the December Additional Warrants (the “February Warrants”). On March 31, 2016, the Company executed amendments to the April 22, 2015, and May 7, 2015 Note Agreements and related Securities Purchase Agreements (collectively, the “March Amendments”), each with certain investors holding the requisite number of conversion shares and warrant shares underlying the Notes and warrants issued in April 2015 and May 2015 pursuant to the referenced purchase agreements. The March Amendments (i) removed the requirement that the Company consummate a “Qualified Public Offering”; (ii) extended the deadline for the Company to commence trading on a Qualified Eligible Market (as defined in the March Amendments) to no later than April 14, 2016; provided that if the Company consummated a private offering of its securities resulting in gross proceeds to the Company of at least $3,000,000 after March 31, 2016 and prior to or on April 14, 2016 (a “Qualified Private Offering”), such deadline shall be automatically extended to October 15, 2016; (iii) provided for the issuance of warrants to purchase up to 500,000 shares of the Company’s common stock, each with an exercise price of $5.00 per share, subject to adjustment as set forth within the warrants (the “March Warrants”); and (iv) added an additional covenant on behalf of the Company that, on or prior to April 14, 2016, it would cause its net monthly cash flow directly associated with the CLA, taken together with its monthly capital expenditure spending associated with the CLA, and excluding expenditures associated with the Full-Scale Acceptance Test (“FSAT”) requirements defined in the CLA, to be neutral or positive, to be accomplished by re-negotiation or termination of such CLA. On April 11, 2016 we consummated a $3 million private offering and thereby satisfied condition (ii) above. On March 31, 2016 we issued the 500,000 warrants as described in Note 11 and we are in compliance with the spending covenant listed in (iv) above. Between April 14, 2016 and June 29, 2016, we were in compliance with the net monthly cash flow covenant related to the CLA. On June 29, 2016, we signed the CMLA, which will replace the CLA upon the successful completion of the technical tests associated with the KG2. The execution of the CMLA satisfied the net monthly cash flow covenant. The Company evaluated the February Warrants and the March Warrants and determined that both issuances should be accounted for as derivative liabilities on the date of issuance. The Company recorded an additional $148,000 of debt discount upon the issuance of the February Warrants and $1,497,000 of debt discount upon the issuance of the March Warrants. The December 31, 2015 debt discount and the additional discounts recorded in February 2016 and March 2016 are amortized over the expected remaining life of the debt. Derivative Liabilities We evaluate any freestanding financial instruments or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity’s own common stock to determine if they are indexed to an entity’s own stock. During 2015, we determined that the issuance of the Notes contained an embedded note conversion feature that is required to be accounted for as a derivative. In December 2015, we modified the conversion feature which gave rise to additional derivative liabilities and issued to the debt holders the December Additional Warrants that allowed for price reset provisions. The inclusion of the price reset provisions required treatment of the December Warrants as derivative liabilities and an increase in debt discount for the initial value of the derivative liability. Also, in December 2015, we issued 312,500 warrants to the investors in the December 2015 equity offering (the “December Offering Warrants”). The December Offering Warrants carry limited price reset provisions, until the earlier of June 30, 2016 or upon the registration of the December 2015 equity securities; such reset provisions lapsed effective June 30, 2016. We recorded the fair value of the December Offering Warrants issued as a derivative liability with a corresponding decrease in additional paid-in capital. After the price reset provisions lapse, the fair value of the December Offering Warrants, marked to market value on the date of the provision lapse, will be adjusted to additional paid-in capital. In the first quarter of 2016, we issued the February Warrants and March Warrants to the holders of the Notes in exchange for the waiver of certain debt covenants. We recorded the fair value of the February Warrants and March Warrants issued as a derivative liability with a corresponding increase in debt discount. The embedded conversion features and common stock purchase warrants do not trade in an active securities market, and as such, we estimate the fair value of these warrants and embedded conversion features using the Black-Scholes pricing model using the following assumptions: 2016 Annual dividend yield — Expected life (years) 0.1–5 years Risk-free interest rate 0.5–0.9 % Expected volatility 98–107 % Expected volatility is based primarily on historical volatility of us and our peer group. Historical volatility was computed using weekly pricing observations for us and daily pricing observations for our peer group for recent periods that correspond to the expected term. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants. We currently have no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants. The risk-free interest rate is based on one-year to five-year U.S. Treasury securities consistent with the remaining term of the warrants. Derivative liabilities consisted of the following (unaudited): Warrants Liability Embedded Note Conversion Feature Total Value as of December 31, 2015 $ 1,297,000 $ 1,213,000 $ 2,510,000 Adjustment to fair value (497,000 ) (1,057,000 ) (1,554,000 ) Additional Warrants issued for debt amendment 1,645,000 — 1,645,000 Modification of Conversion Feature – debt amendment — 1,429,000 1,429,000 Ending balance—June 30, 2016 $ 2,445,000 $ 1,585,000 $ 4,030,000

Fair Value Measurements and Dis

Fair Value Measurements and Disclosures	6 Months Ended
	Jun. 30, 2016
Fair Value Measurements and Disclosures [Abstract]
Fair Value Measurements and Disclosures	Note 9—Fair Value Measurements and Disclosures Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company's own credit risk. Inputs used in measuring fair value are prioritized into a three-level hierarchy based on whether the inputs to those measurements are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. The fair-value hierarchy requires the use of observable market data when available and consists of the following levels: ● Level 1—Quoted prices for identical instruments in active markets; ● Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and ● Level 3—Valuations derived from valuation techniques in which one or more significant inputs are unobservable. The following tables present information on the Company’s financial instruments (unaudited): Fair Value Level 1 Level 2 Level 3 Cash and cash equivalents, including restricted cash $ 982,000 $ 982,000 $ — $ — Embedded note conversion feature $ 1,585,000 $ — $ — $ 1,585,000 Derivative liabilities – warrants $ 2,445,000 $ — $ — $ 2,445,000

Capital Leases Payable

Capital Leases Payable	6 Months Ended
	Jun. 30, 2016
Capital Leases Payable [Abstract]
Capital Leases Payable	Note 10—Capital Leases Payable Capital Leases Payable Capital leases payable consisted of the following: June 30, 2016 (unaudited) December 31, Capital lease payable to De Lange Landon secured by forklift, 10.0% interest, due on October 1, 2018, monthly payment of $452. $ 10,000 $ 13,000 Capital lease payable to Dell Computers secured by computer equipment, 15.09% interest, due on November 16, 2016, monthly payment of $592. 3,000 6,000 Capital lease payable to Dell Computers secured by computer equipment, 15.09% interest, due on December 15, 2016, monthly payment of $590. 4,000 6,000 Capital lease payable to Dell Computers secured by computer equipment, 15.09% interest, due on January 3, 2017, monthly payment of $405. 3,000 5,000 Capital lease payable to Dell Computers secured by computer equipment, 15.09% interest, due on January 3, 2017, monthly payment of $394. 7,000 10,000 Total capital leases $ 27,000 $ 40,000 Less: current portion (20,000 ) (26,000 ) Long-term portion of capital leases $ 7,000 $ 14,000 The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of June 30, 2016, are as follows: Year Ending December 31, Amount 2016 $ 14,000 2017 10,000 2018 5,000 Net minimum lease payments $ 29,000 Less: Amount representing interest (1,000 ) Less: Taxes (1,000 ) Present value of net minimum lease payments $ 27,000 Less: Current maturities of capital lease payables (20,000 ) Long-term capital lease payables $ 7,000

