10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-33624

Amedica Corporation

(Exact name of registrant as specified in its charter)

DELAWARE	84-1375299
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1885 West 2100 South, Salt Lake City, UT	84119
(Address of principal executive offices)	(Zip Code)

(801) 839-3500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days: Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files); Yes [X] No [  ]

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

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ] (Do not check if a smaller reporting company)	Smaller reporting company	[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): [  ] Yes [X] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

3,022,073 shares of common stock, $0.01 par value, were outstanding at November 16, 2017

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to Amedica Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed with the Securities and Exchange Commission on November 14, 2017 (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

The Company is filing Exhibit 101 in accordance with the temporary hardship exemption provided by Rule 201 of Regulation S-T, which extended the date by which the interactive data file is required to be submitted by six business days.

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks, as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

PART II

ITEM 6. EXHIBITS

Exhibit Number	Exhibit Description	Filed Herewith	Incorporated by Reference herein from Form or Schedule	Filing Date	SEC File/ Reg. Number
4.1	Secured Promissory Note with North Stadium Investments, LLC		8-K	08/03/17	001-33624
4.2	North Stadium Investments, LLC Warrant to Purchase Common Stock		8-K	08/03/17	001-33624
10.01	Security Agreement, dated July 28, 2017, by and between the Company and North Stadium Investments, LLC.		8-K	08/03/17	001-33624
31.1*	Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certificate of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32*	Certifications of the Chief Executive Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X

*These exhibits were previously filed or furnished as an exhibit to Amedica Corporation’s quarterly report on Form 10-Q for the quarterly period ended September 30, 2017, filed with the Securities and Exchange Commission on November 14, 2017

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AMEDICA CORPORATION
Date: November 16, 2017	/s/ B. Sonny Bal
	B. Sonny Bal
	Chief Executive Officer (Principal Executive Officer)

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 16, 2017
Document And Entity Information
Entity Registrant Name	AMEDICA Corp
Entity Central Index Key	0001269026
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		3,022,073
Trading Symbol	AMDA
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2017

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 2,816	$ 6,915
Trade accounts receivable, net of allowance of $22 and $22, respectively	1,587	1,620
Prepaid expenses and other current assets	176	239
Inventories, net	1,733	7,213
Total current assets	6,312	15,987
Inventories, net	3,933
Property and equipment, net	1,372	889
Intangible assets, net	2,785	3,187
Goodwill	6,163	6,163
Other long-term assets	35	35
Total assets	20,600	26,261
Current liabilities:
Accounts payable	1,159	658
Accrued liabilities	2,356	3,183
Debt	4,614	7,012
Total current liabilities	8,129	10,853
Deferred rent	215	319
Other long-term liabilities	278	188
Derivative liabilities	506	528
Total liabilities	9,128	11,888
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $0.01 par value, 130,000,000 shares authorized; no shares issued and outstanding at September 30, 2016.
Common stock, $0.01 par value, 250,000,000 shares authorized, 3,022,073 and 2,280,407 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively.	363	274
Additional paid-in capital	231,314	227,234
Accumulated deficit	(220,206)	(213,135)
Total stockholders' equity	11,471	14,373
Total liabilities and stockholders' equity	$ 20,600	$ 26,261

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Allowance of trade accounts receivable	$ 22	$ 22
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized	130,000,000	130,000,000
Convertible preferred stock, shares issued
Convertible preferred stock, shares outstanding
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	3,022,073	2,280,407
Common stock, shares outstanding	3,022,073	2,280,407

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Product revenue	$ 2,956	$ 3,378	$ 8,793	$ 11,574
Costs of revenue	1,408	765	2,791	2,675
Gross profit	1,548	2,613	6,002	8,899
Operating expenses:
Research and development	1,433	1,582	3,790	4,743
General and administrative	1,092	1,912	3,288	4,834
Sales and marketing	1,579	2,326	5,005	7,514
Total operating expenses	4,104	5,820	12,083	17,091
Loss from operations	(2,556)	(3,207)	(6,081)	(8,192)
Other income (expenses):
Interest expense	(270)	(745)	(1,008)	(3,998)
Loss on extinguishment of debt		(417)		(661)
Change in fair value of derivative liabilities	11	26	21	50
Other income		5	(2)	11
Total other expense, net	(259)	(1,131)	(989)	(4,598)
Net loss before income taxes	(2,815)	(4,338)	(7,070)	(12,790)
Provision for income taxes
Net loss	(2,815)	(4,338)	(7,070)	(12,790)
Deemed dividend related to beneficial conversion feature and accretion of a discount on Series A Preferred Stock		(6,278)		(6,278)
Net loss attributable to common stockholders	$ (2,815)	$ (10,616)	$ (7,070)	$ (19,068)
Net loss per share
Basic and diluted	$ (0.93)	$ (5.53)	$ (2.42)	$ (14.56)
Weighted average common shares outstanding:
Basic and diluted	3,022,073	1,920,745	2,918,240	1,309,286

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flow from operating activities
Net loss	$ (7,070)	$ (12,790)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	432	1,123
Amortization of intangible assets	402	375
Amortization of lease incentive for tenant improvements	15	15
Non-cash interest expense	675	1,778
Loss on extinguishment of debt		661
Stock based compensation	173	197
Change in fair value of derivative liabilities	(21)	(50)
Loss (gain) on disposal of equipment	2	(13)
Provision for inventory reserve	1,300	861
Changes in operating assets and liabilities:
Trade accounts receivable	33	1,390
Prepaid expenses and other current assets	63	(138)
Inventories	246	428
Accounts payable and accrued liabilities	(646)	906
Net cash used in operating activities	(4,396)	(5,257)
Cash flows from investing activities
Purchase of property and equipment	(917)	(427)
Proceeds from sale of property and equipment		30
Net cash used in investing activities	(917)	(397)
Cash flows from financing activities
Proceeds from issuance of common stock, net of issuance costs	3,807	11,480
Proceeds from issuance of stock in connection with exercise of warrants		448
Proceeds from issuance of debt	2,500
Payments on debt	(5,043)	(5,071)
Issuance costs paid for debt	(50)	(267)
Debt extinguishment payments		(1,728)
Payments for capital lease		(8)
Net cash provided by financing activities	1,214	4,782
Net decrease in cash and cash equivalents	(4,099)	(872)
Cash and cash equivalents at beginning of period	6,915	11,485
Cash and cash equivalents at end of period	2,816	10,613
Non-cash investing and financing activities
Deemed dividend related to beneficial conversion feature of preferred convertible stock and accretion of a discount		6,278
Debt converted to common stock		2,480
Capital lease for property and equipment		60
Debt discount from warrants issued with debt	189
Supplemental cash-flow information
Cash paid for interest	$ 333	$ 1,330

