Energy Focus (EFOI) 10-Q 8 Nov 17 2017 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 06, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	ENERGY FOCUS, INC/DE
Entity Central Index Key	924,168
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		11,856,843

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 11,935	$ 16,629
Trade accounts receivable, less allowances of $73 and $236, respectively	2,983	5,640
Inventories, net	6,779	9,469
Prepaid and other current assets	1,046	882
Assets held for sale	410	0
Total current assets	23,153	32,620
Property and equipment, net	1,352	2,325
Other assets	30	33
Total assets	24,535	34,978
Current liabilities:
Accounts payable	2,176	3,257
Accrued liabilities	316	107
Accrued legal and professional fees	64	63
Accrued payroll and related benefits	313	522
Accrued sales commissions	85	325
Accrued severance	14	328
Accrued restructuring	174	0
Accrued warranty reserve	187	331
Deferred revenue	16	0
Total current liabilities	3,345	4,933
Other liabilities	248	107
Total liabilities	3,593	5,040
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.0001 per share: Authorized: 2,000,000 shares in 2017 and 2016, Issued and outstanding: no shares in 2016 and 2015	0	0
Common stock, par value $0.0001 per share: Authorized: 30,000,000 shares in 2017 and 2016, Issued and outstanding: 11,690,030 at September 30, 2016 and 11,648,978 at December 31, 2015	1	1
Additional paid-in capital	127,286	126,875
Accumulated other comprehensive income (loss)	1	(1)
Accumulated deficit	(106,346)	(96,937)
Total stockholders' equity	20,942	29,938
Total liabilities and stockholders' equity	$ 24,535	$ 34,978

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Trade accounts receivable, allowances	$ 73	$ 236
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	11,856,843	11,710,549
Common stock, shares outstanding	11,856,843	11,710,549

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Net sales	$ 5,002	$ 8,261	$ 15,119	$ 23,812
Cost of sales	3,865	5,179	11,920	15,063
Gross profit	1,137	3,082	3,199	8,749
Operating expenses:
Product development	732	809	2,266	2,467
Selling, general, and administrative	2,393	5,423	8,802	15,323
Restructuring	(200)	0	1,534	0
Total operating expenses	2,925	6,232	12,602	17,790
Loss from operations	(1,788)	(3,150)	(9,403)	(9,041)
Other expenses (income):
Interest Expense	1	0	1	0
Other (income) expense	(16)	16	5	7
Loss from continuing operations before income taxes	(1,773)	(3,166)	(9,409)	(9,048)
Provision for income taxes	0	11	0	22
Loss from continuing operations	(1,773)	(3,177)	(9,409)	(9,070)
Discontinued operations:
Loss on disposal of discontinued operations	0	0	0	(12)
Loss from discontinued operations	0	0	0	(12)
Net loss	$ (1,773)	$ (3,177)	$ (9,409)	$ (9,082)
Net loss per share - basic:
From continuing operations (in dollars per share)	$ (0.15)	$ (0.27)	$ (0.80)	$ (0.78)
From discontinued operations (in dollars per share)	0	0	0	0
Net loss per share - basic (in dollars per share)	(0.15)	(0.27)	(0.80)	(0.78)
Net loss per share - diluted:
From continuing operations (in dollars per share)	(0.15)	(0.27)	(0.80)	(0.78)
From discontinued operations (in dollars per share)	0	0	0	0
Net loss per share - diluted (in dollars per share)	$ (0.15)	$ (0.27)	$ (0.80)	$ (0.78)
Weighted average shares used in computing net loss per share:
Basic (in shares)	11,856	11,690	11,789	11,666
Diluted (in shares)	11,856	11,690	11,789	11,666

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (1,773)	$ (3,177)	$ (9,409)	$ (9,082)
Other comprehensive income:
Foreign currency translation adjustments	0	1	2	2
Comprehensive loss	$ (1,773)	$ (3,176)	$ (9,407)	$ (9,080)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Balance at the beginning of the period (in shares) at Dec. 31, 2016		11,711
Balance at the beginning of the period at Dec. 31, 2016	$ 29,938	$ 1	$ 126,875	$ (1)	$ (96,937)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under employee stock option and stock purchase plans (in shares)		161
Issuance of common stock under employee stock option and stock purchase plans	105		105
Common stock withheld in lieu of income tax withholding on vesting of restricted stock units (in shares)		(15)
Common stock withheld in lieu of income tax withholding on vesting of restricted stock units	(49)		(49)
Stock-based compensation	625		625
Stock-based compensation reversal	(270)		(270)
Foreign currency translation adjustments	2			2
Net loss from continuing operations	(9,409)				(9,409)
Balance at the end of the period (in shares) at Sep. 30, 2017		11,857
Balance at the end of the period at Sep. 30, 2017	$ 20,942	$ 1	$ 127,286	$ 1	$ (106,346)

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net loss	$ (9,409)	$ (9,082)
Loss from discontinued operations	0	(12)
Loss from continuing operations	(9,409)	(9,070)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	514	555
Stock-based compensation	625	1,076
Stock-based compensation reversal	(270)	0
Provision for doubtful accounts receivable	19	9
Provision for slow-moving and obsolete inventories and valuation reserves	(644)	(292)
Provision for warranties	152	110
Loss on dispositions of property and equipment	108	35
Changes in operating assets and liabilities:
Accounts Receivable	2,638	5,027
Inventories	3,334	(5,993)
Prepaid and other assets	(161)	(308)
Accounts payable	(1,173)	(3,945)
Accrued and other liabilities	(433)	(761)
Deferred revenue	16	(93)
Total adjustments	4,725	(4,580)
Net cash used in operating activities	(4,684)	(13,650)
Cash flows from investing activities:
Acquisitions of property and equipment	(154)	(1,475)
Proceeds from the sale of property and equipment	97	2
Net cash used in investing activities	(57)	(1,473)
Cash flows from financing activities:
Proceeds from exercises of stock options and employee stock purchase plan purchases	105	386
Common stock withheld in lieu of income tax withholding on vesting of restricted stock units	49	0
Common stock withheld to satisfy exercise price and income tax withholding on option exercises	0	(309)
Net cash provided by financing activities	56	77
Effect of exchange rate changes on cash	(9)	5
Net cash used in continuing operations	(4,694)	(15,041)
Cash flows of discontinued operations:
Operating cash flows, net	0	(12)
Net cash used in discontinued operations	0	(12)
Net decrease in cash and cash equivalents	(4,694)	(15,053)
Cash and cash equivalents, beginning of period	16,629	34,640
Cash and cash equivalents, end of period	11,935	19,587
Classification of cash and cash equivalents:
Cash and cash equivalents	11,593	19,245
Restricted cash held	342	342
Cash and cash equivalents, end of period	$ 16,629	$ 34,640

Nature of Operations

Nature of Operations	9 Months Ended
	Sep. 30, 2017
Disclosure Text Block [Abstract]
Nature of Operations	NATURE OF OPERATIONS Energy Focus, Inc. and its subsidiary engage in the design, development, manufacturing, marketing, and sale of energy-efficient lighting systems. We operate in a single industry segment, developing and selling our energy-efficient light-emitting diode (“LED”) lighting products into the general commercial, industrial and military maritime markets. Our goal is to become a trusted leader in the LED lighting retrofit market by replacing fluorescent lamps in institutional buildings and high-intensity discharge (“HID”) lighting in low-bay and high-bay applications with our innovative, high-quality commercial and military tubular LED (“TLED”) products. Product development is a key focus for us. Our product development teams, including our teams located in our Solon, Ohio headquarters and at our product development center in Taipei, Taiwan, are dedicated to developing and designing leading-edge technology LED lighting products.