Equity, Stock Options, and Warr

Equity, Stock Options, and Warrants	6 Months Ended
	Jun. 30, 2016
Equity, Stock Options, and Warrants [Abstract]
Equity, Stock Options, and Warrants	Note 11—Equity, Stock Options, and Warrants On April 11, 2016, we entered into a stock purchase agreement dated April 11, 2016, pursuant to which we issued to an accredited investor an aggregate of 696,056 shares of our common stock in exchange for gross proceeds of approximately $3.0 million (the “April 2016 Private Placement”). The closing of the April 2016 Private Placement satisfied the Qualified Private Offering requirement in the March Amendments described below under “March 2016 Amendment to Notes”. Stock options On July 1, 2013, our board of directors adopted and approved the 2013 Equity Incentive Plan (the “2013 Plan”) and amended the 2013 Plan on March 24, 2015 to increase the number of shares available for issuance. The 2013 Plan authorizes us to grant non-qualified stock options and restricted stock purchase rights to purchase up to 420,000 shares of our common stock with vesting to employees (including officers) and other service providers. With the approval of the 2015 Plan, described below, as of August 29, 2015, no shares of our common stock were available for issuance under the 2013 Plan. On July 15, 2015, our board of directors approved the 2015 Omnibus Incentive Plan (the “2015 Plan”), which was approved by our stockholders on August 28, 2015. The 2015 Plan authorizes us to grant up to 300,000 shares of our common stock and is intended to replace the 2013 Equity Incentive Plan. If the 2015 Plan is approved by our stockholders, no additional grants will be made under the 2013 Plan. The 2015 Plan permits the granting of any or all of the following types of awards: incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards, and performance awards payable in a combination of cash and company shares. There were no awards granted under the 2015 plan as of June 30, 2016. The 2015 Plan has the following limitations: ● Limitation on terms of stock options and stock appreciation rights ● No repricing or grant of discounted stock options ● Clawback ● Double-trigger acceleration ● Code Section 162(m) Eligibility ● Dividends At June 30, 2016, total unrecognized deferred stock compensation expected to be recognized over the remaining weighted-average vesting periods of 0.8 years for outstanding grants was $1.3 million. The fair value of option awards is estimated on the grant date using the Black-Scholes option valuation model. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by us. Stock-based compensation expense is recorded only for those awards expected to vest. Currently, the forfeiture rate is zero. The rate is adjusted if actual forfeitures differ from the estimates in order to recognize compensation cost only for those awards that actually vest. If factors change and different assumptions are employed in future periods, the share-based compensation expense may differ from that recognized in previous periods. Stock-based award activity was as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Life Value Balance, December 31, 2015 308,464 $ 13.61 6.07 $ — Forfeited during 2016 (14,098 ) 14.65 — — Balance, June 30, 2016 294,366 $ 13.56 5.59 $ — Exercisable on June 30, 2016 191,218 $ 14.67 5.19 $ — The options granted have a contract term ranging between three and ten years. Options granted typically vest over a four year period, with 25% vesting after one year and the remainder ratably over the remaining three years. The following table summarizes information about stock options outstanding and exercisable at June 30, 2016: Options Outstanding Options Exercisable Weighted- Average Weighted- Weighted- Number Remaining Average Number Average Exercise of Contractual Exercise of Exercise Prices Shares Life Price Shares Price (In years) $0–$10.00 115,840 7.27 $ 7.74 59,749 $ 7.13 $10.01–$15.00 31,888 7.40 $ 12.50 16,728 $ 12.50 $15.01–$20.00 124,584 3.75 $ 17.50 96,030 $ 17.50 $20.01–$25.00 22,054 4.48 $ 23.46 19,711 $ 23.58 294,366 5.59 $ 13.56 191,218 $ 14.67 Stock based compensation expense consisted of the following: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Research and development $ 149,000 $ 143,000 $ 310,000 $ 295,000 General and administrative 202,000 222,000 417,000 446,000 $ 351,000 $ 365,000 $ 727,000 $ 741,000 Warrants From time to time, we issue warrants to purchase shares of our common stock to investors, note holders and to non-employees for services rendered or to be rendered in the future. Warrant Issuances On February 2, 2016, the Company issued 50,000 Additional Warrants to the existing noteholders under the terms of the December 2015 amendments to the Notes. March 2016 Amendment to Notes On March 31, 2016, the Company executed the March Amendments with certain investors holding the requisite number of conversion shares and warrant shares underlying the Notes and warrants issued in April 2015 and May 2015 pursuant to the referenced purchase agreements. The March Amendments, described above, provided for the issuance of the Additional Warrants, exercisable for ten shares of the Company’s common stock per $100 of outstanding principal of the Notes held by each buyer pursuant to the April 2015 and May 2015 Securities Purchase Agreements, each with an exercise price of $5.00 per share, subject to adjustment as set forth within the warrants. A total of 500,000 Additional Warrants were issued to the Note holders on March 31, 2016. Warrants outstanding as of June 30, 2016 consist of: Issue Expiry Number of Exercise Price 2013 Services Warrants—July Jul-13 Jul-18 9,494 $ 37.50 2013 Services Warrants—August Aug-13 Aug-18 729 37.50 2013 Services Warrants—November Nov-13 Nov-18 2,400 50.00 2014 Services Warrants—April(1) Apr-14 Apr-19 13,657 39.00 2014 Services Warrants—September(2) Aug-14 Aug-19 16,000 25.00 2014 PIPE Warrants—September(3) Sept-14 Sept-18 26,500 25.00 2014 Services Warrants—November(4) Nov-14 Nov-18 6,500 25.00 2014 Settlement Warrants—December(5) Dec-14 Dec-19 38,464 25.00 2015 Notes Warrants(6) Apr/May-15 Apr/May-20 219,785 12.50 2015 Services Warrants—May(7) May-15 May-20 5,514 12.50 2015 LOC Guarantee Warrants—November (8) Nov-15 Nov-20 74,000 15.00 2015 Debt Amendment Warrants—December (9) Dec-15 Dec-20 50,000 5.00 2015 PIPE Warrants—December (10) Dec-15 Dec-20 312,500 5.00 2016 Debt Amendment Warrants—February (11) Feb-16 Feb-21 50,000 5.00 2016 Debt Amendment Warrants—March (12) Mar-16 Mar-21 500,000 5.00 Balance outstanding at June 30, 2016 1,325,543 $ 6.76 Warrants exercisable at June 30, 2016 1,251,543 $ 6.27 (1) The 2014 Services Warrants—April were issued for fees incurred in conjunction with the issuance of convertible notes in 2014. The warrants were valued on the issuance date at $11.50 per share in conjunction with the valuation approach used for the initial valuation of the warrants issued in connection with the convertible notes issued in 2014. (2) The 2014 Services Warrants—September were issued to a consultant in exchange for advisory services with no readily available fair value. The warrants were originally issued at $39.00 per share and had a one-time price reset provision to the exercise price of the warrants issued to investors in the convertible notes offering in April 2014 if the exercise price of such convertible notes warrants changed prior to September 30, 2014. On September 22, 2014, the exercise price was changed to $25.00 per share. There are no further exercise price changes for this warrant series. The warrants were valued using the Black-Scholes option pricing model at $131,000 on the issuance date with an additional $6,000 recorded to expense on September 22, 2014 to reflect the change in fair value resulting from the exercise price change. (3) On September 22, 2014 the Company issued 26,500 warrants with an exercise price of $25.00 per share in conjunction with placement agent services for the Company’s September 2014 private equity placement. The warrants were valued using the Black-Scholes option pricing model at $296,000 on the issuance date. (4) On November 26, 2014, the Company issued 6,500 warrants with an exercise price of $25.00 per share for compensation for investor relations services provided. The warrants were valued using the Black-Scholes option pricing model at $43,000 on the issuance date. (5) On December 1, 2014, the Company issued 19,232 warrants with an exercise price of $39.00 per share and on December 15, 2014 issued 19,232 warrants with an exercise price of $25.00 per share to settle potential legal disputes resulting from claims made by the investors in the November 2013 private equity placement. The warrants issued on December 1, 2014 were issued concurrent with the issuance of 8,462 shares of the Company’s common stock in partial settlement of the potential legal disputes arising from claims by two investors. The Company settled all remaining potential legal disputes with all of the remaining investors in the November 2013 private placement on December 15, 2014 by issuing the second tranche of warrants and setting the exercise price of each warrant series issued at $25.00 with no further reset provisions. The combined issuance of the warrants and expense resulting from any price changes were valued using the Black-Scholes option pricing model at $246,000 and expensed to general and administrative expense. (6) On April 23, 2015 the Company issued warrants exercisable for up to 136,267 shares of our common stock and on May 7, 2015 the Company issued warrants exercisable for 83,518 shares of our common stock, each with an exercise price of $12.50 per share in conjunction with the Notes described in Note 8. The warrants were valued using the Black-Scholes option pricing model at $2,139,000 on the issuance date. (7) On May 7, 2015 the Company issued warrants exercisable for 5,514 shares of our common stock with an exercise price of $12.50 per share in conjunction with placement agent services for the Company’s May 2015 private equity placement. The warrants were valued using the Black-Scholes option pricing model at $56,000 on the issuance date. (8) On November 2, 2015 the Company issued warrants exercisable for up to 74,000 shares of our common stock with an exercise price of $15.00 per share in conjunction with the LOC guarantee described in Note 16. The warrants were valued using the Black-Scholes option pricing model at $246,000 on the issuance date. The warrants are exercisable beginning on November 1, 2016. (9) On December 30, 2015 the Company issued warrants exercisable for up to 50,000 shares of our common stock with an initial exercise price of $12.50 per share in conjunction with the December 30, 2015 Notes amendment described in Note 8. In the event that the Company issues additional common stock derivative securities at a price per share less than the exercise price, the Company is obligated to reduce the exercise price of the December Debt Amendment Warrants to a price per share equal to the newly issued shares or derivative common stock securities. On March 31, 2016, concurrent with the issuance of the additional debt amendment warrants, the exercise price was reduced to $5.00 per share. (10) On December 31, 2015 the Company issued warrants exercisable for up to 312,500 shares of our common stock with an initial exercise price of $5.00 per share in conjunction with the December private equity placement (the “December PIPE”). The warrants provide that if, prior to the earlier of June 30, 2016 or thirty days after the date on which the December PIPE shares and underlying warrants are registered for resale, the Company issued common share derivative securities at a price per share less than $5.00 per share, the Company was obligated to reduce the exercise price of the December PIPE warrants to a price per share equal to the newly issued shares or derivative common stock securities. This price protection clause expired on June 30, 2016.. (11) On February 2, 2016 the Company issued warrants exercisable for up to 50,000 shares of our common stock with an initial exercise price of $12.50 per share in conjunction with the December 30, 2015 Notes amendment described in Note 8. The warrants were valued using the Black-Scholes option pricing model at $148,000 on the issuance date and were recorded as a derivative liability and additional debt discount. The warrants provided that, in the event that the Company issued additional common stock derivative securities at a price per share less than the exercise price, the Company was obligated to reduce the exercise price of the February Debt Amendment Warrants to a price per share equal to the newly issued shares or derivative common stock securities. On March 31, 2016, concurrent with the issuance of the additional debt amendment warrants, the exercise price was reduced to $5.00 per share. This price protection clause expired on June 30, 2016. (12) On March 31, 2016 the Company issued warrants exercisable for up to 500,000 shares of our common stock with an initial exercise price of $5.00 per share in conjunction with the December 30, 2015 Notes amendment described in Note 8. The warrants were valued using the Black-Scholes option pricing model at $1,497,000 on the issuance date and were recorded as a derivative liability and additional debt discount. The warrants provided that , in the event that the Company issued additional common stock derivative securities at a price per share less than the exercise price, the Company was obligated to reduce the exercise price of the March Debt Amendment Warrants to a price per share equal to the newly issued shares or derivative common stock securities. This price protection clause expired on June 30, 2016.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2016
Commitments and Contingencies [Abstract]
Commitments and Contingencies	Note 12—Commitments and Contingencies We may become a party to litigation in the normal course of business. We accrue for open claims based on our historical experience and available insurance coverage. In the opinion of management, there are no legal matters involving us that would have a material adverse effect upon our financial condition, results of operations or cash flows. Lease We lease our office facility, research and development facility and equipment under operating leases, which for the most part, are renewable. The leases also provide that we pay insurance and taxes. Future minimum rental payments under operating leases that have initial noncancelable lease terms in excess of one year as of June 30, 2016 are as follows: Six months ending December 31, 2016 $ 163,000 Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease. Rent expense, net of sublease income, was $79,000 and $158,000 for three and six months ended June 30, 2015, respectively, and $79,000 and $158,000 for the three and six months ended June 30, 2016, respectively. Our current headquarters is located at 9400 Toledo Way, Irvine, California 92618. The property consists of a mixed use commercial office, production, and warehouse facility of 32,649 square feet and expires December 31, 2016. The monthly expense rent is $26,825. In addition, we lease space from the Regents of the University of California, Irvine, for the installation and demonstration of the EC250 equipment. The lease expired on January 1, 2015 and reverted to a month-to-month lease with a monthly payment of $7,780. The university will provide certain goods and services including certain research and development services. Standby Letter of Credit Pursuant to the terms of the D-R Agreement, the Company is required to provide a backstop security of $2.1 million to secure performance of certain obligations under the D-R Agreement (the “BSS”). Effective November 2, 2015, the Company executed that certain Backstop Security Support Agreement (the “Support Agreement”), pursuant to which an investor agreed to provide the Company with financial and other assistance (including the provision of sufficient and adequate collateral) as necessary in order for the Company to obtain a $2.1 million letter of credit acceptable to Dresser-Rand as the BSS and with an expiration date of June 30, 2017 (“Letter of Credit”). If the investor is required to make any payments on the Letter of Credit, subject to the terms of the Intercreditor Agreement (as defined below), the Company shall reimburse the investor the full amount of any such payment. Such payment obligation is secured by a pledge of certain collateral of the Company pursuant to a Security Agreement dated November 2, 2015 (“Security Agreement”), and the security interest in favor of and the payment obligations to the investor are subject to the terms of that certain Subordination and Intercreditor Agreement executed concurrently with the Support Agreement and Security Agreement (the “Intercreditor Agreement”) by and among the investor, the Company and the collateral agent pursuant to the senior secured notes issued by the Company in April and May 2015 (the “2015 Notes”). The term of the Company’s obligations under the Support Agreement (the “Term”) commenced on November 2, 2015, the issuance date of the Letter of Credit, and will terminate on the earliest of: (a) replacement of the Letter of Credit with an alternative BSS in favor of Dresser-Rand, (b) Dresser-Rand eliminating the BSS requirement under the D-R Agreement, or (c) the last day of the twenty-fourth calendar month following the commencement of the Term. In consideration of the investor’s support commitment, the Company paid the investor a one-time fee equal to 4% of the amount of the Letter of Credit and is obligated to pay a monthly fee equal to 1% of the amount of the Letter of Credit for the first twelve months. If the Support Agreement has not terminated after the initial twelve months, the Company will pay another one-time fee equal to 4% of the amount of the Letter of Credit, and a monthly fee equal to 2% of the amount of the Letter of Credit for up to another twelve months.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2016
Subsequent Events [Abstract]
Subsequent Events	Note 13—Subsequent Events None