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Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

Organization

Amedica Corporation was incorporated in the state of Delaware on December 10, 1996. Amedica Corporation is a materials company focused on developing, manufacturing and selling silicon nitride ceramics that are used in medical implants and in a variety of industrial devices. At present, Amedica Corporation commercializes silicon nitride in the spine implant market and believes that its silicon nitride manufacturing expertise positions it favorably to introduce new and innovative devices in the medical and non- medical fields. Amedica Corporation also believes that it is the first and only company to commercialize silicon nitride medical implants. Amedica Corporation acquired US Spine, Inc. (“US Spine”), a Delaware spinal products corporation with operations in Florida, on September 20, 2010. Amedica Corporation and US Spine are collectively referred to as “Amedica” or “the Company in these condensed consolidated financial statements. The Company’s products are sold primarily in the United States.

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”), and include all assets and liabilities of the Company and its wholly-owned subsidiary, US Spine. All material intercompany transactions and balances have been eliminated in consolidation. SEC rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, so long as the statements are not misleading. In the opinion of management, these financial statements and accompanying notes contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented herein. These condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on September 20, 2017. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017. The Company’s significant accounting policies are set forth in Note 1 to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2016.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the periods then ended. Actual results could differ from those estimates. The most significant estimates relate to inventory, stock-based compensation, long-lived and intangible assets and the liability for preferred stock and common stock warrants.

Liquidity and Capital Resources

The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

For the nine months ended September 30, 2017 and 2016, the Company incurred net losses of $7.1 million and $12.8 million, respectively, and used cash in operations of $4.4 million and $5.3 million, respectively. The Company had an accumulated deficit of $220 million and $213 million as of September 30, 2017 and December 31, 2016, respectively. To date, the Company’s operations have been principally financed by proceeds received from the issuance of preferred and common stock, convertible debt and bank debt and, to a lesser extent, cash generated from product sales. It is anticipated that the Company will continue to generate operating losses and use cash in operating activities. The Company’s continuation as a going concern is dependent upon its ability to increase sales, implement cost saving measures, maintain compliance with debt covenants and/or raise additional funds through the capital markets. Whether and when the Company can attain profitability and positive cash flows from operating activities or obtain additional financing is uncertain.

In 2016, the Company implemented certain cost saving measures, including workforce and office space reductions, and will continue to evaluate additional cost savings alternatives during 2017. These additional cost savings measures may include additional workforce and research and development reductions, as well as cuts to certain other operating expenses. In addition to these costs saving measures, an experienced and highly successful leader for the Sales and Marketing team was recruited and hired. This individual has subsequently hired additional experienced personnel in Sales and Marketing. The Company is actively generating additional scientific and clinical data to have it published in leading industry publications. The unique features of the Company’s silicon nitride material are not well known, and publication of such data would help sales efforts as the Company approaches new prospects. The Company is also making additional changes to the sales strategy, including a focus on revenue growth of silicon nitride lateral lumbar implants and the newly developed pedicle screw system (known as Taurus).

As discussed further in Note 7, in June 2014 the Company entered into a term loan with Hercules Technology Growth Capital, Inc. (“Hercules Technology”), as administrative and collateral agent for the lenders thereunder and as lender, and Hercules Technology III, LP, (“HT III” and, together with Hercules Technology, “Hercules”) as lender (the “Hercules Term Loan”). The Hercules Term Loan has a liquidity covenant that requires the Company to maintain a cash balance of the lesser of $2.5 million or the outstanding balance of the Hercules Term Loan. As of September 30, 2017, the outstanding balance on the Hercules Term Loan was $2.3 million and the Company’s cash balance was $2.8 million. The Company believes it will be in position to maintain compliance with the liquidity covenant related to the Hercules Term Loan at least through November 2017. On July 28, 2017, the Company entered into a $2.5 million term loan with a related party that will assist the Company in its cash needs through November 2017. The Company has common stock that is publicly traded and has been able to successfully raise capital when needed since the date of the Company’s initial public offering. The Company is engaged in discussions with investment and banking firms to examine financing alternatives, including options to encourage the exercise of outstanding warrants and other lending alternatives.

If the Company is unable to access additional funds prior to becoming non-compliant with the financial and liquidity covenants related to its debt, the outstanding balances of its debt would become immediately due and payable at the option of the lender. Although the Company is seeking to obtain additional equity and/or debt financing, such funding is not assured and may not be available to the Company on favorable or acceptable terms, and may involve significant restrictive covenants. Any additional equity financing is also not assured and, if available to the Company, will most likely be dilutive to its current stockholders. If the Company is not able to obtain additional debt or equity financing on a timely basis, the impact on the Company will be material and adverse.

Reverse Stock Split

On November 10, 2017, the Company effected a 1 for 12 reverse stock split of the Company’s common stock. The par value and the authorized shares of the common and convertible preferred stock were not adjusted as a result of the reverse stock split. All common stock share and per-share amounts for all periods presented in these condensed consolidated financial statements prior to November 10, 2017 have been adjusted retroactively to reflect the reverse stock split.

Significant Accounting Policies

There have been no significant changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

New Accounting Pronouncement, Not Yet Adopted

In January 2017, the FASB issued ASU 2017-04 Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this guidance eliminate the requirement to calculate the implied fair value of goodwill used to measure goodwill impairment charge (Step 2). As a result, an impairment charge will equal the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the amount of goodwill allocated to the reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendment should be applied on a prospective basis. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. The impact of this guidance for the Company will depend on the outcomes of future goodwill impairment tests.