Basis of Presentation and Summa

Basis of Presentation and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The condensed consolidated financial statements (“financial statements”) include the accounts of the Company and its subsidiary Energy Focus Europe, Ltd. located in the United Kingdom, which is not active. Unless indicated otherwise, the information in the accompanying financial statements and Notes to the condensed consolidated financial statements relates to our continuing operations. We have prepared the accompanying financial data for the three and nine months ended September 30, 2017 and 2016 pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The accompanying financial data and information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016 (“ 2016 Annual Report”). The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying financial statements contain all normal and recurring adjustments necessary to present fairly our Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 , Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016 , Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2017 and 2016 , Condensed Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2017 , and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 . Use of estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, actual results may vary from the estimates. Estimates include, but are not limited to, the establishment of reserves for accounts receivable, sales returns, inventory obsolescence and warranty claims; the useful lives of property and equipment; valuation allowance for net deferred taxes; the cost and offsetting income related to subleased property; and stock-based compensation. In addition, estimates and assumptions associated with the determination of the fair value of financial instruments and evaluation of long-lived assets for impairment requires considerable judgment. Actual results could differ from those estimates and such differences could be material. Reclassifications Certain amounts related to purchase price and manufacturing variances capitalized in inventories in 2016 and legal fees related to our restructuring actions in 2017 were reclassified to conform to current period reporting presentation with no impact on financial position, loss from operations, or cash used in operations. Certain risks and concentrations We have certain customers whose net sales individually represented 10 percent or more of our total net sales, or whose net trade accounts receivable balance individually represented 10 percent or more of our total net trade accounts receivable, as follows: For the three months ended September 30, 2017 , one of the largest global healthcare systems located in Northeast Ohio and a large energy services contracting company in our Southeastern sales region each accounted for approximately 23 percent of net sales. While the last contractually required stocking commitment under our exclusive distributor agreement with Atlantic Diving Supply, Inc. (“ADS”), a distributor for the U.S. Navy, was fulfilled in December 2016, sales to ADS for the three months ended September 30, 2017 accounted for approximately 12 percent of net sales, and when combined with non-exclusive sales to other distributors, sales of products for the U.S. Navy comprised approximately 20 percent of net sales for the same period. For the three months ended September 30, 2016 , ADS accounted for approximately 40 percent of net sales and sales of products to the U.S. Navy comprised approximately 46 percent of net sales. In addition, another distributor of military maritime products to foreign navies accounted for approximately 12 percent of net sales for the three months ended September 30, 2016 . For the nine months ended September 30, 2017 , the healthcare system located in Northeast Ohio and the energy services contracting company accounted for approximately 17 percent and 12 percent of net sales, respectively. While the last contractually required stocking commitment under our exclusive distributor agreement with ADS was fulfilled in December 2016, sales to ADS accounted for approximately 12 percent of net sales, and when combined with non-exclusive sales to other distributors, sales of products for the U.S. Navy comprised approximately 18 percent of net sales for the nine months ended September 30, 2017 . For the nine months ended September 30, 2016 , sales to ADS accounted for approximately 32 percent of net sales, and total sales of products for the U.S. Navy of approximately 40 percent of net sales. In addition, the healthcare system located in Northeast Ohio accounted for approximately 11 percent of net sales for the nine months ended September 30, 2016 . Our exclusive distributor agreement with ADS ended on March 31, 2017 and we are currently evaluating all sales channels within the military maritime market to broaden our sales opportunities. The energy services contracting company and the global healthcare system located in Northeast Ohio accounted for approximately 28 percent and 18 percent of net trade accounts receivable, respectively, at September 30, 2017 . At December 31, 2016 , ADS and the global healthcare system located in Northeast Ohio accounted for approximately 63 percent and 10 percent of net trade accounts receivable, respectively. Recent accounting pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation—Stock Compensation: Scope of Modification Accounting , which provides guidance about which changes to the terms or conditions of a share-based payment award would require an entity to apply modification accounting. This standard is effective for fiscal years beginning after December 15, 2017. We are in the process of evaluating the impact of the standard. In November, 2016, the FASB issued ASU No. 2016-18, Restricted Cash , which requires entities to show the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flow. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The new standard must be adopted retrospectively. We are in the process of evaluating the impact of the standard. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments , which is intended to reduce diversity in practice by making eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and will require adoption on a retrospective basis. We are in the process of evaluating the impact of the standard. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which significantly changes the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain financial instruments, including trade receivables, and requires an entity to recognize an allowance based on its estimate of expected credit losses rather than incurred losses. This standard will be effective for interim and annual periods beginning after December 15, 2019, and will generally require adoption on a modified retrospective basis. We are in the process of evaluating the impact of the standard. In February 2016, the FASB issued ASU No. 2016-02, Leases , which supersedes the current lease accounting requirements. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. In addition, this standard requires lessees to disclose certain key information about lease transactions. Upon implementation, an entity’s lease payment obligations will be recognized at their estimated present value along with a corresponding right-of-use asset. Lease expense recognition will be generally consistent with current practice. This standard will be effective for interim and annual periods beginning after December 15, 2018, and will require adoption on a modified retrospective basis. We are in the process of evaluating the impact of the standard. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which amends certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in the consolidation of the investee). This standard will be effective for interim and annual periods beginning after December 15, 2017, and will require adoption on a prospective basis with a cumulative-effect adjustment to the beginning balance sheet. We are in the process of evaluating the impact of the standard. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , as amended by ASU 2015-14, 2016-08, 2016-10, 2016-12, and 2016-20, which is a comprehensive revenue recognition standard which supersedes nearly all of the existing revenue recognition guidance under U.S. GAAP. This standard requires an entity to recognize revenue when it transfers promised goods or services to customers in amounts that reflect the consideration the entity expects for receive in exchange for those goods or services. Entities will need to use more judgments and estimates than under the current guidance, including estimating the amount of variable revenue to recognize for each performance obligation. Additional disclosures regarding the nature, amount, and timing of revenues and cash flows from contracts will also be required. This ASU is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period, using either a full retrospective or a modified retrospective approach. We will adopt the standard on January 1, 2018, as required, using the modified retrospective approach. We continue to evaluate the impact the guidance in this ASU will have on our disclosures. At this time, we do not expect the guidance to have a significant impact on our consolidated results of operations, cash flows, or financial position, as our revenue arrangements generally consist of a single performance obligation to transfer promised goods. Update to significant accounting policies There have been no material changes to our significant accounting policies, as compared to those described in our 2016 Annual Report. Net loss per share Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive potential common shares consist of incremental shares upon the exercise or release of stock options, restricted stock units, and warrants, unless the effect would be anti-dilutive. As a result of the net loss we incurred for the three and nine months ended September 30, 2017 , approximately 28 thousand and 72 thousand potentially dilutive equity awards, respectively, were excluded from the net loss per share calculation, as their inclusion would have been anti-dilutive. As a result of the net loss we incurred for the three and nine months ended September 30, 2016 , approximately 74 thousand and 150 thousand potentially dilutive equity awards, respectively, were excluded from the net loss per share calculation, as their inclusion would have been anti-dilutive. Therefore, for the three and nine months ended September 30, 2017 and 2016 , the basic weighted average shares outstanding were used in calculating diluted loss per share. The following is a reconciliation of the numerator and denominator of the basic and diluted net loss per share computations for the periods presented below (in thousands): Three months ended Nine months ended 2017 2016 2017 2016 Numerator: Loss from continuing operations $ (1,773 ) $ (3,177 ) $ (9,409 ) $ (9,070 ) Loss from discontinued operations — — — (12 ) Net loss $ (1,773 ) $ (3,177 ) $ (9,409 ) $ (9,082 ) Denominator: Basic weighted average common shares outstanding 11,856 11,690 11,789 11,666 Potential common shares from equity awards and warrants — — — — Diluted weighted average shares 11,856 11,690 11,789 11,666 Product warranties Through March 31, 2016 , we warranted finished goods against defects in material and workmanship under normal use and service for periods generally between one and five years . Beginning April 1, 2016 , we warrant our commercial LED tubes, globes, and troffer luminaires for a period of ten years . Warranty settlement costs consist of actual amounts expensed for warranty, which are largely a result of the cost of replacement products provided to our customers. A liability for the estimated future costs under product warranties is maintained for products outstanding under warranty based on the actual claims incurred to date and the estimated nature, frequency, and costs of future claims. These estimates are inherently uncertain and changes to our historical or projected experience may cause material changes to our warranty reserves in the future. We continuously review the assumptions related to the adequacy of our warranty reserve, including product failure rates, and make adjustments to the existing warranty liability when there are changes to these estimates or the underlying replacement product costs, or the warranty period expires. Extending the warranty did not have a material impact on our condensed consolidated financial statements in 2016 or for the three and nine months ended September 30, 2017 . The following table summarizes warranty activity for the periods presented (in thousands): Three months ended Nine months ended 2017 2016 2017 2016 Balance at beginning of period $ 179 $ 298 $ 331 $ 314 Warranty accruals for current period sales 18 65 152 111 Adjustments to existing warranties 30 (60 ) (36 ) (112 ) In kind settlements made during the period (40 ) (8 ) (260 ) (18 ) Accrued warranty reserve $ 187 $ 295 $ 187 $ 295 Geographic information Approximately 98 percent of our long-lived fixed assets are located in the United States, with the remainder located in our product development center in Taiwan. Net sales attributable to customers outside the United States accounted for approximately one percent of our total net sales for each of the three months ended September 30, 2017 and 2016 . Net sales attributable to customers outside the United States accounted for approximately one percent and two percent of our total net sales for the nine months ended September 30, 2017 and 2016 , respectively. The geographic location of our net sales is derived from the destination to which we ship the product.