Summary of Significant Accoun19

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2016
Summary of Significant Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements include our accounts and our wholly-owned subsidiary, Ener-Core Power, Inc. All significant intercompany transactions and accounts have been eliminated in consolidation. All monetary amounts are rounded to the nearest $000, except certain per share amounts. The accompanying financial statements have been prepared in accordance with GAAP.
Reclassifications	Reclassifications Certain amounts in the 2015 consolidated condensed financial statements have been reclassified to conform to the current year presentation. These reclassifications have no effect on previously reported net loss.
Segments	Segments We operate in one segment. All of our operations are located domestically.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires 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 items subject to such estimates and assumptions include but are not limited to: collectability of receivables; the valuation of certain assets, useful lives, and carrying amounts of property and equipment, equity instruments and share-based compensation; provision for contract losses; valuation allowances for deferred income tax assets; valuation of derivative liabilities; and exposure to warranty and other contingent liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Foreign Currency Adjustments	Foreign Currency Adjustments Our functional currency for all operations worldwide is the U.S. dollar. Nonmonetary assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at exchange rates in effect at the end of the year. Income statement accounts are translated at average rates for the year. At June 30, 2016 and December 31, 2015, we did not hold any foreign currency asset or liability amounts. Gains and losses resulting from foreign currency transactions are reported as other income in the period they occurred.
Concentrations of Credit Risk	Concentrations of Credit Risk Cash and Cash Equivalents We maintain our non-interest bearing transactional cash accounts at financial institutions for which the Federal Deposit Insurance Corporation (“FDIC”) provides insurance coverage of up to $250,000. For interest bearing cash accounts, from time to time, balances exceed the amount insured by the FDIC. We have not experienced any losses in such accounts and believe we are not exposed to any significant credit risk related to these deposits. At June 30, 2016, we had $456,000 in excess of the FDIC limit. We consider all highly liquid investments available for current use with an initial maturity of three months or less and are not restricted to be cash equivalents. We invest our cash in short-term money market accounts.
Cash and Cash Equivalents	Cash and Cash Equivalents We maintain our non-interest bearing transactional cash accounts at financial institutions for which the Federal Deposit Insurance Corporation (“FDIC”) provides insurance coverage of up to $250,000. For interest bearing cash accounts, from time to time, balances exceed the amount insured by the FDIC. We have not experienced any losses in such accounts and believe we are not exposed to any significant credit risk related to these deposits. At June 30, 2016, we had $100,000 in excess of the FDIC limit. We consider all highly liquid investments available for current use with an initial maturity of three months or less and are not restricted to be cash equivalents. We invest our cash in short-term money market accounts.
Restricted Cash	Restricted Cash Collateral Account Under a credit card processing agreement with a financial institution that was entered in 2013, we are required to maintain funds on deposit with the financial institution as collateral. The amount of the deposit, which is at the discretion of the financial institution, was $50,000 on June 30, 2016 and December 31, 2015.
Dresser-Rand Escrow Account	Dresser-Rand Escrow Account Under the CLA, prepaid license fee payments of $400,000 per quarter are to be paid by Dresser-Rand into an escrow account with a financial institution beginning August, 2015. Dresser-Rand is allowed to withdraw up to $125,000 per quarter from this escrow account for qualified engineering expenses incurred by Dresser-Rand under the terms and conditions of the CLA. Through June 30, 2016, Dresser-Rand has funded $800,000 and has withdrawn $375,000. The balance in the escrow account was $300,000 and $150,000 on June 30, 2016 and December 31, 2015, respectively. The Company is allowed to withdraw funds from the escrow account after completion of additional technical milestones, expected to be completed in the third quarter of 2016. See also Note 7—Deferred Revenues and Customer Advances.
Accounts Receivable	Accounts Receivable Our accounts receivable are typically from credit worthy customers or, for international customers are supported by guarantees or letters of credit. For those customers to whom we extend credit, we perform periodic evaluations of them and maintain allowances for potential credit losses as deemed necessary. We generally do not require collateral to secure accounts receivable. We have a policy of reserving for uncollectible accounts based on our best estimate of the amount of probable credit losses in existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2016, one customer accounted for all of our accounts receivable.
Accounts Payable	Accounts Payable As of June 30, 2016 and December 31, 2015, three and five vendors, respectively, collectively accounted for approximately 33% and 50% of our total accounts payable.
Inventory	Inventory Inventory, which consists of raw materials, is stated at the lower of cost or net realizable value, with cost being determined by the average-cost method, which approximates the first-in, first-out method. At each balance sheet date, we evaluate our ending inventory for excess quantities and obsolescence. This evaluation primarily includes an analysis of forecasted demand in relation to the inventory on hand, among consideration of other factors. Based upon the evaluation, provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the respective inventories. At June 30, 2016 and December 31, 2015, we did not have a reserve for slow-moving or obsolete inventory.
Property and Equipment	Property and Equipment Property and equipment are stated at cost, and are being depreciated using the straight-line method over the estimated useful lives of the related assets, ranging from three to ten years. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the cost and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are reflected in the consolidated statements of operations.
Deposits	Deposits Deposits primarily consist of amounts incurred or paid in advance of the receipt of fixed assets or are deposits for rent and insurance.
Accrued Warranties	Accrued Warranties Accrued warranties represent the estimated costs that will be incurred during the warranty period of our products. We make an estimate of expected costs that will be incurred by us during the warranty period and charge that expense to the consolidated statement of operations at the date of sale. We also reevaluate the estimate at each balance sheet date and if the estimate is changed, the effect is reflected in the consolidated statement of operations. We had no warranty accrual at December 31, 2015 or June 30, 2016. We expect that most terms for future warranties of our Powerstations and Oxidizers will be one to two years depending on the warranties provided and the products sold. Accrued warranties for expected expenditures within one year are classified as current liabilities and as non-current liabilities for expected expenditures for time periods beyond one year.
Deferred Rent	Deferred Rent We record deferred rent expense, included in accrued expenses, which represents the temporary differences between the reporting of rental expense on the financial statements and the actual amounts remitted to the landlord. The deferred rent portion of lease agreements are leasing inducements provided by the landlord. Also, tenant improvement allowances provided are recorded as a deferred rent liability and recognized ratably as a reduction to rent expense over the lease term. As of June 30, 2016 we had $7,000 of deferred rent, recorded in accrued liabilities.
Intangible Assets	Intangible Assets Our intangible assets represent intellectual property acquired during the reverse merger. We amortize our intangible assets with finite lives over their estimated useful lives.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets We account for our long-lived assets in accordance with the accounting standards which require that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical carrying value of an asset may no longer be appropriate. We consider the carrying value of assets may not be recoverable based upon its review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. As of June 30, 2016 and December 31, 2015, we do not believe there have been any impairments of our long-lived assets. There can be no assurance, however, that market conditions will not change or demand for our products will continue, which could result in impairment of long-lived assets in the future.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, convertible notes, derivative liabilities, and capital lease liabilities. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2016 and December 31, 2015. The carrying amounts of short-term financial instruments are reasonable estimates of their fair values due to their short-term nature or proximity to market rates for similar items. We determine the fair value of our financial instruments based on a three-level hierarchy established for fair value measurements under which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy: ● Level 1: Valuations based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Currently, we classify our cash and cash equivalents as Level 1 financial instruments. ● Level 2: Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. We do not currently have any accounts under Level 2. ● Level 3: Valuations based on inputs that require inputs that are both significant to the fair value measurement and unobservable and involve management judgment (i.e., supported by little or no market activity). Currently, we classify our warrants and conversion options accounted for as derivative liabilities as Level 3 financial instruments. If the inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial security’s hierarchy level is based upon the lowest level of input that is significant to the fair value measurement.
Derivative Financial Instruments	Derivative Financial Instruments The Company issues derivative financial instruments in conjunction with its debt and equity offerings and to provide additional incentive to investors and placement agents. The Company uses derivative financial instruments in order to obtain the lowest cash cost-source of funds. Derivative liabilities are recognized in the consolidated balance sheets at fair value based on the criteria specified in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) topic 815-40 “ Derivatives and Hedging—Contracts in Entity’s own Equity The Company issued detachable common stock warrants and secured debt with a conversion feature in April and May 2015 and amended existing debt to add a conversion feature in December 2015. The Company issued additional common stock warrants with price reset provisions in December 2015, February 2016, and March 2016. These embedded derivatives and detachable warrants were evaluated under ASC topic 815-40. We determined that the warrants and embedded conversion feature for the April 2014 issuance, the conversion feature for the 2015 issuances, and the warrants issued with price reset provisions should be accounted for as derivative liabilities. We determined that the detachable warrants associated with the 2015 issuance on the issuance date should not be accounted for as derivative liabilities. Warrants and the debt conversion features determined to be derivative liabilities were bifurcated from the debt host and are classified as liabilities on the consolidated balance sheet. Warrants not determined to be derivative liabilities were recorded to debt discount and paid-in capital. The Company records the warrants and embedded derivative liabilities at fair value and adjusts the carrying value of the common stock warrants and embedded derivatives to their estimated fair value at each reporting date with the increases or decreases in the fair value of such warrants and derivatives at each reporting date, recorded as a gain or (loss) in the consolidated statements of operations. The 2015 detachable warrants determined not to be derivative liabilities were recorded to debt discount with a corresponding entry to paid-in capital.
Revenue Recognition	Revenue Recognition We generate revenue from the sale of our clean power energy systems and from consulting services. Revenue is recognized when there is persuasive evidence of an arrangement, product delivery and acceptance have occurred, the sales price is fixed or determinable and collectability of the resulting receivable is reasonable assured. Amounts billed to clients for shipping and handling are classified as sales of product with related costs incurred included in cost of sales. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related revenue is recorded. We defer any revenue for which the services have not been performed or are subject to refund until such time that we and our customer jointly determine that the services have been performed or no refund will be required. Revenues under long-term construction contracts are generally recognized using the completed-contract method of accounting. Long-term construction-type contracts for which reasonably dependable estimates cannot be made or for which inherent hazards make estimates difficult are accounted for under the completed-contract method. Revenues under the completed-contract method are recognized upon substantial completion—that is acceptance by the customer, compliance with performance specifications demonstrated in a factory acceptance test or similar event. Accordingly, during the period of contract performance, billings and costs are accumulated on the balance sheet, but no profit or income is recorded before completion or substantial completion of the work. Anticipated losses on contracts are recognized in full in the period in which losses become probable and estimable. Changes in estimate of profit or loss on contracts are included in earnings on a cumulative basis in the period the estimate is changed. As of June 30, 2016 and December 31, 2015, we had a $600,000 provision for contract losses for both periods presented.
Research and Development Costs	Research and Development Costs Research and development costs are expensed as incurred. Research and development costs were $755,000 and $968,000 for the three months ended June 30, 2016 and 2015, respectively, and were $1,698,000 and $1,709,000 for the six months ended June 30, 2016 and 2015, respectively.
Share-Based Compensation	Share-Based Compensation We maintain an equity incentive plan and record expenses attributable to the awards granted under the equity incentive plan. We amortize share-based compensation from the date of grant on a weighted average basis over the requisite service (vesting) period for the entire award. We account for equity instruments issued to consultants and vendors in exchange for goods and services at fair value. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant’s or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. In accordance with the accounting standards, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, we record the fair value of the fully vested, non-forfeitable common stock issued for future consulting services as prepaid expense in our consolidated balance sheets.
Income taxes	Income Taxes We account for income taxes under FASB ASC 740 “Income Taxes.” Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that we will not realize tax assets through future operations.
Earnings (Loss) per Share	Earnings (Loss) per Share Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional common shares were dilutive. Options and warrants to purchase approximately 1.6 million and 0.5 million common shares were outstanding at June 30, 2016 and 2015, respectively, but were excluded from the computation of diluted loss per share due to the anti-dilutive effect on net loss per share. All share and per share amounts in the table below have been adjusted to reflect the 1-for-50 reverse split of our issued and outstanding common stock on July 8, 2015, retroactively. Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net loss $ (2,185,000 ) $ (3,228,000 ) $ (6,033,000 ) $ (5,292,000 ) Weighted average number of common shares outstanding: Basic and diluted 3,708,782 2,408,200 3,400,711 2,345,500 Net loss attributable to common stockholders per share: Basic and diluted $ (0.59 ) $ (1.34 ) $ (1.84 ) $ (2.26 )
Comprehensive Income (Loss)	Comprehensive Income (Loss) We have no items of other comprehensive income (loss) in any period presented. Therefore, net loss as presented in our Consolidated Statements of Operations equals comprehensive loss.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). In April 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing (“ASU 2016-10”). ASU 2014-09, with additional guidance and clarification from ASU 2016-10, provides a framework for addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. ASU 2016-10 provides additional guidance specific to licensing and royalty revenue recognition. ASU 2014-09 is effective beginning with the calendar year ended December 31, 2017. The Company has not yet assessed the impact ASU 2014-09 will have upon adoption on its financial position, results of operations or cash flows. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires that an entity’s management evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Certain disclosures are necessary in the footnotes to the financial statements in the event that conditions or events raise substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter and early application is permitted. The Company has not yet assessed the impact ASU 2014-15 will have upon adoption. In November 2014, the FASB issued ASU 2014-16—Derivatives and Hedging: Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. ASU 2014-16 clarifies how current GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. ASU 2014-16 became effective for the interim and annual periods beginning after December 15, 2015. There was no impact to any prior periods presented as a result of adopting ASU 2014-16. In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. ASU 2015-03 became effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years and early application is permitted. The Company elected to adopt ASU 2015-03 beginning with the interim period ended June 30, 2015. There was no impact to any prior periods presented as a result of adopting ASU 2015-03. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. ASU 2015-11 requires that entities measure inventory at the lower of cost and net realizable value. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years and early application is permitted. The Company has not yet assessed the impact ASU 2015-11 will have upon adoption. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that entities’ deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for fiscal years beginning after December 15, 2017 and interim periods within annual periods beginning after December 15, 2018. The Company has not yet assessed the impact ASU 2015-17 will have upon adoption. In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842). ASU 2016-2 affects any entity entering into a lease and changes the accounting for operating leases to require companies to record an operating lease liability and a corresponding right-of-use lease asset, with limited exceptions. ASU 2016-2 is effective for fiscal years beginning after December 15, 2019 and interim periods with annual periods beginning after December 15, 2010. Early adoption is allowed. The Company has not yet assessed the impact ASU 2016-2 will have upon adoption.