In August 2016, the Financial Accounting Standards Board (“FASB”) updated accounting guidance on the following eight specific cash flow classification issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Under existing U.S. GAAP, there is no specific guidance on the eight cash flow classification issues aforementioned. These updates are effective for the Company for its annual period beginning January 1, 2019, and interim periods therein, with early adoption permitted. The guidance in this standard is not expected to have a material impact on the financial statements of the Company.

In March 2016 the FASB updated the accounting guidance related to stock compensation. This update simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as the well as classification in the statement of cash flows. The standard is effective for the Company for its annual period beginning January 1, 2018. The guidance in this standard is not expected to have a material impact on the financial statements of the Company.

In February 2016, the FASB updated the accounting guidance related to leases as part of a joint project with the International Accounting Standards Board (“IASB”) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, a lessee will be required to recognize assets and liabilities for capital and operating leases with lease terms of more than 12 months. Additionally, this update will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The standard is effective for the Company for its annual period beginning January 1, 2020, and interim periods therein, with early adoption permitted. The Company is currently evaluating the potential impact this new standard may have on its financial statements, but believes the most significant change will relate to building leases.

In May 2014, in addition to several amendments issued during 2016, the FASB updated the accounting guidance related to revenue from contracts with customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The standard defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for the Company for its annual period beginning January 1, 2019, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is in the preliminary stages of evaluating the impact that the new standard will have on its financial statements.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.

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Basic and Diluted Net Loss Per Common Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Basic and Diluted Net Loss Per Common Share

2. Basic and Diluted Net Loss per Common Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents are primarily comprised of warrants for the purchase of common stock and stock options. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding because their effect would have been anti-dilutive due to the Company reporting a net loss. The Company had potentially dilutive securities, shares of common stock, totaling approximately 1.5 million and 1.1 million as of September 30, 2017 and 2016, respectively.

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Inventories, Net

9 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Inventories, Net

3. Inventories, net

Inventories consisted of the following (in thousands):

	September 30, 2017		December 31, 2016
Raw materials	$	676	$	761
WIP		101		75
Finished goods		4,889		6,377
	$	5,666	$	7,213

Finished goods included consigned inventory totaling approximately $2.8 million and $5.6 million as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017, inventories totaling $1.7 million and $3.9 million were classified as current and long-term, respectively. Inventories classified as current represent the carrying value of inventories at September 30, 2017 that management estimates will be sold by September 30, 2018. As of December 31, 2016, all inventories were classified as current.

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Intangible Assets

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

4. Intangible Assets

Intangible assets consisted of the following (in thousands):

	September 30, 2017			December 31, 2016
Developed technology	$	4,685		$	4,685
Customer relationships		3,990			3,990
Other patents and patent applications		562			562
Trademarks		350			350
		9,587			9,587
Less: accumulated amortization		(6,802	)		(6,400	)
	$	2,785		$	3,187

Amortization expense is expected to approximate $134,000 for the remainder of 2017, $536,000 per year through 2021, $369,000 in 2022 and a total of $140,000 thereafter, until fully amortized.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

5. Fair Value Measurements

Financial Instruments Measured and Recorded at Fair Value on a Recurring Basis

The Company has issued certain warrants to purchase shares of common stock, which are considered mark-to-market liabilities and are re-measured to fair value at each reporting period in accordance with accounting guidance. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1	-	quoted market prices for identical assets or liabilities in active markets.
Level 2	-	observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level 3	-	unobservable inputs reflecting management’s assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The Company classifies assets and liabilities measured at fair value in their entirety based on the lowest level of input that is significant to their fair value measurement. No financial assets were measured on a recurring basis as of September 30, 2017 and December 31, 2016. The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2017 and December 31, 2016:

	Fair Value Measurements as of September 30, 2017
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	-	$	-	$	506	$	506

	Fair Value Measurements as of December 31, 2016
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	-	$	-	$	528	$	528

The Company did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy during the nine months ended September 30, 2017 and 2016.

The assumptions used in estimating the common stock warrant liability as of September 30, 2017 and December 31, 2016 were as follows:

	September 30, 2017			December 31, 2016
Weighted-average risk free interest rate		1.6	%		0.9	%
Weighted-average expected life (in years)		2.7			2.5
Expected dividend yield		-	%		-	%
Weighted-average expected volatility		120.0	%		136.0	%

Other Financial Instruments

The Company’s recorded values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. The recorded value of debt approximates the fair value as the interest rates are reflective of market interest rates.

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Accrued Liabilities

9 Months Ended

Sep. 30, 2017

Payables and Accruals [Abstract]

Accrued Liabilities

6. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	September 30, 2017		December 31, 2016
Commissions	$	16	$	466
Payroll and related expenses		357		461
Royalties		182		416
Interest payable		24		76
Final loan payment fees		1,624		1,333
Other		153		431
	$	2,356	$	3,183

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Debt

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Debt

7. Debt

North Stadium Term Loan

On July 28, 2017, the Company entered into a $2.5 million term loan (the “North Stadium Loan”) with North Stadium Investments, LLC (“North Stadium”), a company owned and controlled by the Company’s Chief Executive Officer and Chairman of the Board. The North Stadium Loan bears interest at 10% per annum and requires the Company to make monthly interest only payments from September 5, 2017 through July 5, 2018. All principal and unpaid interest (if any) under the North Stadium Loan is due and payable on July 28, 2018. The North Stadium Loan is secured by substantially all of the assets of the Company but is junior to security interest in assets encumbered by the Hercules Term Loan (see below). In connection with the North Stadium Loan the Company also issued North Stadium a warrant to purchase up to 55,000 shares of the Company’s common stock at a purchase price of $5.04 per share, subject to a 5-year term. The relative estimated value of the warrants on the date of grant approximated $0.2 million, which is being amortized as interest expense over the life of the term loan. The assumptions used in the calculation of the fair value of the warrants issued on July 28, 2017, were as follows:

Weighted-average risk-free interest rate	1.8	%
Weighted-average expected life (in years)	4.8
Expected dividend yield	-	%
Weighted-average expected volatility	122.0	%

Hercules Term Loan

On June 30, 2014, the Company entered into a Loan and Security Agreement with Hercules which provided the Company with a $20 million term loan. The Hercules Term Loan matures on January 1, 2018. The Hercules Term Loan included a $0.2 million closing fee, which was paid to Hercules on the closing date of the loan. The closing fee was recorded as a debt discount and is being amortized to interest expense over the life of the loan. The Hercules Term Loan also includes a non-refundable final payment fee of $1.7 million. The final payment fee is being accrued and recorded to interest expense over the life of the loan. The Hercules Term Loan bears interest at the rate of the greater of either (i) the prime rate plus 7.7%, and (ii) 10.95%, provided however, that during an adjustment period, the term loan interest rate shall mean for any day a per annum rate of interest equal to the grater of either (i) the prime rate plus 9.2%, and (ii) 12.45%. The applicable rate was 11.95% as of September 30, 2017. Interest accrues from the closing date of the loan and interest payments are due monthly. Principal payments commenced August 1, 2015 and are currently being made in equal monthly installments totaling approximately $500,000, with the remainder due at maturity. The Hercules Term Loan is secured by a first priority security interest in substantially all of its assets, including intellectual property, of the Company and contains covenants restricting payments to certain Company affiliates and certain financial reporting requirements.

On September 8, 2015, the Company entered into a Consent and First Amendment to Loan and Security Agreement (the “Amendment”) with Hercules. The Amendment modified the liquidity covenant to reduce the required minimum cash and cash equivalents balance by $500,000 for every $1.0 million in principal paid, up to a minimum of $2.5 million. Once the Hercules Term Loan principal balance is below $2.5 million the Company is only required to maintain a cash and cash equivalents balance equal to the outstanding principal balance on the Hercules Term loan. The minimum cash and cash equivalents balance required to maintain compliance with the minimum liquidity covenant as of September 30, 2017, was $2.5 million. The Company believes it will maintain compliance with the liquidity covenant related to the Hercules Term Loan at least through November 2017. To maintain compliance beyond that date, the Company will likely require additional cash.

See discussion below with respect to the assignment of $3.0 million of the principal balance of the Hercules Term Loan to Riverside Merchant Partners, LLC (“Riverside”) and the subsequent agreement between the Company and Riverside to exchange the $3.0 million of the Hercules Term Loan held by Riverside for subordinated convertible promissory notes in the aggregate principal amount of $3.0 million.

Hercules and Riverside Debt Exchange

On April 4, 2016, the Company entered into an Assignment and Second Amendment to Loan and Security Agreement (the “Assignment Agreement”) with Riverside and Hercules, pursuant to which Hercules sold $1.0 million of the principal amount outstanding under the Hercules Term Loan to Riverside. In addition, pursuant to the terms of the Assignment Agreement, Riverside acquired an option to purchase an additional $2.0 million of the principal amount outstanding under the Hercules Term Loan from Hercules. On April 18, 2016, Riverside exercised and purchased an additional $1.0 million of the principal amount of the Hercules Term Loan and on April 27, 2016, Riverside exercised the remainder of its option and purchased an additional $1.0 million of the principal amount of the Hercules Term Loan from Hercules.

Riverside Debt

On April 4, 2016, the Company entered into an exchange agreement (the “Exchange Agreement”) with Riverside, pursuant to which the Company agreed to exchange $1.0 million of the principal amount outstanding under the Hercules Term Loan held by Riverside for a subordinated convertible promissory note in the principal amount of $1.0 million (the “First Exchange Note”) and a warrant to purchase 8,333 shares of common stock of the Company at a fixed exercise price of $0.14 per share (the “First Exchange Warrant”) (the “Exchange”). All principal accrued under the Exchange Notes was convertible into shares of common stock at the election of the Holder at any time at a fixed conversion price of $0.12 per share (the “Conversion Price”). The closing stock price on April 4, 2016, was $0.14 and a beneficial conversion feature of $245,000 was recorded to equity and as a debt discount. The warrant value of $106,000 was recorded to equity and as a debt discount.

In addition, pursuant to the terms and conditions of the Exchange Agreement, the Company and Riverside had the option to exchange an additional $2.0 million of the principal amount of the Hercules Term Loan for an additional subordinated convertible promissory note in the principal amount of up to $2.0 million and an additional warrant to purchase 8,333 shares of common stock (the “Second Exchange Warrant”). The Exchange Agreement also provided that if the volume-weighted average price of the Company’s common stock was less than the Conversion Price, the Company would issue up to an additional 12,500 shares of common stock (the “True-Up Shares”) to Riverside, which was subsequently reduced to 11,667 shares of common stock.

On April 18, 2016, the Company and Riverside exercised their option to exchange an additional $1.0 million of the principal amount of the Hercules Term Loan for an additional subordinated convertible promissory note in the principal amount of $1.0 million (the “Second Exchange Note”). The closing stock price on April 18, 2016, was $0.17 and a beneficial conversion feature of $412,000 was recorded to equity and as a debt discount. Additionally, on April 27, 2016, the Company and Riverside exercised their option to exchange an additional $1.0 million of the principal amount of the Term Loan for an additional subordinated convertible promissory note in the principal amount of $1.0 million (the “Third Exchange Note”) and an additional warrant to purchase 8,333 shares of the Company’s common stock at a fixed exercise price of $0.14 per share. The warrant value of $107,000 was recorded to equity and as a debt discount. The closing stock price on April 27, 2016, was $0.14 and a beneficial conversion feature of $268,000 was recorded to equity and as a debt discount. Financing costs were $267,000 and were recorded to interest expense. The unamortized deferred financing costs and debt discount of the Hercules Term Loan exchanged were $244,000 at the time of the exchange and were recorded as a loss on extinguishment of debt related to the debt exchange. The First Exchange Note, the Second Exchange Note and the Third Exchange Note are collectively referred to herein as the “Exchange Notes.”