Restructuring

Restructuring	9 Months Ended
	Sep. 30, 2017
Restructuring and Related Activities [Abstract]
Restructuring	RESTRUCTURING During the first quarter of 2017 , we announced a restructuring initiative with a goal of significantly reducing annual operating costs from 2016 levels. The initiative included an organizational consolidation of management and oversight functions in order to streamline and better align the organization into more focused, efficient, and cost effective reporting relationships, and involved headcount reductions and office closures. This initiative was designed to return the Company to profitability and mitigate the substantial doubt that existed at December 31, 2016 about our ability to continue as a going concern. The restructuring actions taken in the first nine months of 2017 resulted in a decrease in operating expenses, excluding restructuring and asset impairment charges, of approximately $3.1 million and $6.7 million over the third quarter and first nine months of 2016 , respectively. The actions taken in the first quarter of 2017 included closing our offices in Rochester, Minnesota, New York, New York, and Arlington, Virginia and impacted 20 employees, primarily located in these offices. During the second quarter of 2017 , we fully exited the New York and Arlington facilities and took additional actions to improve our operating efficiencies. These actions impacted an additional 17 production and administrative employees in our Solon location. During the three months ended September 30, 2017 we recorded net restructuring credits totaling approximately $0.2 million , primarily related to a reduction of $0.3 million related to the revision of our initial estimates of the cost and offsetting sublease income for the remaining lease obligations for the former New York, New York office. The sublease agreement was finalized in October 2017. This reduction was partially offset by the reclassification of other expenses primarily for legal costs related to the restructuring actions totaling approximately $0.1 million . For the nine months ended September 30, 2017 , we recorded restructuring charges totaling approximately $1.5 million , consisting of approximately $0.7 million in severance and related benefits, $0.6 million in facilities costs related to the termination of the Rochester lease obligations and the remaining lease obligations for the former New York and Arlington offices, and $0.2 million in other restructuring costs primarily related to fixed asset and prepaid expenses write-offs. Our restructuring liabilities consist of one-time termination costs for severance and benefits to former employees and estimated ongoing costs related to long-term operating lease obligations. The recorded value of the termination severance and benefits to employees approximates fair value, as the remaining obligation is based on the arrangements made with the former employees, and these obligations will be completely satisfied in less than 12 months. The recorded value of the ongoing lease obligations is based on the remaining lease term and payment amount, net of estimated sublease income, discounted to present value. Changes in subsequent periods resulting from a revision to either the timing or the amount of estimated cash flows over the future period are measured using the credit adjusted, risk-free rate that was used to measure the restructuring liabilities initially. We estimated that we would receive a total of approximately $1.3 million in sublease payments to offset our remaining lease obligations, which extend until June 2021 , of approximately $1.8 million . We expect to incur approximately $0.1 million in additional costs over the remaining life of our lease obligations, but we do not anticipate further major restructuring activities in the near future. The following is a reconciliation of the beginning and ending balances of our restructuring liability: Severance and Related Benefits Facilities Other Total Balance at January 1, 2017 $ — $ — $ — $ — Additions 643 19 12 674 Payments (30 ) (19 ) (3 ) (52 ) Balance at March 31, 2017 $ 613 $ — $ 9 $ 622 Additions 127 811 106 1,044 Accretion of lease obligations — 16 — 16 Write-offs — 9 (95 ) (86 ) Payments (313 ) (69 ) (20 ) (402 ) Balance at June 30, 2017 $ 427 $ 767 $ — $ 1,194 Additions $ — $ — $ 68 $ 68 Accretion of lease obligations $ — $ 8 $ — $ 8 Adjustment of lease obligations $ — $ (276 ) $ — $ (276 ) Write-offs $ — $ — $ — $ — Payments $ (253 ) $ (109 ) $ (68 ) $ (430 ) Balance at September 30, 2017 $ 174 $ 390 $ — $ 564 While the substantial doubt about our ability to continue as a going concern continued to exist at September 30, 2017 , we had $11.9 million in cash and no debt obligations at the end of the quarter. In addition, the restructuring actions taken in the first nine months of 2017 resulted in a decrease in operating expenses, excluding restructuring and asset impairment charges, of approximately $3.1 million and $6.7 million over the third quarter and first nine months of 2016 , respectively. During the first quarter of 2017, we announced a restructuring initiative with the goal of reducing our operating costs by an estimated $10 million from 2016 levels. The intent of the restructuring strategy was to maximize operating cost reductions without sacrificing either our new product pipeline or potential long-term revenue growth. We continue to refine our cost savings estimate, and are now on track for a total cost reduction between $8.0 million to $9.0 million from the 2016 levels. Consequently, considering both quantitative and qualitative information, we continue to believe that the combination of our restructuring actions, current financial position, liquid resources, obligations due or anticipated within the next year, executive reorganization, and implementation of our sales channel strategy will return us to profitability in 2018 and effectively mitigates the substantial doubt about our ability to continue as a going concern.