Summary of Significant Accoun20

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2016
Summary of Significant Accounting Policies [Abstract]
Schedule of earnings per share, basic and diluted	Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net loss $ (2,185,000 ) $ (3,228,000 ) $ (6,033,000 ) $ (5,292,000 ) Weighted average number of common shares outstanding: Basic and diluted 3,708,782 2,408,200 3,400,711 2,345,500 Net loss attributable to common stockholders per share: Basic and diluted $ (0.59 ) $ (1.34 ) $ (1.84 ) $ (2.26 )

Prepaid Expenses and Other Cu21

Prepaid Expenses and Other Current Assets (Tables)	6 Months Ended
	Jun. 30, 2016
Prepaid Expenses and Other Current Assets [Abstract]
Schedule of prepaid expenses and other current assets	June 30, 2016 (unaudited) December 31, 2015 Prepaid rent $ 27,000 $ 27,000 Prepaid insurance 20,000 40,000 Prepaid other 279,000 140,000 Prepaid professional fees 49,000 — Current portion – deferred financing fees for LOC 228,000 228,000 Total $ 603,000 $ 408,000

Property and Equipment, Net (Ta

Property and Equipment, Net (Tables)	6 Months Ended
	Jun. 30, 2016
Property and Equipment, Net [Abstract]
Schedule of property and equipment	June 30, 2016 (unaudited) December 31, 2015 Machinery and equipment $ 4,844,000 $ 4,042,000 Office furniture and fixtures 217,000 217,000 Computer equipment and software 174,000 169,000 Total cost 5,235,000 4,428,000 Less accumulated depreciation (1,263,000 ) (1,002,000 ) Net $ 3,972,000 $ 3,426,000
Schedule of assets recorded under capital leases	June 30, 2016 (unaudited) December 31, Machinery and equipment $ 27,000 $ 27,000 Computer equipment and software 60,000 46,000 Total assets under capital lease 87,000 73,000 Less accumulated amortization (60,000 ) (46,000 ) Net assets under capital lease $ 27,000 $ 27,000
Schedule of depreciation expense	Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Research and development $ 103,000 $ 64,000 $ 203,000 $ 94,000 General and administrative 29,000 29,000 58,000 58,000 $ 132,000 $ 93,000 $ 261,000 $ 152,000

Accrued Expenses (Tables)

Accrued Expenses (Tables)	6 Months Ended
	Jun. 30, 2016
Accrued Expenses [Abstract]
Schedule of accrued expenses	June 30, (unaudited) December 31, Accrued professional fees $ 256,000 $ 205,000 Accrued vacation & paid time off 345,000 333,000 Accrued expense reports 10,000 46,000 Accrued board of directors fees 80,000 13,000 Accrued interest 50,000 50,000 Accrued other 16,000 10,000 Total accrued expenses $ 757,000 $ 657,000

Deferred Revenues and Custome24

Deferred Revenues and Customer Advances (Tables)	6 Months Ended
	Jun. 30, 2016
Deferred Revenues and Customer Advances [Abstract]
Schedule of deferred revenues and customer advances	June 30, (unaudited) December 31, 2015 Customer advances on equipment sales $ 2,776,000 $ 2,572,000 Prepaid license fees 300,000 275,000 Total deferred revenues and customer advances $ 3,076,000 $ 2,847,000

Convertible Secured Notes Pay25

Convertible Secured Notes Payable (Tables)	6 Months Ended
	Jun. 30, 2016
Secured Notes Payable [Abstract]
Schedule of secured notes payable	Notes Debt Offering Costs Net Ending balance—December 31, 2015 $ 5,000,000 $ (791,000 ) $ (99,000 ) $ 4,110,000 Amortization of debt discount and deferred financing costs — 1,497,000 40,000 1,537,000 Additional debt discount—March warrants — (1,497,000 ) — (1,497,000 ) Additional debt discount—February warrants — (148,000 ) — (148,000 ) Ending balance—June 30, 2016 5,000,000 (939,000 ) (59,000 ) 4,002,000 Less: Current Portion $ (5,000,000 ) $ 939,000 $ 59,000 $ (4,002,000 ) Long Term Portion $ — $ — $ — $ —
Summary of fair value assumptions	2016 Annual dividend yield — Expected life (years) 0.1–5 years Risk-free interest rate 0.5–0.9 % Expected volatility 98–107 %
Schedule of derivative liabilities	Warrants Liability Embedded Note Conversion Feature Total Value as of December 31, 2015 $ 1,297,000 $ 1,213,000 $ 2,510,000 Adjustment to fair value (497,000 ) (1,057,000 ) (1,554,000 ) Additional Warrants issued for debt amendment 1,645,000 — 1,645,000 Modification of Conversion Feature – debt amendment — 1,429,000 1,429,000 Ending balance—June 30, 2016 $ 2,445,000 $ 1,585,000 $ 4,030,000

Fair Value Measurements and D26

Fair Value Measurements and Disclosures (Tables)	6 Months Ended
	Jun. 30, 2016
Fair Value Measurements and Disclosures [Abstract]
Summary of fair-value measurement liabilities table present information	Fair Value Level 1 Level 2 Level 3 Cash and cash equivalents, including restricted cash $ 982,000 $ 982,000 $ — $ — Embedded note conversion feature $ 1,585,000 $ — $ — $ 1,585,000 Derivative liabilities – warrants $ 2,445,000 $ — $ — $ 2,445,000

Capital Leases Payable (Tables)