Pursuant to the terms of the Exchange Notes, since the volume-weighted average price of the Company’s common stock was less than the Conversion Price on May 6, 2016, the Company issued an additional 11,667 shares of common stock to Riverside and recorded the value of the True-Up Shares of $199,000 to interest expense and equity.

All principal outstanding under each of the Exchange Notes was to be due on April 3, 2018 (the “Maturity Date”). Each of the Exchange Notes bore interest at a rate of 6% per annum, with the interest that would accrue on the initial principal amount of the Exchange Notes during the first 12 months being guaranteed and deemed earned as of the date of issuance. Prior to the Maturity Date, all interest accrued under the Exchange Notes was payable in cash or, if certain conditions were met, payable in shares of common stock at the Company’s option, at a conversion price of $0.11 per share. During 2016, the entire principal amount of the First and Second Exchange Notes, $300,000 of the Third Exchange Note, and the interest related to the First, Second, and Third Exchange Notes was converted into 145,227 shares of common stock. In July 2016, the Company paid Riverside $840,000 to redeem in full the remaining principal balance of the Third Exchange Note. The debt discounts associated with the converted debt was recorded to interest expense.

Long-term debt consisted of the following (in thousands):

	September 30, 2017									December 31, 2016
	Outstanding Principal			Unamortized Discount and Debt Issuance Costs			Net Carrying Amount			Outstanding Principal			Unamortized Discount and Debt Issuance Costs			Net Carrying Amount
Hercules Term Loan	$	2,377		$	(58	)	$	2,319		$	7,421		$	(409	)	$	7,012
North Stadium Term Loan		2,500			(205	)		2,295			-			-			-
Less: Current portion		(4,877	)		263			(4,614	)		(7,421	)		409			(7,012	)
Long-term debt	$	-		$	-		$	-		$	-		$	-		$	-

Based on contractual principal payment obligations on the Hercules term loan as of September 30, 2017, before considering acceleration of maturity payments due to potential non-compliance with loan covenants, the entire principal balance is due January 1, 2018, and therefore current.

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Equity

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Equity

8. Equity

During the nine months ended September 30, 2017, the Company completed a secondary offering in which the Company sold 741,667 shares of common stock and warrants to purchase 333,750 shares of common stock for $0.04 per unit (each unit consisting of one share of common stock and 0.45 warrants). The Company received approximately $3.8 million in proceeds from the offering, which was net of approximately $732,000 in total underwriting expenses, commission and other offering expenses. The warrants became exercisable on the closing date, expire on the five-year anniversary of the closing date, and have an initial exercise price per share equal to $0.05 per share, subject to adjustments for events of recapitalization, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock.

On February 24, 2017, the underwriter in the 2017 secondary offering exercised its option to purchase additional warrants for 30,000 shares of the Company’s common stock.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

9. Stock-Based Compensation

A summary of the Company’s outstanding stock option activity for the nine months ended September 30, 2017, is as follows:

				September 30, 2017
	Options			Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Intrinsic Value
As of December 31, 2016		11,446		$	2.55		8.2	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		-			-		-		-
Expired		(47	)		63.78		-		-
As of September 30, 2017		11,399		$	2.30		7.3		-
Exercisable as of September 30, 2017		11,025		$	2.82		7.3		-
Expected to vest as of September 30, 2017		11,399		$	2.30		7.3		-

The Company estimates the fair value of each stock option on the grant date using the Black-Scholes-Merton valuation model, which requires several estimates including an estimate of the fair value of the underlying common stock on grant date. The expected volatility was based on an average of the historical volatility of a peer group of similar companies. The expected term was calculated utilizing the simplified method. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The following weighted average assumptions were used in the calculation to estimate the fair value of options granted to employees during the nine months ended September 30, 2016 (no options were granted for the nine months ended September 30, 2017):

	Nine Months Ended
	September 30, 2016
Weighted-average risk-free interest rate		1.6	%
Weighted-average expected life (in years)		6.3
Expected dividend yield		-	%
Weighted-average expected volatility		65.0	%

Summary of Stock-Based Compensation Expense

Total stock-based compensation expense included in the condensed consolidated statements of operations is allocated as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Cost of revenue	$	-	$	6	$	10	$	13
Research and development		11		18		61		71
General and administrative		23		20		69		95
Selling and marketing		20		1		33		18
Capitalized into inventory		-		11		-		14
	$	54	$	56	$	173	$	211

Unrecognized stock-based compensation as of September 30, 2017 is as follows (in thousands):

			Weighted Average
	Unrecognized Stock-Based		Remaining of Recognition
	Compensation		(in years)
Stock options	$	88		0.65

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

10. Commitments and Contingencies

From time to time, the Company is subject to various claims and legal proceedings covering matters that arise in the ordinary course of its business activities. Management believes any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, operating results or cash flows.

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Organization and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Organization

Organization

Amedica Corporation was incorporated in the state of Delaware on December 10, 1996. Amedica Corporation is a materials company focused on developing, manufacturing and selling silicon nitride ceramics that are used in medical implants and in a variety of industrial devices. At present, Amedica Corporation commercializes silicon nitride in the spine implant market and believes that its silicon nitride manufacturing expertise positions it favorably to introduce new and innovative devices in the medical and non- medical fields. Amedica Corporation also believes that it is the first and only company to commercialize silicon nitride medical implants. Amedica Corporation acquired US Spine, Inc. (“US Spine”), a Delaware spinal products corporation with operations in Florida, on September 20, 2010. Amedica Corporation and US Spine are collectively referred to as “Amedica” or “the Company in these condensed consolidated financial statements. The Company’s products are sold primarily in the United States.