Discontinued Operations

Discontinued Operations	9 Months Ended
	Sep. 30, 2017
Discontinued Operations and Disposal Groups [Abstract]
Discontinued Operations	DISCONTINUED OPERATIONS The loss on disposal of discontinued operations for the nine months ended September 30, 2016 of $12 thousand consists of legal fees incurred for the settlement of an outstanding arbitration claim related to our pool products business, which we sold in November 2013 . On March 18, 2016 , we executed a settlement agreement for this claim and the funds held in escrow plus the interest earned on the account were released to the buyer. For additional information regarding the sale of our pool products business and the settlement of this arbitration claim, please refer to Note 3, “Discontinued Operations,” included under Item 8 of our 2016 Annual Report.

Inventories

Inventories	9 Months Ended
	Sep. 30, 2017
Inventory Disclosure [Abstract]
Inventories	INVENTORIES Inventories are stated at the lower of standard cost (which approximates actual cost determined using the first-in, first-out cost method) or market, and consist of the following (in thousands): September 30, December 31, Raw materials $ 4,263 $ 5,049 Finished goods 7,468 10,016 Reserves for excess, obsolete, and slow moving inventories and valuation reserves $ (4,952 ) $ (5,596 ) Inventories, net $ 6,779 $ 9,469

Property and Equipment and Asse

Property and Equipment and Assets Held For Sale	9 Months Ended
	Sep. 30, 2017
Property, Plant and Equipment [Abstract]
Property and Equipment and Assets Held For Sale	PROPERTY AND EQUIPMENT AND ASSETS HELD FOR SALE Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the related assets and consist of the following (in thousands): September 30, December 31, Equipment (useful life 3 to 15 years) $ 1,749 $ 2,231 Tooling (useful life 2 to 5 years) 371 863 Vehicles (useful life 5 years) 47 39 Furniture and fixtures (useful life 5 years) 137 170 Computer software (useful life 3 years) 1,043 977 Leasehold improvements (the shorter of useful life or lease life) 201 256 Projects in progress 48 154 Property and equipment at cost 3,596 4,690 Less: accumulated depreciation (2,244 ) (2,365 ) Property and equipment, net $ 1,352 $ 2,325 Depreciation expense was $0.2 million for each of the three months ended September 30, 2017 and 2016 . Depreciation expense was $0.5 million and $0.6 million for the nine months ended September 30, 2017 and 2016 , respectively. As of December 31, 2016 , we recorded an impairment charge related to certain equipment that we were no longer using and adjusted the carrying value of this equipment to its estimated net realizable value of $0.4 million . During the first quarter of 2017 , we began to seek out a buyer for this equipment, and as such, we reclassified the amount and continue to classify the amount on our Condensed Consolidated Balance Sheets under the caption, “Assets held for sale.”