Capital Leases Payable (Tables)	6 Months Ended
	Jun. 30, 2016
Capital Leases Payable [Abstract]
Summary of capital lease payable	June 30, 2016 (unaudited) December 31, Capital lease payable to De Lange Landon secured by forklift, 10.0% interest, due on October 1, 2018, monthly payment of $452. $ 10,000 $ 13,000 Capital lease payable to Dell Computers secured by computer equipment, 15.09% interest, due on November 16, 2016, monthly payment of $592. 3,000 6,000 Capital lease payable to Dell Computers secured by computer equipment, 15.09% interest, due on December 15, 2016, monthly payment of $590. 4,000 6,000 Capital lease payable to Dell Computers secured by computer equipment, 15.09% interest, due on January 3, 2017, monthly payment of $405. 3,000 5,000 Capital lease payable to Dell Computers secured by computer equipment, 15.09% interest, due on January 3, 2017, monthly payment of $394. 7,000 10,000 Total capital leases $ 27,000 $ 40,000 Less: current portion (20,000 ) (26,000 ) Long-term portion of capital leases $ 7,000 $ 14,000
Summary of capital lease payments	Year Ending December 31, Amount 2016 $ 14,000 2017 10,000 2018 5,000 Net minimum lease payments $ 29,000 Less: Amount representing interest (1,000 ) Less: Taxes (1,000 ) Present value of net minimum lease payments $ 27,000 Less: Current maturities of capital lease payables (20,000 ) Long-term capital lease payables $ 7,000

Equity, Stock Options, and Wa28

Equity, Stock Options, and Warrants (Tables)	6 Months Ended
	Jun. 30, 2016
Equity, Stock Options, and Warrants [Abstract]
Schedule of stock-based award activity	Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Life Value Balance, December 31, 2015 308,464 $ 13.61 6.07 $ — Forfeited during 2016 (14,098 ) 14.65 — — Balance, June 30, 2016 294,366 $ 13.56 5.59 $ — Exercisable on June 30, 2016 191,218 $ 14.67 5.19 $ —
Schedule of information about stock options outstanding and exercisable	Options Outstanding Options Exercisable Weighted- Average Weighted- Weighted- Number Remaining Average Number Average Exercise of Contractual Exercise of Exercise Prices Shares Life Price Shares Price (In years) $0–$10.00 115,840 7.27 $ 7.74 59,749 $ 7.13 $10.01–$15.00 31,888 7.40 $ 12.50 16,728 $ 12.50 $15.01–$20.00 124,584 3.75 $ 17.50 96,030 $ 17.50 $20.01–$25.00 22,054 4.48 $ 23.46 19,711 $ 23.58 294,366 5.59 $ 13.56 191,218 $ 14.67
Schedule of stock based compensation expense	Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Research and development $ 149,000 $ 143,000 $ 310,000 $ 295,000 General and administrative 202,000 222,000 417,000 446,000 $ 351,000 $ 365,000 $ 727,000 $ 741,000
Schedule of warrants outstanding	Issue Expiry Number of Exercise Price 2013 Services Warrants—July Jul-13 Jul-18 9,494 $ 37.50 2013 Services Warrants—August Aug-13 Aug-18 729 37.50 2013 Services Warrants—November Nov-13 Nov-18 2,400 50.00 2014 Services Warrants—April(1) Apr-14 Apr-19 13,657 39.00 2014 Services Warrants—September(2) Aug-14 Aug-19 16,000 25.00 2014 PIPE Warrants—September(3) Sept-14 Sept-18 26,500 25.00 2014 Services Warrants—November(4) Nov-14 Nov-18 6,500 25.00 2014 Settlement Warrants—December(5) Dec-14 Dec-19 38,464 25.00 2015 Notes Warrants(6) Apr/May-15 Apr/May-20 219,785 12.50 2015 Services Warrants—May(7) May-15 May-20 5,514 12.50 2015 LOC Guarantee Warrants—November (8) Nov-15 Nov-20 74,000 15.00 2015 Debt Amendment Warrants—December (9) Dec-15 Dec-20 50,000 5.00 2015 PIPE Warrants—December (10) Dec-15 Dec-20 312,500 5.00 2016 Debt Amendment Warrants—February (11) Feb-16 Feb-21 50,000 5.00 2016 Debt Amendment Warrants—March (12) Mar-16 Mar-21 500,000 5.00 Balance outstanding at June 30, 2016 1,325,543 $ 6.76 Warrants exercisable at June 30, 2016 1,251,543 $ 6.27 (1) The 2014 Services Warrants—April were issued for fees incurred in conjunction with the issuance of convertible notes in 2014. The warrants were valued on the issuance date at $11.50 per share in conjunction with the valuation approach used for the initial valuation of the warrants issued in connection with the convertible notes issued in 2014. (2) The 2014 Services Warrants—September were issued to a consultant in exchange for advisory services with no readily available fair value. The warrants were originally issued at $39.00 per share and had a one-time price reset provision to the exercise price of the warrants issued to investors in the convertible notes offering in April 2014 if the exercise price of such convertible notes warrants changed prior to September 30, 2014. On September 22, 2014, the exercise price was changed to $25.00 per share. There are no further exercise price changes for this warrant series. The warrants were valued using the Black-Scholes option pricing model at $131,000 on the issuance date with an additional $6,000 recorded to expense on September 22, 2014 to reflect the change in fair value resulting from the exercise price change. (3) On September 22, 2014 the Company issued 26,500 warrants with an exercise price of $25.00 per share in conjunction with placement agent services for the Company’s September 2014 private equity placement. The warrants were valued using the Black-Scholes option pricing model at $296,000 on the issuance date. (4) On November 26, 2014, the Company issued 6,500 warrants with an exercise price of $25.00 per share for compensation for investor relations services provided. The warrants were valued using the Black-Scholes option pricing model at $43,000 on the issuance date. (5) On December 1, 2014, the Company issued 19,232 warrants with an exercise price of $39.00 per share and on December 15, 2014 issued 19,232 warrants with an exercise price of $25.00 per share to settle potential legal disputes resulting from claims made by the investors in the November 2013 private equity placement. The warrants issued on December 1, 2014 were issued concurrent with the issuance of 8,462 shares of the Company’s common stock in partial settlement of the potential legal disputes arising from claims by two investors. The Company settled all remaining potential legal disputes with all of the remaining investors in the November 2013 private placement on December 15, 2014 by issuing the second tranche of warrants and setting the exercise price of each warrant series issued at $25.00 with no further reset provisions. The combined issuance of the warrants and expense resulting from any price changes were valued using the Black-Scholes option pricing model at $246,000 and expensed to general and administrative expense. (6) On April 23, 2015 the Company issued warrants exercisable for up to 136,267 shares of our common stock and on May 7, 2015 the Company issued warrants exercisable for 83,518 shares of our common stock, each with an exercise price of $12.50 per share in conjunction with the Notes described in Note 8. The warrants were valued using the Black-Scholes option pricing model at $2,139,000 on the issuance date. (7) On May 7, 2015 the Company issued warrants exercisable for 5,514 shares of our common stock with an exercise price of $12.50 per share in conjunction with placement agent services for the Company’s May 2015 private equity placement. The warrants were valued using the Black-Scholes option pricing model at $56,000 on the issuance date. (8) On November 2, 2015 the Company issued warrants exercisable for up to 74,000 shares of our common stock with an exercise price of $15.00 per share in conjunction with the LOC guarantee described in Note 16. The warrants were valued using the Black-Scholes option pricing model at $246,000 on the issuance date. The warrants are exercisable beginning on November 1, 2016. (9) On December 30, 2015 the Company issued warrants exercisable for up to 50,000 shares of our common stock with an initial exercise price of $12.50 per share in conjunction with the December 30, 2015 Notes amendment described in Note 8. In the event that the Company issues additional common stock derivative securities at a price per share less than the exercise price, the Company is obligated to reduce the exercise price of the December Debt Amendment Warrants to a price per share equal to the newly issued shares or derivative common stock securities. On March 31, 2016, concurrent with the issuance of the additional debt amendment warrants, the exercise price was reduced to $5.00 per share. (10) On December 31, 2015 the Company issued warrants exercisable for up to 312,500 shares of our common stock with an initial exercise price of $5.00 per share in conjunction with the December private equity placement (the “December PIPE”). The warrants provide that if, prior to the earlier of June 30, 2016 or thirty days after the date on which the December PIPE shares and underlying warrants are registered for resale, the Company issued common share derivative securities at a price per share less than $5.00 per share, the Company was obligated to reduce the exercise price of the December PIPE warrants to a price per share equal to the newly issued shares or derivative common stock securities. This price protection clause expired on June 30, 2016.. (11) On February 2, 2016 the Company issued warrants exercisable for up to 50,000 shares of our common stock with an initial exercise price of $12.50 per share in conjunction with the December 30, 2015 Notes amendment described in Note 8. The warrants were valued using the Black-Scholes option pricing model at $148,000 on the issuance date and were recorded as a derivative liability and additional debt discount. The warrants provided that, in the event that the Company issued additional common stock derivative securities at a price per share less than the exercise price, the Company was obligated to reduce the exercise price of the February Debt Amendment Warrants to a price per share equal to the newly issued shares or derivative common stock securities. On March 31, 2016, concurrent with the issuance of the additional debt amendment warrants, the exercise price was reduced to $5.00 per share. This price protection clause expired on June 30, 2016. (12) On March 31, 2016 the Company issued warrants exercisable for up to 500,000 shares of our common stock with an initial exercise price of $5.00 per share in conjunction with the December 30, 2015 Notes amendment described in Note 8. The warrants were valued using the Black-Scholes option pricing model at $1,497,000 on the issuance date and were recorded as a derivative liability and additional debt discount. The warrants provided that , in the event that the Company issued additional common stock derivative securities at a price per share less than the exercise price, the Company was obligated to reduce the exercise price of the March Debt Amendment Warrants to a price per share equal to the newly issued shares or derivative common stock securities. This price protection clause expired on June 30, 2016.