Basis of Presentation

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”), and include all assets and liabilities of the Company and its wholly-owned subsidiary, US Spine. All material intercompany transactions and balances have been eliminated in consolidation. SEC rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, so long as the statements are not misleading. In the opinion of management, these financial statements and accompanying notes contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented herein. These condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on September 20, 2017. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017. The Company’s significant accounting policies are set forth in Note 1 to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2016.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the periods then ended. Actual results could differ from those estimates. The most significant estimates relate to inventory, stock-based compensation, long-lived and intangible assets and the liability for preferred stock and common stock warrants.

Liquidity and Capital Resources

Liquidity and Capital Resources

The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

For the nine months ended September 30, 2017 and 2016, the Company incurred net losses of $7.1 million and $12.8 million, respectively, and used cash in operations of $4.4 million and $5.3 million, respectively. The Company had an accumulated deficit of $220 million and $213 million as of September 30, 2017 and December 31, 2016, respectively. To date, the Company’s operations have been principally financed by proceeds received from the issuance of preferred and common stock, convertible debt and bank debt and, to a lesser extent, cash generated from product sales. It is anticipated that the Company will continue to generate operating losses and use cash in operating activities. The Company’s continuation as a going concern is dependent upon its ability to increase sales, implement cost saving measures, maintain compliance with debt covenants and/or raise additional funds through the capital markets. Whether and when the Company can attain profitability and positive cash flows from operating activities or obtain additional financing is uncertain.

In 2016, the Company implemented certain cost saving measures, including workforce and office space reductions, and will continue to evaluate additional cost savings alternatives during 2017. These additional cost savings measures may include additional workforce and research and development reductions, as well as cuts to certain other operating expenses. In addition to these costs saving measures, an experienced and highly successful leader for the Sales and Marketing team was recruited and hired. This individual has subsequently hired additional experienced personnel in Sales and Marketing. The Company is actively generating additional scientific and clinical data to have it published in leading industry publications. The unique features of the Company’s silicon nitride material are not well known, and publication of such data would help sales efforts as the Company approaches new prospects. The Company is also making additional changes to the sales strategy, including a focus on revenue growth of silicon nitride lateral lumbar implants and the newly developed pedicle screw system (known as Taurus).

As discussed further in Note 7, in June 2014 the Company entered into a term loan with Hercules Technology Growth Capital, Inc. (“Hercules Technology”), as administrative and collateral agent for the lenders thereunder and as lender, and Hercules Technology III, LP, (“HT III” and, together with Hercules Technology, “Hercules”) as lender (the “Hercules Term Loan”). The Hercules Term Loan has a liquidity covenant that requires the Company to maintain a cash balance of the lesser of $2.5 million or the outstanding balance of the Hercules Term Loan. As of September 30, 2017, the outstanding balance on the Hercules Term Loan was $2.3 million and the Company’s cash balance was $2.8 million. The Company believes it will be in position to maintain compliance with the liquidity covenant related to the Hercules Term Loan at least through November 2017. On July 28, 2017, the Company entered into a $2.5 million term loan with a related party that will assist the Company in its cash needs through November 2017. The Company has common stock that is publicly traded and has been able to successfully raise capital when needed since the date of the Company’s initial public offering. The Company is engaged in discussions with investment and banking firms to examine financing alternatives, including options to encourage the exercise of outstanding warrants and other lending alternatives.

If the Company is unable to access additional funds prior to becoming non-compliant with the financial and liquidity covenants related to its debt, the outstanding balances of its debt would become immediately due and payable at the option of the lender. Although the Company is seeking to obtain additional equity and/or debt financing, such funding is not assured and may not be available to the Company on favorable or acceptable terms, and may involve significant restrictive covenants. Any additional equity financing is also not assured and, if available to the Company, will most likely be dilutive to its current stockholders. If the Company is not able to obtain additional debt or equity financing on a timely basis, the impact on the Company will be material and adverse.

Reverse Stock Split

Reverse Stock Split

On November 10, 2017, the Company effected a 1 for 12 reverse stock split of the Company’s common stock. The par value and the authorized shares of the common and convertible preferred stock were not adjusted as a result of the reverse stock split. All common stock share and per-share amounts for all periods presented in these condensed consolidated financial statements prior to November 10, 2017 have been adjusted retroactively to reflect the reverse stock split.

Significant Accounting Policies

Significant Accounting Policies

There have been no significant changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

New Accounting Pronouncement, Not Yet Adopted

New Accounting Pronouncement, Not Yet Adopted

In January 2017, the FASB issued ASU 2017-04 Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this guidance eliminate the requirement to calculate the implied fair value of goodwill used to measure goodwill impairment charge (Step 2). As a result, an impairment charge will equal the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the amount of goodwill allocated to the reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendment should be applied on a prospective basis. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. The impact of this guidance for the Company will depend on the outcomes of future goodwill impairment tests.

In August 2016, the Financial Accounting Standards Board (“FASB”) updated accounting guidance on the following eight specific cash flow classification issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Under existing U.S. GAAP, there is no specific guidance on the eight cash flow classification issues aforementioned. These updates are effective for the Company for its annual period beginning January 1, 2019, and interim periods therein, with early adoption permitted. The guidance in this standard is not expected to have a material impact on the financial statements of the Company.

In March 2016 the FASB updated the accounting guidance related to stock compensation. This update simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as the well as classification in the statement of cash flows. The standard is effective for the Company for its annual period beginning January 1, 2018. The guidance in this standard is not expected to have a material impact on the financial statements of the Company.

In February 2016, the FASB updated the accounting guidance related to leases as part of a joint project with the International Accounting Standards Board (“IASB”) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, a lessee will be required to recognize assets and liabilities for capital and operating leases with lease terms of more than 12 months. Additionally, this update will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The standard is effective for the Company for its annual period beginning January 1, 2020, and interim periods therein, with early adoption permitted. The Company is currently evaluating the potential impact this new standard may have on its financial statements, but believes the most significant change will relate to building leases.

In May 2014, in addition to several amendments issued during 2016, the FASB updated the accounting guidance related to revenue from contracts with customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The standard defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for the Company for its annual period beginning January 1, 2019, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is in the preliminary stages of evaluating the impact that the new standard will have on its financial statements.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.