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2017
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXES The components of the provision for income taxes are shown below for the periods presented (in thousands): Three months ended Nine months ended 2017 2016 2017 2016 Current: U.S. federal $ — $ 1 $ — $ 1 State — 10 — 21 Provision for income taxes $ — $ 11 $ — $ 22 As a result of the operating loss incurred during the three and nine months ended September 30, 2017 and the three months ended September 30, 2016 , and after the application of the annual limitation set forth under Section 382 of the Internal Revenue Code (“IRC”), it was not necessary to record a provision for U.S. federal income tax or various states income taxes. The expense recorded for the three and nine months ended September 30, 2016 , represents the adjustment of the 2015 provision to the actual tax on the 2015 returns. At September 30, 2017 and December 31, 2016 , we had a full valuation allowance recorded against our deferred tax assets. The valuation allowance was recorded due to uncertainties related to our ability to realize the deferred tax assets, primarily consisting of certain net operating loss carry-forwards. The valuation allowance is based on management’s estimates of taxable income by jurisdiction and the periods over which the deferred tax assets will be recoverable. At December 31, 2016 , we had a net operating loss carry-forward of approximately $79.8 million for U.S. federal, state, and local income tax purposes. However, due to changes in our capital structure, approximately $25.4 million of the net operating loss carry-forward is available to offset future taxable income, and after the application of the limitations found under Section 382 of the IRC, we only expect to have approximately $18.5 million of this amount available for use in 2017 . If not used, these carry-forwards will begin to expire in 2021 for federal and in 2021 or sooner for state and local purposes. For a full discussion of the estimated restrictions on our utilization of net operating loss carry-forwards, please refer to Note 10, “Income Taxes,” included under Item 8 of our 2016 Annual Report.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2017
Stockholders' Equity Note [Abstract]
Stockholders' Equity	STOCKHOLDERS’ EQUITY Warrants A summary of warrant activity for the nine months ended September 30, 2017 is presented as follows: Warrants Weighted Balance at December 31, 2016 6,750 $ 4.30 Exercised — — Canceled/forfeited (6,750 ) 4.30 Expired — — Balance at September 30, 2017 — $ — Stock-based compensation Stock-based compensation expense is attributable to stock options and restricted stock unit awards. For all stock-based awards, we recognize expense using a straight-line amortization method. The following table summarizes stock-based compensation expense and the impact it had on operations for the periods presented (in thousands): Three months ended Nine months ended 2017 2016 2017 2016 Cost of sales $ 10 $ 13 $ 40 $ 37 Product development 16 24 45 60 Selling, general, and administrative 166 399 540 979 Total stock-based compensation $ 192 $ 436 $ 625 $ 1,076 The table above excludes approximately $0.3 million in stock-based compensation expense from prior periods that was reversed and included as a reduction to restructuring expenses due to the workforce reduction associated with our restructuring actions in the first six months of 2017 . Total unearned stock-based compensation was $0.9 million at September 30, 2017 , compared to $1.6 million at September 30, 2016 . These costs will be charged to expense and amortized on a straight-line basis in future periods. The weighted average period over which the unearned compensation at September 30, 2017 is expected to be recognized is approximately 1.9 years. Stock options The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model. Estimates utilized in the calculation include the expected life of the option, risk-free interest rate, and expected volatility, and are further comparatively detailed as follows: Nine months ended 2017 2016 Fair value of options issued $ 2.66 $ 5.36 Exercise price $ 3.55 $ 7.59 Expected life of options (in years) 5.8 5.8 Risk-free interest rate 2.1 % 1.6 % Expected volatility 91.9 % 93.9 % Dividend yield 0.0 % 0.0 % A summary of option activity under all plans for the nine months ended September 30, 2017 is presented as follows: Number of Weighted Weighted Balance at December 31, 2016 530,734 $ 7.48 Granted 192,984 3.55 Exercised (40,500 ) 2.30 Canceled/forfeited (298,720 ) 5.73 Expired (56,111 ) 10.65 Balance at September 30, 2017 328,387 $ 6.86 8.0 Vested and expected to vest at September 30, 2017 301,768 $ 7.16 7.8 Exercisable at September 30, 2017 179,162 $ 9.63 6.8 Restricted stock units A summary of restricted stock unit activity under all plans for the nine months ended September 30, 2017 is presented as follows: Restricted Weighted Weighted Balance at December 31, 2016 250,115 $ 6.34 Granted 375,542 3.18 Released (115,622 ) 5.78 Canceled/forfeited (183,265 ) 5.45 Balance at September 30, 2017 326,770 $ 3.41 2.5

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	COMMITMENTS AND CONTINGENCIES We may be the subject of threatened or pending legal actions and contingencies in the normal course of conducting our business. We provide for costs related to these matters when a loss is probable and the amount can be reasonably estimated. The effect of the outcome of these matters on our future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount or timing of the resolution of such matters. For certain types of claims, we maintain insurance coverage for personal injury and property damage, product liability and other liability coverages in amounts and with deductibles that we believe are prudent, but there can be no assurance that these coverages will be applicable or adequate to cover adverse outcomes of claims or legal proceedings against us.

Basis of Presentation and Sum17

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Basis of presentation	Basis of presentation The condensed consolidated financial statements (“financial statements”) include the accounts of the Company and its subsidiary Energy Focus Europe, Ltd. located in the United Kingdom, which is not active. Unless indicated otherwise, the information in the accompanying financial statements and Notes to the condensed consolidated financial statements relates to our continuing operations. We have prepared the accompanying financial data for the three and nine months ended September 30, 2017 and 2016 pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The accompanying financial data and information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016 (“ 2016 Annual Report”). The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying financial statements contain all normal and recurring adjustments necessary to present fairly our Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 , Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016 , Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2017 and 2016 , Condensed Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2017 , and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 .
Use of estimates	Use of estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, actual results may vary from the estimates. Estimates include, but are not limited to, the establishment of reserves for accounts receivable, sales returns, inventory obsolescence and warranty claims; the useful lives of property and equipment; valuation allowance for net deferred taxes; the cost and offsetting income related to subleased property; and stock-based compensation. In addition, estimates and assumptions associated with the determination of the fair value of financial instruments and evaluation of long-lived assets for impairment requires considerable judgment. Actual results could differ from those estimates and such differences could be material.
Reclassifications	Reclassifications Certain amounts related to purchase price and manufacturing variances capitalized in inventories in 2016 and legal fees related to our restructuring actions in 2017 were reclassified to conform to current period reporting presentation with no impact on financial position, loss from operations, or cash used in operations.
Certain risks and concentrations	Certain risks and concentrations We have certain customers whose net sales individually represented 10 percent or more of our total net sales, or whose net trade accounts receivable balance individually represented 10 percent or more of our total net trade accounts receivable
Recent accounting pronouncements	Recent accounting pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation—Stock Compensation: Scope of Modification Accounting , which provides guidance about which changes to the terms or conditions of a share-based payment award would require an entity to apply modification accounting. This standard is effective for fiscal years beginning after December 15, 2017. We are in the process of evaluating the impact of the standard. In November, 2016, the FASB issued ASU No. 2016-18, Restricted Cash , which requires entities to show the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flow. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The new standard must be adopted retrospectively. We are in the process of evaluating the impact of the standard. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments , which is intended to reduce diversity in practice by making eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and will require adoption on a retrospective basis. We are in the process of evaluating the impact of the standard. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which significantly changes the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain financial instruments, including trade receivables, and requires an entity to recognize an allowance based on its estimate of expected credit losses rather than incurred losses. This standard will be effective for interim and annual periods beginning after December 15, 2019, and will generally require adoption on a modified retrospective basis. We are in the process of evaluating the impact of the standard. In February 2016, the FASB issued ASU No. 2016-02, Leases , which supersedes the current lease accounting requirements. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. In addition, this standard requires lessees to disclose certain key information about lease transactions. Upon implementation, an entity’s lease payment obligations will be recognized at their estimated present value along with a corresponding right-of-use asset. Lease expense recognition will be generally consistent with current practice. This standard will be effective for interim and annual periods beginning after December 15, 2018, and will require adoption on a modified retrospective basis. We are in the process of evaluating the impact of the standard. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which amends certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in the consolidation of the investee). This standard will be effective for interim and annual periods beginning after December 15, 2017, and will require adoption on a prospective basis with a cumulative-effect adjustment to the beginning balance sheet. We are in the process of evaluating the impact of the standard. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , as amended by ASU 2015-14, 2016-08, 2016-10, 2016-12, and 2016-20, which is a comprehensive revenue recognition standard which supersedes nearly all of the existing revenue recognition guidance under U.S. GAAP. This standard requires an entity to recognize revenue when it transfers promised goods or services to customers in amounts that reflect the consideration the entity expects for receive in exchange for those goods or services. Entities will need to use more judgments and estimates than under the current guidance, including estimating the amount of variable revenue to recognize for each performance obligation. Additional disclosures regarding the nature, amount, and timing of revenues and cash flows from contracts will also be required. This ASU is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period, using either a full retrospective or a modified retrospective approach. We will adopt the standard on January 1, 2018, as required, using the modified retrospective approach. We continue to evaluate the impact the guidance in this ASU will have on our disclosures. At this time, we do not expect the guidance to have a significant impact on our consolidated results of operations, cash flows, or financial position, as our revenue arrangements generally consist of a single performance obligation to transfer promised goods.
Net loss per share	Net loss per share Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive potential common shares consist of incremental shares upon the exercise or release of stock options, restricted stock units, and warrants, unless the effect would be anti-dilutive.
Product warranties	Product warranties Through March 31, 2016 , we warranted finished goods against defects in material and workmanship under normal use and service for periods generally between one and five years . Beginning April 1, 2016 , we warrant our commercial LED tubes, globes, and troffer luminaires for a period of ten years . Warranty settlement costs consist of actual amounts expensed for warranty, which are largely a result of the cost of replacement products provided to our customers. A liability for the estimated future costs under product warranties is maintained for products outstanding under warranty based on the actual claims incurred to date and the estimated nature, frequency, and costs of future claims. These estimates are inherently uncertain and changes to our historical or projected experience may cause material changes to our warranty reserves in the future. We continuously review the assumptions related to the adequacy of our warranty reserve, including product failure rates, and make adjustments to the existing warranty liability when there are changes to these estimates or the underlying replacement product costs, or the warranty period expires.