Commitments and Contingencies (

Commitments and Contingencies (Tables)	6 Months Ended
	Jun. 30, 2016
Commitments and Contingencies [Abstract]
Summary of future minimum rental payments under operating leases	Six months ending December 31, 2016 $ 163,000

Organization (Details)

Organization (Details) - USD ($) $ / shares in Units, $ in Millions	Jul. 08, 2015	May 31, 2015	Apr. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Sep. 03, 2015	Jul. 01, 2013
Organization (Textual)
Forward stock split				30-for-1
Unrestricted cash balance				$ 0.6		$ 2.6
Cancellation of shares in reverse merger								2,410,400
Common stock, par value				$ 0.0001		$ 0.0001
Preferred stock, par value				$ 0.0001		$ 0.0001
Common stock, shares authorized				200,000,000		200,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Preferred stock, shares authorized				50,000,000		50,000,000
Effective date of reverse stock split				Jul. 8, 2015
Entity Incorporation, State Country Name				Delaware
Entity Incorporation, Date of Incorporation				Sep. 3, 2015
Consumption of oil and gas description				Our Power Oxidizers have been designed to operate on fuels from 100% combustible gas down to concentrations of 5% or less combustible gas content.
Increase in capital		$ 5.8	$ 5.8			$ 2.5
Reverse stock split				1-for-50
Increased authorized shares of stock							250,000,000
Common stock [Member]
Organization (Textual)
Reduction of shares due to reverse stock split	4,000,000
Preferred stock [Member]
Organization (Textual)
Reduction of shares due to reverse stock split	1,000,000

Summary of Significant Accoun31

Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Summary of Significant Accounting Policies [Abstract]
Net loss	$ (2,185,000)	$ (3,228,000)	$ (6,033,000)	$ (5,292,000)
Weighted average number of common shares outstanding:
Basic and diluted	3,708,782	2,408,200	3,400,711	2,345,500
Net loss attributable to common stockholders per share:
Basic and diluted	$ (0.59)	$ (1.34)	$ (1.84)	$ (2.26)

Summary of Significant Accoun32

Summary of Significant Accounting Policies (Details Textual) shares in Millions	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 31, 2015USD ($)	Jun. 30, 2016USD ($)	Jun. 30, 2015USD ($)	Jun. 30, 2016USD ($)Vendorssegmentshares	Jun. 30, 2015USD ($)shares	Dec. 31, 2015USD ($)Vendors
Summary of Significant Accounting Policies (Textual)
FDIC Insurance coverage		$ 250,000		$ 250,000
Cash in excess of FDIC		456,000		456,000
Security deposit as collateral with financial institution		50,000		50,000		$ 50,000
Research and development costs		755,000	$ 968,000	$ 1,698,000	$ 1,709,000
Options and warrants to purchase of common stock | shares				1.6	0.5
Number of operating segments | segment				1
Escrow account balance		800,000		$ 800,000
Dresser-Rand fund with draw		375,000		$ 375,000
Reverse stock split				1-for-50
Provision for contract loss				$ 600,000		600,000
Deferred rent		7,000		7,000
Dresser-Rand Corporation [Member]
Summary of Significant Accounting Policies (Textual)
Prepaid license fee payments	$ 400,000
Escrow account balance		$ 300,000		$ 300,000		$ 150,000
Engineering expenses incurred by Dresser-Rand	$ 125,000
Accounts Payable [Member]
Summary of Significant Accounting Policies (Textual)
Number of vendors | Vendors				3		5
Concentration risk, Percentage				33.00%		50.00%

Inventory (Details)

Inventory (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Inventory (Textual)
Inventory	$ 1,770,000	$ 747,000
Inventory reserve

Prepaid Expenses and Other Cu34

Prepaid Expenses and Other Current Assets (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Prepaid Expenses and Other Current Assets [Abstract]
Prepaid rent	$ 27,000	$ 27,000
Prepaid insurance	20,000	40,000
Prepaid other	279,000	140,000
Prepaid professional fees	49,000
Current portion - deferred financing fees for LOC	228,000	228,000
Total	$ 603,000	$ 408,000

Property and Equipment, Net (De

Property and Equipment, Net (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Total cost	$ 5,235,000	$ 4,428,000
Less accumulated depreciation	(1,263,000)	(1,002,000)
Net	3,972,000	3,426,000
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Total cost	4,844,000	4,042,000
Office furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Total cost	217,000	217,000
Computer equipment and software [Member]
Property, Plant and Equipment [Line Items]
Total cost	$ 174,000	$ 169,000

Property and Equipment, Net (36

Property and Equipment, Net (Details 1) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Total assets under capital lease	$ 5,235,000	$ 4,428,000
Less accumulated amortization	(1,263,000)	(1,002,000)
Capital Lease [Member]
Property, Plant and Equipment [Line Items]
Total assets under capital lease	87,000	73,000
Less accumulated amortization	(60,000)	(46,000)
Net assets under capital lease	27,000	27,000
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total assets under capital lease	4,844,000	4,042,000
Machinery and Equipment [Member] | Capital Lease [Member]
Property, Plant and Equipment [Line Items]
Total assets under capital lease	27,000	27,000
Computer equipment and software [Member]
Property, Plant and Equipment [Line Items]
Total assets under capital lease	174,000	169,000
Computer equipment and software [Member] | Capital Lease [Member]
Property, Plant and Equipment [Line Items]
Total assets under capital lease	$ 60,000	$ 46,000

Property and Equipment, Net (37

Property and Equipment, Net (Details 2) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 132,000	$ 93,000	$ 261,000	$ 152,000
Research and development [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense	103,000	64,000	203,000	94,000
General and administrative [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 29,000	$ 29,000	$ 58,000	$ 58,000

Property and Equipment, Net (38

Property and Equipment, Net (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Property and Equipment, Net [Abstract]
Amortization of assets under capital lease	$ 6,000	$ 6,000	$ 12,000	$ 12,000

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Accrued Expenses [Abstract]
Accrued professional fees	$ 256,000	$ 205,000
Accrued vacation & paid time off	345,000	333,000
Accrued expense reports	10,000	46,000
Accrued board of directors fees	80,000	13,000
Accrued interest	50,000	50,000
Accrued other	16,000	10,000
Total accrued expenses	$ 757,000	$ 657,000

Deferred Revenues and Custome40

Deferred Revenues and Customer Advances (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Deferred Revenues and Customer Advances [Abstract]
Customer advances on equipment sales	$ 2,776,000	$ 2,572,000
Prepaid license fees	300,000	275,000
Total deferred revenues and customer advances	$ 3,076,000	$ 2,847,000

Convertible Secured Notes Pay41

Convertible Secured Notes Payable (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Debt Instrument [Line Items]
Beginning balance	$ 4,110,000
Amortization of debt discount and deferred financing costs	1,656,000	$ 804,000
Additional debt discount-March warrants	(1,497,000)
Additional debt discount-February warrants	(148,000)
Ending balance	4,002,000
Less: Current Portion	(4,002,000)
Long Term Portion
Notes [Member]
Debt Instrument [Line Items]
Beginning balance	5,000,000
Amortization of debt discount and deferred financing costs
Additional debt discount-March warrants
Additional debt discount-February warrants
Ending balance	5,000,000
Less: Current Portion	(5,000,000)
Long Term Portion
Debt Discount [Member]
Debt Instrument [Line Items]
Beginning balance	(791,000)
Amortization of debt discount and deferred financing costs	1,497,000
Additional debt discount-March warrants	(1,497,000)
Additional debt discount-February warrants	(148,000)
Ending balance	(939,000)
Less: Current Portion	939,000
Long Term Portion
Offering Costs [Member]
Debt Instrument [Line Items]
Beginning balance	(99,000)
Amortization of debt discount and deferred financing costs	40,000
Additional debt discount-March warrants
Additional debt discount-February warrants
Ending balance	(59,000)
Less: Current Portion	59,000
Long Term Portion

Convertible Secured Notes Pay42

Convertible Secured Notes Payable (Details 1) - Warrant Liability [Member]	6 Months Ended
	Jun. 30, 2016
Annual dividend yield
Minimum [Member]
Expected life (years)	1 month 6 days
Risk-free interest rate	0.50%
Expected volatility	98.00%
Maximum [Member]
Expected life (years)	5 years
Risk-free interest rate	0.90%
Expected volatility	107.00%

Convertible Secured Notes Pay43

Convertible Secured Notes Payable (Details 2)	6 Months Ended
	Jun. 30, 2016USD ($)
Value	$ 2,510,000
Adjustment to fair value	(1,554,000)
Additional Warrants issued for debt amendment	1,645,000
Modification of Conversion Feature - debt amendment	1,429,000
Ending balance	4,030,000
Warrants Liability [Member]
Value	1,297,000
Adjustment to fair value	(497,000)
Additional Warrants issued for debt amendment	1,645,000
Modification of Conversion Feature - debt amendment
Ending balance	2,445,000
Embedded Note Conversion Feature [Member]
Value	1,213,000
Adjustment to fair value	(1,057,000)
Additional Warrants issued for debt amendment
Modification of Conversion Feature - debt amendment	1,429,000
Ending balance	$ 1,585,000

Convertible Secured Notes Pay44

Convertible Secured Notes Payable (Details Textual)	Dec. 30, 2015USD ($)shares	May 07, 2015USD ($)Investors	Apr. 23, 2015USD ($)Investorsshares	Feb. 02, 2016USD ($)shares	Jun. 30, 2016USD ($)$ / sharesshares	Dec. 31, 2015USD ($)shares
Secured Notes Payables (Textual)
Number of warrants issued for common stock | shares					219,785
Exercise price per share | $ / shares					$ 12.5
Warrants exercisable term					5 years
Percentage of principal amount of debt rereemed					115.00%
Securities purchase agreement, description					On April 11, 2016 we consummated a $3 million private offering and thereby satisfied condition (ii) above. On March 31, 2016 we issued the 500,000 warrants as described in Note 11 and we are in compliance with the spending covenant listed in (iv) above. Between April 14, 2016 and June 29, 2016 we were in compliance with the net monthly cash flow covenant related to the D-R Agreement. On June 29, 2016 we announced the re-negotiation of the D-R Agreement to be replaced with a revised Commercial License and Manufacturing Agreement ("CMLA") and removed the net monthly cash flow covenant.
Fair value of additional warrants issued					$ (1,554,000)
Issuance of warrant to investors | shares					1,325,543
Warrants to purchase of common stock | shares	50,000
Fourth Amendment Securities Purchase Agreement [Member]
Secured Notes Payables (Textual)
Embedded conversion feature liability, description	The December Amendments also amended the terms of the Notes to allow for the remaining 50% to be converted under the same terms as the original 50%, as described above.
Percentage of conversion feature	50.00%
Securities purchase agreement, description	(i) extended the deadline to March 31, 2016 for the Company's consummation of a firm commitment underwritten public offering registered under the Securities Act and related listing of its Common Stock on a national securities exchange, (ii) provided for the issuance of additional five-year warrants (the "Additional Warrants"), exercisable for ten shares of Common Stock per $1,000 of outstanding principal of the Notes held by each buyer pursuant to the April 2015 and May 2015 purchase agreements, each with an exercise price of $12.50 per share, subject to adjustment as set forth within the Additional Warrants, issuable in tranches triggered by certain Company actions as set forth in the December Amendments and (iii) authorized the Company, prior to January 31, 2016, to issue to one or more investors up to an aggregate of $1,000,000 principal amount of senior secured notes, on the terms and subject to the restrictions set forth in the December Amendments.
Fair value of beneficial conversion feature	$ 609,000
Fair value of additional warrants issued	$ 182,000
December 2015 Equity Offering [Member]
Secured Notes Payables (Textual)
Issuance of warrant to investors | shares						312,500
Warrants [Member]
Secured Notes Payables (Textual)
Fair value of additional warrants issued				$ 148,000	$ 1,497,000
Issuance of warrant to investors | shares			500,000	50,000
Secured Debt [Member]
Secured Notes Payables (Textual)
Proceeds recieved from debt gross					5,000,000	$ 5,000,000
Aggregate principal amount		$ 1,900,000	$ 3,100,000
Number of institutional investors | Investors		4	7
Transaction expenses					$ 300,000
Bear interest rate			12.00%
Secured notes payable, description					The Notes become convertible at a price per share equal to 85% of the average of the five lowest volume weighted average prices of the Company's common stock during a 15 consecutive trading day period immediately prior to the applicable conversion date.
Increased interest rate					18.00%
Debt instrument maturity description					The Notes bear interest at a rate of 12% per year, payable monthly, and are set to mature on the two-year anniversary of the issuance dates of the Notes on April 23, 2017 and May 7, 2017 for the first and second tranches, respectively. At the discretion of each investor, a 100% of the Notes may be exchanged for shares of the Company's common stock. The Notes may be repaid by the Company at any time unless the Notes are in default.
Proceeds from secured note					$ 5,000,000
Secured notes payable term					2 years
Warrants exercisable term					5 years