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Inventories, Net (Tables)

9 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Components of Inventory

Inventories consisted of the following (in thousands):

	September 30, 2017		December 31, 2016
Raw materials	$	676	$	761
WIP		101		75
Finished goods		4,889		6,377
	$	5,666	$	7,213

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Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets consisted of the following (in thousands):

	September 30, 2017			December 31, 2016
Developed technology	$	4,685		$	4,685
Customer relationships		3,990			3,990
Other patents and patent applications		562			562
Trademarks		350			350
		9,587			9,587
Less: accumulated amortization		(6,802	)		(6,400	)
	$	2,785		$	3,187

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Inputs, Liabilities, Quantitative Information [Line Items]

Schedule of Financial Liabilities Measured at Fair Value on Recurring Basis by Level within Fair Value Hierarchy

The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2017 and December 31, 2016:

	Fair Value Measurements as of September 30, 2017
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	-	$	-	$	506	$	506

	Fair Value Measurements as of December 31, 2016
Description	Level 1		Level 2		Level 3		Total
Derivative liability
Common stock warrants	$	-	$	-	$	528	$	528

Common Stock Warrants [Member]

Fair Value Inputs, Liabilities, Quantitative Information [Line Items]

Schedule of Assumptions Used in Estimating Fair Value

The assumptions used in estimating the common stock warrant liability as of September 30, 2017 and December 31, 2016 were as follows:

	September 30, 2017			December 31, 2016
Weighted-average risk free interest rate		1.6	%		0.9	%
Weighted-average expected life (in years)		2.7			2.5
Expected dividend yield		-	%		-	%
Weighted-average expected volatility		120.0	%		136.0	%

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Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2017

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	September 30, 2017		December 31, 2016
Commissions	$	16	$	466
Payroll and related expenses		357		461
Royalties		182		416
Interest payable		24		76
Final loan payment fees		1,624		1,333
Other		153		431
	$	2,356	$	3,183

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Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of Assumptions used in Fair Value of Warrants

The assumptions used in the calculation of the fair value of the warrants issued on July 28, 2017, were as follows:

Weighted-average risk-free interest rate	1.8	%
Weighted-average expected life (in years)	4.8
Expected dividend yield	-	%
Weighted-average expected volatility	122.0	%

Schedule of Outstanding Long-Term Debt

Long-term debt consisted of the following (in thousands):

	September 30, 2017									December 31, 2016
	Outstanding Principal			Unamortized Discount and Debt Issuance Costs			Net Carrying Amount			Outstanding Principal			Unamortized Discount and Debt Issuance Costs			Net Carrying Amount
Hercules Term Loan	$	2,377		$	(58	)	$	2,319		$	7,421		$	(409	)	$	7,012
North Stadium Term Loan		2,500			(205	)		2,295			-			-			-
Less: Current portion		(4,877	)		263			(4,614	)		(7,421	)		409			(7,012	)
Long-term debt	$	-		$	-		$	-		$	-		$	-		$	-

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Option Activity

A summary of the Company’s outstanding stock option activity for the nine months ended September 30, 2017, is as follows:

				September 30, 2017
	Options			Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Intrinsic Value
As of December 31, 2016		11,446		$	2.55		8.2	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		-			-		-		-
Expired		(47	)		63.78		-		-
As of September 30, 2017		11,399		$	2.30		7.3		-
Exercisable as of September 30, 2017		11,025		$	2.82		7.3		-
Expected to vest as of September 30, 2017		11,399		$	2.30		7.3		-

Schedule of Black-Scholes-Merton Option Pricing Model

The following weighted average assumptions were used in the calculation to estimate the fair value of options granted to employees during the nine months ended September 30, 2016 (no options were granted for the nine months ended September 30, 2017):

	Nine Months Ended
	September 30, 2016
Weighted-average risk-free interest rate		1.6	%
Weighted-average expected life (in years)		6.3
Expected dividend yield		-	%
Weighted-average expected volatility		65.0	%

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

Total stock-based compensation expense included in the condensed consolidated statements of operations is allocated as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Cost of revenue	$	-	$	6	$	10	$	13
Research and development		11		18		61		71
General and administrative		23		20		69		95
Selling and marketing		20		1		33		18
Capitalized into inventory		-		11		-		14
	$	54	$	56	$	173	$	211

Schedule of Unrecognized Compensation Cost, Nonvested Awards

Unrecognized stock-based compensation as of September 30, 2017 is as follows (in thousands):

			Weighted Average
	Unrecognized Stock-Based		Remaining of Recognition
	Compensation		(in years)
Stock options	$	88		0.65

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Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Jul. 28, 2017	Dec. 31, 2016	Dec. 31, 2015
Net loss	$ 2,815	$ 4,338	$ 7,070	$ 12,790
Net cash used in operating activities			4,396	5,257
Accumulated deficit	220,206		$ 220,206			$ 213,135
Debt instrument, payment terms			As discussed further in Note 7, in June 2014 the Company entered into a term loan with Hercules Technology Growth Capital, Inc. (“Hercules Technology”), as administrative and collateral agent for the lenders thereunder and as lender, and Hercules Technology III, LP, (“HT III” and, together with Hercules Technology, “Hercules”) as lender (the “Hercules Term Loan”). The Hercules Term Loan has a liquidity covenant that requires the Company to maintain a cash balance of the lesser of $2.5 million or the outstanding balance of the Hercules Term Loan. As of September 30, 2017, the outstanding balance on the Hercules Term Loan was $2.3 million and the Company’s cash balance was $2.8 million. The Company believes it will be in position to maintain compliance with the liquidity covenant related to the Hercules Term Loan at least through November 2017. On July 28, 2017, the Company entered into a $2.5 million term loan with a related party that will assist the Company in its cash needs through November 2017.
Term loan principal balance					$ 2,500
Cash and cash equivalents	2,816	$ 10,613	$ 2,816	$ 10,613		$ 6,915	$ 11,485
November 10, 2017 [Member]
Reverse stock split			1 for 12 reverse stock
Hercules Term Loan [Member]
Term loan principal balance	2,300		$ 2,300
Hercules Term Loan [Member] | Maximum [Member]
Term loan principal balance	$ 2,500		$ 2,500