Basis of Presentation and Sum18

Basis of Presentation and Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Reconciliation of basic and diluted income (loss) per share	The following is a reconciliation of the numerator and denominator of the basic and diluted net loss per share computations for the periods presented below (in thousands): Three months ended Nine months ended 2017 2016 2017 2016 Numerator: Loss from continuing operations $ (1,773 ) $ (3,177 ) $ (9,409 ) $ (9,070 ) Loss from discontinued operations — — — (12 ) Net loss $ (1,773 ) $ (3,177 ) $ (9,409 ) $ (9,082 ) Denominator: Basic weighted average common shares outstanding 11,856 11,690 11,789 11,666 Potential common shares from equity awards and warrants — — — — Diluted weighted average shares 11,856 11,690 11,789 11,666
Schedule of warranty activity	The following table summarizes warranty activity for the periods presented (in thousands): Three months ended Nine months ended 2017 2016 2017 2016 Balance at beginning of period $ 179 $ 298 $ 331 $ 314 Warranty accruals for current period sales 18 65 152 111 Adjustments to existing warranties 30 (60 ) (36 ) (112 ) In kind settlements made during the period (40 ) (8 ) (260 ) (18 ) Accrued warranty reserve $ 187 $ 295 $ 187 $ 295

Restructuring (Tables)

Restructuring (Tables)	9 Months Ended
	Sep. 30, 2017
Restructuring and Related Activities [Abstract]
Schedule of Restructuring Reserve by Type of Cost	The following is a reconciliation of the beginning and ending balances of our restructuring liability: Severance and Related Benefits Facilities Other Total Balance at January 1, 2017 $ — $ — $ — $ — Additions 643 19 12 674 Payments (30 ) (19 ) (3 ) (52 ) Balance at March 31, 2017 $ 613 $ — $ 9 $ 622 Additions 127 811 106 1,044 Accretion of lease obligations — 16 — 16 Write-offs — 9 (95 ) (86 ) Payments (313 ) (69 ) (20 ) (402 ) Balance at June 30, 2017 $ 427 $ 767 $ — $ 1,194 Additions $ — $ — $ 68 $ 68 Accretion of lease obligations $ — $ 8 $ — $ 8 Adjustment of lease obligations $ — $ (276 ) $ — $ (276 ) Write-offs $ — $ — $ — $ — Payments $ (253 ) $ (109 ) $ (68 ) $ (430 ) Balance at September 30, 2017 $ 174 $ 390 $ — $ 564

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Sep. 30, 2017
Inventory Disclosure [Abstract]
Schedule of inventory	Inventories are stated at the lower of standard cost (which approximates actual cost determined using the first-in, first-out cost method) or market, and consist of the following (in thousands): September 30, December 31, Raw materials $ 4,263 $ 5,049 Finished goods 7,468 10,016 Reserves for excess, obsolete, and slow moving inventories and valuation reserves $ (4,952 ) $ (5,596 ) Inventories, net $ 6,779 $ 9,469

Property and Equipment and As21

Property and Equipment and Assets Held For Sale (Tables)	9 Months Ended
	Sep. 30, 2017
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the related assets and consist of the following (in thousands): September 30, December 31, Equipment (useful life 3 to 15 years) $ 1,749 $ 2,231 Tooling (useful life 2 to 5 years) 371 863 Vehicles (useful life 5 years) 47 39 Furniture and fixtures (useful life 5 years) 137 170 Computer software (useful life 3 years) 1,043 977 Leasehold improvements (the shorter of useful life or lease life) 201 256 Projects in progress 48 154 Property and equipment at cost 3,596 4,690 Less: accumulated depreciation (2,244 ) (2,365 ) Property and equipment, net $ 1,352 $ 2,325

Income Taxes (Tables)

Income Taxes (Tables)	9 Months Ended
	Sep. 30, 2017
Income Tax Disclosure [Abstract]
Summary of the provision for (benefit from) income taxes	The components of the provision for income taxes are shown below for the periods presented (in thousands): Three months ended Nine months ended 2017 2016 2017 2016 Current: U.S. federal $ — $ 1 $ — $ 1 State — 10 — 21 Provision for income taxes $ — $ 11 $ — $ 22

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2017
Stockholders' Equity Note [Abstract]
Summary of warrant activity	A summary of warrant activity for the nine months ended September 30, 2017 is presented as follows: Warrants Weighted Balance at December 31, 2016 6,750 $ 4.30 Exercised — — Canceled/forfeited (6,750 ) 4.30 Expired — — Balance at September 30, 2017 — $ —
Summary of stock-based compensation expense	The following table summarizes stock-based compensation expense and the impact it had on operations for the periods presented (in thousands): Three months ended Nine months ended 2017 2016 2017 2016 Cost of sales $ 10 $ 13 $ 40 $ 37 Product development 16 24 45 60 Selling, general, and administrative 166 399 540 979 Total stock-based compensation $ 192 $ 436 $ 625 $ 1,076
Schedule of valuation assumptions	Estimates utilized in the calculation include the expected life of the option, risk-free interest rate, and expected volatility, and are further comparatively detailed as follows: Nine months ended 2017 2016 Fair value of options issued $ 2.66 $ 5.36 Exercise price $ 3.55 $ 7.59 Expected life of options (in years) 5.8 5.8 Risk-free interest rate 2.1 % 1.6 % Expected volatility 91.9 % 93.9 % Dividend yield 0.0 % 0.0 %
Summary of option activity	A summary of option activity under all plans for the nine months ended September 30, 2017 is presented as follows: Number of Weighted Weighted Balance at December 31, 2016 530,734 $ 7.48 Granted 192,984 3.55 Exercised (40,500 ) 2.30 Canceled/forfeited (298,720 ) 5.73 Expired (56,111 ) 10.65 Balance at September 30, 2017 328,387 $ 6.86 8.0 Vested and expected to vest at September 30, 2017 301,768 $ 7.16 7.8 Exercisable at September 30, 2017 179,162 $ 9.63 6.8 Restricted stock units A summary of restricted stock unit activity under all plans for the nine months ended September 30, 2017 is presented as follows: Restricted Weighted Weighted Balance at December 31, 2016 250,115 $ 6.34 Granted 375,542 3.18 Released (115,622 ) 5.78 Canceled/forfeited (183,265 ) 5.45 Balance at September 30, 2017 326,770 $ 3.41 2.5