Fair Value Measurements and D45

Fair Value Measurements and Disclosures (Details)	Jun. 30, 2016USD ($)
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Cash and cash equivalents, including restricted cash	$ 982,000
Embedded note conversion feature	1,585,000
Derivative Liabilities - warrants	2,445,000
Level 1 [Member]
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Cash and cash equivalents, including restricted cash	982,000
Embedded note conversion feature
Derivative Liabilities - warrants
Level 2 [Member]
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Cash and cash equivalents, including restricted cash
Embedded note conversion feature
Derivative Liabilities - warrants
Level 3 [Member]
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Cash and cash equivalents, including restricted cash
Embedded note conversion feature	1,585,000
Derivative Liabilities - warrants	$ 2,445,000

Capital Leases Payable (Details

Capital Leases Payable (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Total capital leases	$ 27,000	$ 40,000
Less: current portion	(20,000)	(26,000)
Long-term portion of capital leases	7,000	14,000
October 1, 2018 [Member] | De Lange Landon [Member]
Total capital leases	10,000	13,000
November 16, 2016 [Member] | Dell Computers [Member]
Total capital leases	3,000	6,000
December 15, 2016 [Member] | Dell Computers [Member]
Total capital leases	4,000	6,000
January 3, 2017 [Member] | Dell Computers [Member]
Total capital leases	3,000	5,000
January 3, 2017 One [Member] | Dell Computers [Member]
Total capital leases	$ 7,000	$ 10,000

Capital Leases Payable (Detai47

Capital Leases Payable (Details 1) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Capital Leases Payable [Abstract]
2,016	$ 14,000
2,017	10,000
2,018	5,000
Net minimum lease payments	29,000
Less: Amount representing interest	(1,000)
Less: Taxes	(1,000)
Present value of net minimum lease payments	27,000
Less: Current maturities of capital lease payables	(20,000)	$ (26,000)
Long-term portion of capital leases	$ 7,000	$ 14,000

Capital Leases Payable (Detai48

Capital Leases Payable (Details Textual)	6 Months Ended
	Jun. 30, 2016USD ($)
Capital Leases Payables (Textual)
Lease expiration date	Dec. 31, 2016
October 1, 2018 [Member] | De Lange Landon [Member]
Capital Leases Payables (Textual)
Lease expiration date	Oct. 1, 2018
Capital lease payable	$ 452
Tangible asset capital lease interest rate	10.00%
November 16, 2016 [Member] | Dell Computers [Member]
Capital Leases Payables (Textual)
Lease expiration date	Nov. 16, 2016
Capital lease payable	$ 592
Tangible asset capital lease interest rate	15.09%
December 15, 2016 [Member] | Dell Computers [Member]
Capital Leases Payables (Textual)
Lease expiration date	Dec. 15, 2016
Capital lease payable	$ 590
Tangible asset capital lease interest rate	15.09%
January 3, 2017 [Member] | Dell Computers [Member]
Capital Leases Payables (Textual)
Lease expiration date	Jan. 3, 2017
Capital lease payable	$ 405
Tangible asset capital lease interest rate	15.09%
January 3, 2017 One [Member] | Dell Computers [Member]
Capital Leases Payables (Textual)
Lease expiration date	Jan. 3, 2017
Capital lease payable	$ 394
Tangible asset capital lease interest rate	15.09%

Equity, Stock Options, and Wa49

Equity, Stock Options, and Warrants (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Equity, Stock Options, and Warrants [Abstract]
Shares Balance, December 31, 2015	308,464
Forfeited during 2016	(14,098)
Shares Balance, June 30, 2016	294,366	308,464
Exercisable on June 30, 2016	191,218
Weighted- Average Excerise Price, Balance, December 31, 2015	$ 13.61
Weighted- Average Excerise Price, Forfeited during 2016	14.65
Weighted- Average Excerise Price, Balance, June 30, 2016	13.56	$ 13.61
Weighted- Average Excerise Price, Exercisable on June 30, 2016	$ 14.67
Options Outstanding, Weighted- Average Remaining Contractual Life	5 years 7 months 2 days	6 years 26 days
Weighted- Average Remaining Contractual Life, Exercisable	5 years 2 months 9 days
Aggregate Intrinsic Value, Balance, December 31, 2015
Aggregate Intrinsic Value, Balance, June 30, 2016
Aggregate Intrinsic Value, Exercisable on June 30, 2016

Equity, Stock Options, and Wa50

Equity, Stock Options, and Warrants (Details 1) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number of Shares	294,366	308,464
Options Outstanding, Weighted- Average Remaining Contractual Life	5 years 7 months 2 days	6 years 26 days
Options Outstanding, Weighted- Average Exercise Price	$ 13.56	$ 13.61
Options Exercisable, Number of Shares	191,218
Options Exercisable, Weighted- Average Exercise Price	$ 14.67
$0 - $10.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, Lower Limit	0
Exercise Price, Upper Limit	$ 10
Options Outstanding, Number of Shares	115,840
Options Outstanding, Weighted- Average Remaining Contractual Life	7 years 3 months 7 days
Options Outstanding, Weighted- Average Exercise Price	$ 7.75
Options Exercisable, Number of Shares	59,749
Options Exercisable, Weighted- Average Exercise Price	$ 7.13
$10.01 - $15.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, Lower Limit	10.01
Exercise Price, Upper Limit	$ 15
Options Outstanding, Number of Shares	31,888
Options Outstanding, Weighted- Average Remaining Contractual Life	7 years 4 months 24 days
Options Outstanding, Weighted- Average Exercise Price	$ 12.50
Options Exercisable, Number of Shares	16,728
Options Exercisable, Weighted- Average Exercise Price	$ 12.50
$15.01 - $20.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, Lower Limit	15.01
Exercise Price, Upper Limit	$ 20
Options Outstanding, Number of Shares	124,584
Options Outstanding, Weighted- Average Remaining Contractual Life	3 years 9 months
Options Outstanding, Weighted- Average Exercise Price	$ 17.50
Options Exercisable, Number of Shares	96,030
Options Exercisable, Weighted- Average Exercise Price	$ 17.50
$20.01 - $25.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, Lower Limit	20.01
Exercise Price, Upper Limit	$ 25
Options Outstanding, Number of Shares	22,054
Options Outstanding, Weighted- Average Remaining Contractual Life	4 years 5 months 23 days
Options Outstanding, Weighted- Average Exercise Price	$ 23.58
Options Exercisable, Number of Shares	19,711
Options Exercisable, Weighted- Average Exercise Price	$ 23.58

Equity, Stock Options, and Wa51

Equity, Stock Options, and Warrants (Details 2) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock based compensation expense	$ 351,000	$ 365,000	$ 727,000	$ 741,000
Research and development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock based compensation expense	149,000	143,000	310,000	295,000
General and administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock based compensation expense	$ 202,000	$ 222,000	$ 417,000	$ 446,000

Equity, Stock Options, and Wa52

Equity, Stock Options, and Warrants (Details 3)	6 Months Ended
	Jun. 30, 2016$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Warrants | shares	1,325,543
Exercise Price per Share | $ / shares	$ 6.76
Number of warrants exercisable | shares	1,251,543
Warrants exercisable Price per share | $ / shares	$ 6.27
2013 Services Warrants - July [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Jul13
Expiry Date	Jul18
Number of Warrants | shares	9,494
Exercise Price per Share | $ / shares	$ 37.50
2013 Services Warrants- August [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Aug13
Expiry Date	Aug18
Number of Warrants | shares	729
Exercise Price per Share | $ / shares	$ 37.50
2013 Services Warrants - November [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Nov13
Expiry Date	Nov18
Number of Warrants | shares	2,400
Exercise Price per Share | $ / shares	$ 50
2014 Services Warrants - April (1) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Apr14	[1]
Expiry Date	Apr19	[1]
Number of Warrants | shares	13,657	[1]
Exercise Price per Share | $ / shares	$ 39	[1]
2014 Services Warrants-September(2) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Aug14	[2]
Expiry Date	Aug19	[2]
Number of Warrants | shares	16,000	[2]
Exercise Price per Share | $ / shares	$ 25	[2]
2014 PIPE Warrants-September(3) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Sept14	[3]
Expiry Date	Sept18	[3]
Number of Warrants | shares	26,500	[3]
Exercise Price per Share | $ / shares	$ 25	[3]
2014 Services Warrants-November(4) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Nov14	[4]
Expiry Date	Nov18	[4]
Number of Warrants | shares	6,500	[4]
Exercise Price per Share | $ / shares	$ 25	[4]
2014 Settlement Warrants-December(5) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Dec14	[5]
Expiry Date	Dec19	[5]
Number of Warrants | shares	38,464	[5]
Exercise Price per Share | $ / shares	$ 25	[5]
2015 Notes Warrants(6) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Apr/May-15	[6]
Expiry Date	Apr/May-20	[6]
Number of Warrants | shares	219,785	[6]
Exercise Price per Share | $ / shares	$ 12.50	[6]
2015 Services Warrants-May(7) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	May15	[7]
Expiry Date	May20	[7]
Number of Warrants | shares	5,514	[7]
Exercise Price per Share | $ / shares	$ 12.50	[7]
2015 LOC Guarantee Warrants - November (8) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Nov15	[8]
Expiry Date	Nov20	[8]
Number of Warrants | shares	74,000	[8]
Exercise Price per Share | $ / shares	$ 15	[8]
2015 Debt Amendment Warrants - December (9) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Dec15	[9]
Expiry Date	Dec20	[9]
Number of Warrants | shares	50,000	[9]
Exercise Price per Share | $ / shares	$ 5	[9]
2015 PIPE Warrants - December (10) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Dec15	[10]
Expiry Date	Dec20	[10]
Number of Warrants | shares	312,500	[10]
Exercise Price per Share | $ / shares	$ 5	[10]
2016 Debt Amendment Warrants - February (11) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Feb16	[11]
Expiry Date	Feb21	[11]
Number of Warrants | shares	50,000	[11]
Exercise Price per Share | $ / shares	$ 5	[11]
2016 Debt Amendment Warrants - March (12) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issue Date	Mar16	[12]
Expiry Date	Mar21	[12]
Number of Warrants | shares	500,000	[12]
Exercise Price per Share | $ / shares	$ 5	[12]
[1]	The 2014 Services Warrants April were issued for fees incurred in conjunction with the issuance of convertible notes in 2014. The warrants were valued on the issuance date at $11.50 per share in conjunction with the valuation approach used for the initial valuation of the warrants issued in connection with the convertible notes issued in 2014.
[2]	The 2014 Services Warrants September were issued to a consultant in exchange for advisory services with no readily available fair value. The warrants were originally issued at $39.00 per share and had a one-time price reset provision to the exercise price of the warrants issued to investors in the convertible notes offering in April 2014 if the exercise price of such convertible notes warrants changed prior to September 30, 2014. On September 22, 2014, the exercise price was changed to $25.00 per share. There are no further exercise price changes for this warrant series. The warrants were valued using the Black-Scholes option pricing model at $131,000 on the issuance date with an additional $6,000 recorded to expense on September 22, 2014 to reflect the change in fair value resulting from the exercise price change.
[3]	On September 22, 2014 the Company issued 26,500 warrants with an exercise price of $25.00 per share in conjunction with placement agent services for the Company's September 2014 private equity placement. The warrants were valued using the Black-Scholes option pricing model at $296,000 on the issuance date.
[4]	On November 26, 2014, the Company issued 6,500 warrants with an exercise price of $25.00 per share for compensation for investor relations services provided. The warrants were valued using the Black-Scholes option pricing model at $43,000 on the issuance date.
[5]	On December 1, 2014, the Company issued 19,232 warrants with an exercise price of $39.00 per share and on December 15, 2014 issued 19,232 warrants with an exercise price of $25.00 per share to settle potential legal disputes resulting from claims made by the investors in the November 2013 private equity placement. The warrants issued on December 1, 2014 were issued concurrent with the issuance of 8,462 shares of the Company's common stock in partial settlement of the potential legal disputes arising from claims by two investors. The Company settled all remaining potential legal disputes with all of the remaining investors in the November 2013 private placement on December 15, 2014 by issuing the second tranche of warrants and setting the exercise price of each warrant series issued at $25.00 with no further reset provisions. The combined issuance of the warrants and expense resulting from any price changes were valued using the Black-Scholes option pricing model at $246,000 and expensed to general and administrative expense.
[6]	On April 23, 2015 the Company issued warrants exercisable for up to 136,267 shares of our common stock and on May 7, 2015 the Company issued warrants exercisable for 83,518 shares of our common stock, each with an exercise price of $12.50 per share in conjunction with the Notes described in Note 8. The warrants were valued using the Black-Scholes option pricing model at $2,139,000 on the issuance date.
[7]	On May 7, 2015 the Company issued warrants exercisable for 5,514 shares of our common stock with an exercise price of $12.50 per share in conjunction with placement agent services for the Company's May 2015 private equity placement. The warrants were valued using the Black-Scholes option pricing model at $56,000 on the issuance date.
[8]	On November 2, 2015 the Company issued warrants exercisable for up to 74,000 shares of our common stock with an exercise price of $15.00 per share in conjunction with the LOC guarantee described in Note 16. The warrants were valued using the Black-Scholes option pricing model at $246,000 on the issuance date. The warrants are exercisable beginning on November 1, 2016.
[9]	On December 30, 2015 the Company issued warrants exercisable for up to 50,000 shares of our common stock with an initial exercise price of $12.50 per share in conjunction with the December 30, 2015 Notes amendment described in Note 8. In the event that the Company issues additional common stock derivative securities at a price per share less than the exercise price, the Company is obligated to reduce the exercise price of the December Debt Amendment Warrants to a price per share equal to the newly issued shares or derivative common stock securities. On March 31, 2016, concurrent with the issuance of the additional debt amendment warrants, the exercise price was reduced to $5.00 per share.
[10]	On December 31, 2015 the Company issued warrants exercisable for up to 312,500 shares of our common stock with an initial exercise price of $5.00 per share in conjunction with the December private equity placement (the "December PIPE"). The warrants provide that if, prior to the earlier of June 30, 2016 or thirty days after the date on which the December PIPE shares and underlying warrants are registered for resale, the Company issued common share derivative securities at a price per share less than $5.00 per share, the Company was obligated to reduce the exercise price of the December PIPE warrants to a price per share equal to the newly issued shares or derivative common stock securities. This price protection clause expired on June 30, 2016.
[11]	On February 2, 2016 the Company issued warrants exercisable for up to 50,000 shares of our common stock with an initial exercise price of $12.50 per share in conjunction with the December 30, 2015 Notes amendment described in Note 8. The warrants were valued using the Black-Scholes option pricing model at $148,000 on the issuance date and were recorded as a derivative liability and additional debt discount. The warrants provided that, in the event that the Company issued additional common stock derivative securities at a price per share less than the exercise price, the Company was obligated to reduce the exercise price of the February Debt Amendment Warrants to a price per share equal to the newly issued shares or derivative common stock securities. On March 31, 2016, concurrent with the issuance of the additional debt amendment warrants, the exercise price was reduced to $5.00 per share. This price protection clause expired on June 30, 2016.
[12]	On March 31, 2016 the Company issued warrants exercisable for up to 500,000 shares of our common stock with an initial exercise price of $5.00 per share in conjunction with the December 30, 2015 Notes amendment described in Note 8. The warrants were valued using the Black-Scholes option pricing model at $1,497,000 on the issuance date and were recorded as a derivative liability and additional debt discount. The warrants provided that , in the event that the Company issued additional common stock derivative securities at a price per share less than the exercise price, the Company was obligated to reduce the exercise price of the March Debt Amendment Warrants to a price per share equal to the newly issued shares or derivative common stock securities. This price protection clause expired on June 30, 2016.

Equity, Stock Options, and Wa53

Equity, Stock Options, and Warrants (Details Textual) - USD ($)	Apr. 11, 2016	Dec. 30, 2015	Nov. 02, 2015	May 07, 2015	May 07, 2015	Apr. 23, 2015	Dec. 15, 2014	Dec. 01, 2014	Nov. 26, 2014	Sep. 22, 2014	Mar. 31, 2016	Feb. 02, 2016	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Jul. 15, 2015	Jul. 01, 2013
Equity Stock Options and Warrants (textual)
Common stock, shares authorized													200,000,000		200,000,000
Remaining weighted-average vesting period													9 months 18 days
Description of granted options vesting right													Vesting periods of 0.8 years for outstanding grants was $1.3 million.
Stock-based compensation													$ 727,000	$ 741,000
Warrants issued								8,462				50,000
Warrant issued value													$ (1,554,000)
Exercise price per share													$ 12.5
Warrants valued using the Black-Scholes option pricing model								$ 246,000
Options granted contract term													5 years 7 months 2 days		6 years 26 days
Proceeds from issuance of private placement	$ 3,000,000
Aggregate of common stock shares	696,056
Stock Option [Member]
Equity Stock Options and Warrants (textual)
Description of granted options vesting right													The options granted have a contract term ranging between three and ten years. Options granted typically vest over a four year period, with 25% vesting after one year and the remainder ratably over the remaining three years.
Options vesting period													4 years
Options vesting percentage													25.00%
2014 Services Warrants - April [Member]
Equity Stock Options and Warrants (textual)
Exercise price per share													$ 11.50
2014 Services Warrants - September [Member]
Equity Stock Options and Warrants (textual)
Exercise price per share													$ 39
2013 Equity Incentive Plan [Member]
Equity Stock Options and Warrants (textual)
Maximum number of common shares authorized to purchase																	420,000
2015 Equity Incentive Award Plan [Member]
Equity Stock Options and Warrants (textual)
Common stock, shares authorized																300,000
Term of stock option and stock appreciation right													The maximum term of each stock option and stock appreciation right (SAR) is 10 years.
Maximum [Member]
Equity Stock Options and Warrants (textual)
Options granted contract term													10 years
Minimum [Member]
Equity Stock Options and Warrants (textual)
Options granted contract term													3 years
Warrants [Member]
Equity Stock Options and Warrants (textual)
Warrants issued		50,000	74,000	5,514	83,518	136,267	19,232	19,232	6,500	26,500	500,000	50,000	500,000		312,500
Warrant issued value									$ 43,000	$ 296,000
Exercise price per share		$ 12.50	$ 15	$ 12.50	$ 12.50	$ 12.50	$ 25	$ 39	$ 25	$ 25	$ 5	$ 12.50	$ 5		$ 5
Warrants valued using the Black-Scholes option pricing model			$ 246,000	$ 56,000	$ 2,139,000	$ 2,139,000					$ 1,497,000	$ 148,000
Reduction in warrants exercise price													$ 5
Warrants outstanding											$ 100
Convertible notes warrants [Member] | 2014 Services Warrants - September [Member]
Equity Stock Options and Warrants (textual)
Stock-based compensation										$ 6,000
Warrant issued value										$ 131,000
Exercise price per share										$ 25

Commitments and Contingencies54

Commitments and Contingencies (Details)	Jun. 30, 2016USD ($)
Summary of future minimum rental payments under operating leases
Six months ending December 31, 2016	$ 163,000

Commitments and Contingencies55

Commitments and Contingencies (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2016USD ($)ft²	Jun. 30, 2015USD ($)	Jun. 30, 2016USD ($)ft²	Jun. 30, 2015USD ($)
Commitments and Contingencies (Textual)
Rent expense net of sublease income	$ 79,000	$ 79,000	$ 158,000	$ 158,000
Area of lease property | ft²	32,649		32,649
Lease expiration date			Dec. 31, 2016
Operating leases monthly rent expense			$ 26,825
Lease agreement, Description			The lease expired on January 1, 2015 and reverted to a month-to-month lease with a monthly payment of $7,780.
Standby Letter of Credit [Member]
Commitments and Contingencies (Textual)
Lease expiration date			Jun. 30, 2017
Lease agreement, Description			(a) replacement of the Letter of Credit with an alternative BSS in favor of Dresser-Rand, (b) Dresser-Rand eliminating the BSS requirement under the D-R Agreement, or (c) the last day of the twenty-fourth calendar month following the commencement of the Term. In consideration of the investor's support commitment, the Company paid the investor a one-time fee equal to 4% of the amount of the Letter of Credit and is obligated to pay a monthly fee equal to 1% of the amount of the Letter of Credit for the first twelve months. If the Support Agreement has not terminated after the initial twelve months, the Company will pay another one-time fee equal to 4% of the amount of the Letter of Credit, and a monthly fee equal to 2% of the amount of the Letter of Credit for up to another twelve months.
Secured performance fees			$ 2,100,000
Line of credit	$ 2,100,000		$ 2,100,000