Basis of Presentation and Sum24

Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) - shares shares in Thousands	Apr. 01, 2016	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Concentration Risk [Line Items]
Securities excluded from net loss per share calculation (in shares)		28	74	72	150
Warranty service periods	10 years
Minimum
Concentration Risk [Line Items]
Warranty service periods				1 year
Maximum
Concentration Risk [Line Items]
Warranty service periods				5 years
Geographic concentration risk | United States
Concentration Risk [Line Items]
Concentration risk (less than for one percent)				98.00%
Revenue | Geographic concentration risk | Countries outside of the United States
Concentration Risk [Line Items]
Concentration risk (less than for one percent)		1.00%	1.00%	1.00%	2.00%
Global Healthcare Systems, Northeast Ohio | Revenue | Customer concentration risk
Concentration Risk [Line Items]
Concentration risk (less than for one percent)		23.00%		17.00%	11.00%
Global Healthcare Systems, Northeast Ohio | Accounts receivable | Customer concentration risk
Concentration Risk [Line Items]
Concentration risk (less than for one percent)				18.00%		10.00%
ESCO | Revenue | Customer concentration risk
Concentration Risk [Line Items]
Concentration risk (less than for one percent)		23.00%
Customer One | Revenue | Customer concentration risk
Concentration Risk [Line Items]
Concentration risk (less than for one percent)			12.00%
Customer Two | Revenue | Customer concentration risk
Concentration Risk [Line Items]
Concentration risk (less than for one percent)				12.00%
Customer Two | Accounts receivable | Customer concentration risk
Concentration Risk [Line Items]
Concentration risk (less than for one percent)				28.00%
Atlantic Diving Supply, Inc. | Revenue | Customer concentration risk
Concentration Risk [Line Items]
Concentration risk (less than for one percent)		12.00%	40.00%	12.00%	32.00%
Atlantic Diving Supply, Inc. | Accounts receivable | Customer concentration risk
Concentration Risk [Line Items]
Concentration risk (less than for one percent)						63.00%
U.S. Navy | Revenue | Customer concentration risk
Concentration Risk [Line Items]
Concentration risk (less than for one percent)		20.00%	46.00%	18.00%	40.00%

Basis of Presentation and Sum25

Basis of Presentation and Summary of Significant Accounting Policies - Reconciliation of Basic and Diluted Loss per Share (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Numerator:
Loss from continuing operations	$ (1,773)	$ (3,177)	$ (9,409)	$ (9,070)
Loss from discontinued operations	0	0	0	(12)
Net loss	$ (1,773)	$ (3,177)	$ (9,409)	$ (9,082)
Denominator:
Basic weighted average common shares outstanding (in shares)	11,856	11,690	11,789	11,666
Potential common shares from equity awards and warrants (in shares)	0	0	0	0
Diluted weighted average shares (in shares)	11,856	11,690	11,789	11,666

Basis of Presentation and Sum26

Basis of Presentation and Summary of Significant Accounting Policies - Warranty Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at beginning of period	$ 179	$ 298	$ 331	$ 314
Accruals for warranties issued	18	65	152	111
Adjustments to existing warranties	30	(60)	(36)	(112)
In kind settlements made during the period	(40)	(8)	(260)	(18)
Accrued warranty reserve	$ 187	$ 295	$ 187	$ 295

Restructuring - Narrative (Deta

Restructuring - Narrative (Details)	3 Months Ended				9 Months Ended
	Sep. 30, 2017USD ($)	Jun. 30, 2017employee	Mar. 31, 2017USD ($)employee	Sep. 30, 2016USD ($)	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, number of positions eliminated | employee		17	20
Restructuring	$ (200,000)			$ 0	$ 1,534,000	$ 0
Restructuring and related cost, obligations to be satisfied, term					12 months
Restructuring and related Cost, estimate of sublease payments to be received					$ 1,300,000
Lease obligations	1,800,000				1,800,000
Additional restructuring charges expected	100,000				100,000
Cash and cash equivalents	11,935,000			19,587,000	11,935,000	19,587,000	$ 16,629,000	$ 34,640,000
Debt obligations	$ 0				0
Impact of restructuring activities on operating expenses, excluding restructuring and asset impairment charges				$ (3,100,000)		$ (6,700,000)
Restructuring Initiative 2017
Restructuring Cost and Reserve [Line Items]
Restructuring initiative, reduction of annual operating costs, amount			$ 10,000,000
Severance and Related Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring					700,000
Facilities
Restructuring Cost and Reserve [Line Items]
Restructuring					600,000
Other
Restructuring Cost and Reserve [Line Items]
Restructuring					186,000
Minimum
Restructuring Cost and Reserve [Line Items]
Impact of restructuring activities on operating expenses, excluding restructuring and asset impairment charges					8,000,000
Maximum
Restructuring Cost and Reserve [Line Items]
Impact of restructuring activities on operating expenses, excluding restructuring and asset impairment charges					$ 9,000,000

Restructuring - Reconciliation

Restructuring - Reconciliation of Restructuring Liability (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017
Restructuring Reserve [Roll Forward]
Beginning balance	$ 1,194	$ 622	$ 0
Additions	68	1,044	674
Accretion of lease obligations	8	16
Adjustment of lease obligations	(276)
Write-offs	0	(86)
Payments	(430)	(402)	(52)
Ending balance	564	1,194	622
Severance and Related Benefits
Restructuring Reserve [Roll Forward]
Beginning balance	427	613	0
Additions	0	127	643
Accretion of lease obligations	0	0
Adjustment of lease obligations	0
Write-offs	0	0
Payments	(253)	(313)	(30)
Ending balance	174	427	613
Facilities
Restructuring Reserve [Roll Forward]
Beginning balance	767	0	0
Additions	0	811	19
Accretion of lease obligations	8	16
Adjustment of lease obligations	(276)
Write-offs	0	9
Payments	(109)	(69)	(19)
Ending balance	390	767	0
Other
Restructuring Reserve [Roll Forward]
Beginning balance	0	9	0
Additions	68	106	12
Accretion of lease obligations	0	0
Adjustment of lease obligations	0
Write-offs	0	(95)
Payments	(68)	(20)	(3)
Ending balance	$ 0	$ 0	$ 9

Discontinued Operations - Narra

Discontinued Operations - Narrative (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)
Discontinued Operations and Disposal Groups [Abstract]
Legal fees	$ (12)

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 4,263	$ 5,049
Finished goods	7,468	10,016
Reserves for excess, obsolete, and slow moving inventories and valuation reserves	(4,952)	(5,596)
Inventories, net	$ 6,779	$ 9,469

Property and Equipment and As31

Property and Equipment and Assets Held For Sale (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment at cost	$ 3,596		$ 3,596		$ 4,690
Less: accumulated depreciation	(2,244)		(2,244)		(2,365)
Property and equipment, net	1,352		1,352		2,325
Depreciation	166	$ 200	514	$ 555
Equipment
Property, Plant and Equipment [Line Items]
Property and equipment at cost	1,749		$ 1,749		2,231
Equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful life			3 years
Equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful life			15 years
Tooling
Property, Plant and Equipment [Line Items]
Property and equipment at cost	371		$ 371		863
Tooling | Minimum
Property, Plant and Equipment [Line Items]
Useful life			2 years
Tooling | Maximum
Property, Plant and Equipment [Line Items]
Useful life			5 years
Vehicles
Property, Plant and Equipment [Line Items]
Useful life			5 years
Property and equipment at cost	47		$ 47		39
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Useful life			5 years
Property and equipment at cost	137		$ 137		170
Computer software
Property, Plant and Equipment [Line Items]
Useful life			3 years
Property and equipment at cost	1,043		$ 1,043		977
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment at cost	201		201		256
Projects in progress
Property, Plant and Equipment [Line Items]
Property and equipment at cost	$ 48		$ 48		154
Discontinued Operations, Held-for-sale | Equipment
Property, Plant and Equipment [Line Items]
Property and equipment at cost					$ 410

Income Taxes - Components (Deta

Income Taxes - Components (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Current:
U.S. federal	$ 0	$ 1	$ 0	$ 1
State and local	0	10	0	21
Provision for income taxes	$ 0	$ 11	$ 0	$ 22

Income Taxes - Narrative (Detai

Income Taxes - Narrative (Details) - U.S. Federal, State and Local tax authorities - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Operating Loss Carryforwards [Line Items]
Operating loss carry-forward		$ 79.8
Operating loss carry-forward available	$ 18.5	$ 25.4

Stockholders' Equity - Warrants

Stockholders' Equity - Warrants (Details)	9 Months Ended
	Sep. 30, 2017$ / sharesshares
Warrants Outstanding
Outstanding at the beginning of the period (in shares) | shares	6,750
Exercised (in shares) | shares	0
Canceled/forfeited (in shares) | shares	(6,750)
Expired (in shares) | shares	0
Outstanding at the end of the period (in shares) | shares	0
Weighted Average Exercise Price During Period
Outstanding at the beginning of the period (in dollars per share) | $ / shares	$ 4.30
Exercised (in dollars per share) | $ / shares	0
Canceled/forfeited (in dollars per share) | $ / shares	4.30
Expired (in dollars per share) | $ / shares	0
Outstanding at the end of the period (in dollars per share) | $ / shares	$ 0

Stockholders' Equity - Stock-Ba

Stockholders' Equity - Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 192	$ 436	$ 625	$ 1,076
Stock-based compensation reversal			(270)
Unearned stock-based compensation	900	1,600	$ 900	1,600
Unearned compensation expected to be recognized, period			1 year 10 months 24 days
Cost of sales
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	10	13	$ 40	37
Product development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	16	24	45	60
Selling, general, and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 166	$ 399	$ 540	$ 979

Stockholders' Equity - Stock Op

Stockholders' Equity - Stock Options and a Summary of Activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Stockholders' Equity Note [Abstract]
Fair value of options issued (in dollars per share)	$ 2.66	$ 5.36
Exercise price (in dollars per share)	$ 3.55	$ 7.59
Expected life of options (in years)	5 years 9 months 18 days	5 years 9 months 18 days
Risk-free interest rate	2.10%	1.60%
Expected volatility	91.90%	93.90%
Dividend yield	0.00%	0.00%
Number of Options
Outstanding at beginning of period (in shares)	530,734
Granted (in shares)	192,984
Exercised (in shares)	(40,500)
Canceled/forfeited (in shares)	(298,720)
Expired (in shares)	(56,111)
Outstanding at end of period (in shares)	328,387
Vested and expected to vest at period end (in shares)	301,768
Exercisable at period end (in shares)	179,162
Weighted Average Exercise Price Per Share
Outstanding at beginning of period (in dollars per share)	$ 7.48
Granted (in dollars per share)	3.55
Exercised (in dollars per share)	2.30
Canceled/forfeited (in dollars per share)	5.73
Expired (in dollars per share)	10.65
Outstanding at end of period (in dollars per share)	6.86
Vested and expected to vest at period end (in dollars per share)	7.16
Exercisable at period end (in dollars per share)	$ 9.63
Weighted Average Remaining Contractual Life (in years)
Outstanding at end of period	8 years
Vested and expected to vest at period end	7 years 9 months 18 days
Exercisable at period end	6 years 9 months 18 days

Stockholders' Equity - Restrict

Stockholders' Equity - Restricted Stock Units (Details)	9 Months Ended
	Sep. 30, 2017$ / sharesshares
Restricted Stock Units
Outstanding at beginning of period (in shares) | shares	530,734
Granted (in shares) | shares	192,984
Canceled/forfeited (in shares) | shares	(298,720)
Outstanding at end of period (in shares) | shares	328,387
Weighted Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 7.48
Granted (in dollars per share) | $ / shares	3.55
Canceled/forfeited (in dollars per share) | $ / shares	5.73
Outstanding at end of period (in dollars per share) | $ / shares	$ 6.86
Weighted Average Remaining Contractual Life (in years)
Outstanding at end of period	8 years
Restricted Stock Units
Restricted Stock Units
Outstanding at beginning of period (in shares) | shares	250,115
Granted (in shares) | shares	375,542
Released (in shares) | shares	(115,622)
Canceled/forfeited (in shares) | shares	(183,265)
Outstanding at end of period (in shares) | shares	326,770
Weighted Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 6.34
Granted (in dollars per share) | $ / shares	3.18
Released (in dollars per share) | $ / shares	5.78
Canceled/forfeited (in dollars per share) | $ / shares	5.45
Outstanding at end of period (in dollars per share) | $ / shares	$ 3.41
Weighted Average Remaining Contractual Life (in years)
Outstanding at end of period	2 years 6 months