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Basic and Diluted Net Loss Per Common Share (Details Narrative) - shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Abstract]
Dilutive securities	1,500,000	1,100,000

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Inventories, Net (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Finished goods include consigned inventory	$ 2,800	$ 5,600
Inventories, current	1,733	7,213
Inventories, non - current	$ 3,933

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Inventories, Net - Components of Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 676	$ 761
WIP	101	75
Finished Goods	4,889	6,377
Total inventory	$ 5,666	$ 7,213

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Intangible Assets (Details Narrative) $ in Thousands	Sep. 30, 2017 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expenses	$ 134
Estimated amortization expense, 2021	536
Estimated amortization expense, 2022	369
Thereafter	$ 140

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Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Total intangibles	$ 9,587	$ 9,587
Less accumulated amortization	(6,802)	(6,400)
Total intangibles net of amortization	2,785	3,187
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangibles	350	350
Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangibles	4,685	4,685
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangibles	3,990	3,990
Other Patents And Patent Applications [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangibles	$ 562	$ 562

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Fair Value Measurements (Details Narrative) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Fair Value Disclosures [Abstract]
Financial assets measured on recurring basis

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Fair Value Measurements - Schedule of Financial Liabilities Measured at Fair Value on Recurring Basis by Level within Fair Value Hierarchy (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 506	$ 528
Fair Value, Measurements, Recurring [Member] | Common Stock Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	506	528
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Common Stock Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Common Stock Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Common Stock Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 506	$ 528

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Fair Value Measurements - Schedule of Assumptions Used in Estimating Fair Value (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Weighted-average risk free interest rate	1.80%
Weighted-average expected life (in years)	4 years 9 months 18 days
Expected dividend yield	0.00%
Common Stock Warrants [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Weighted-average risk free interest rate	1.60%	0.90%
Weighted-average expected life (in years)	2 years 8 months 12 days	2 years 6 months
Expected dividend yield	0.00%	0.00%
Weighted average expected volatility	120.00%	136.00%

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Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accrued Liabilities, Current [Abstract]
Commissions	$ 16	$ 466
Payroll and related expenses	357	461
Royalties	182	416
Interest payable	24	76
Final loan payment fees	1,624	1,333
Other	153	431
Total accrued liabilities	$ 2,356	$ 3,183

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Debt (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands								9 Months Ended
	Jul. 28, 2017	May 06, 2016	Apr. 27, 2016	Apr. 18, 2016	Apr. 04, 2016	Sep. 08, 2015	Jun. 30, 2014	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Warrant exercise price per share								$ 0.05
Number of shares issued								3,022,073		2,280,407
Payment of debt								$ 5,043	$ 5,071
Exchange Agreement [Member]
Percentage of loan bear interest rate								6.00%
Debt maturity date								Apr. 03, 2018
Debt principal balance								$ 300
Debt instrument conversion price								$ 0.11
Hercules Term Loan [Member]
Debt principal amount								$ 2,377		$ 7,421
Percentage of loan bear interest rate							10.95%	12.45%
Term loan, payment terms								Principal payments commenced August 1, 2015 and are currently being made in equal monthly installments of approximately $500,000, with the remainder due at maturity.
Debt instrument, periodic payment, principal								$ 500
Hercules Term Loan [Member] | Prime Rate [Member]
Percentage of loan bear interest rate							7.70%	9.20%
Hercules Term Loan [Member] | Closing Date [Member]
Percentage of loan bear interest rate								11.95%
Term loan fee amount								$ 200
Final payment fee for debt								1,700
Riverside Merchant Partners, LLC [Member]
Debt principal amount								3,000
Subordinated convertible promissory notes								$ 3,000
Riverside Merchant Partners, LLC [Member] | Hercules and Riverside Debt Assignment [Member]
Debt principal amount					$ 1,000
Debt additional principal			$ 1,000	$ 1,000	2,000
Riverside Debt [Member]
Number of shares issued		11,667
Value of true up shares to interest expense and equity		$ 199
First, Second and Third Exchange Note [Member] | Exchange Agreement [Member]
Debt instrument converted shares								145,227
Payment of debt								$ 840
First Amendment to Loan and Security Agreement [Member] | Hercules Term Loan [Member]
Debt principal amount						$ 1,000		2,500
Debt instrument, covenant description						The Amendment modified the liquidity covenant to reduce the required minimum cash and cash equivalents balance by $500,000 for every $1.0 million in principal paid, up to a minimum of $2.5 million. Once the Hercules Term Loan principal balance is below $2.5 million the Company is only required to maintain a cash and cash equivalents balance equal to the outstanding principal balance on the Hercules Term loan. The minimum cash and cash equivalents balance required to maintain compliance with the minimum liquidity covenant as of September 30, 2017, was $2.5 million.
First Amendment to Loan and Security Agreement [Member] | Hercules Term Loan [Member] | Minimum [Member]
Debt principal amount						$ 500
Debt principal balance						$ 2,500
Exchange Agreement [Member] | Hercules and Riverside Debt Assignment [Member]
Debt principal amount					$ 2,000
Warrant to purchase shares of common stock					8,333
Debt additional principal					$ 2,000
Number of shares issued					12,500
Number of shares reduced					11,667
Exchange Agreement [Member] | Hercules Term Loan [Member]
Fair value of warrants			107
Debt beneficial conversion feature			268
Financing costs			267
Debt conversion original debt amount			244
Exchange Agreement [Member] | Riverside Debt [Member]
Debt principal amount					$ 1,000
Fair value of warrants					106
Subordinated convertible promissory notes					$ 1,000
Debt instrument conversion price					$ 0.12
Common stock closing price per share					$ 0.14
Debt instrument premium amount					$ 245
Exchange Agreement [Member] | Riverside Debt [Member] | Warrant [Member]
Warrant to purchase shares of common stock					8,333
Warrant exercise price per share					$ 0.14
Exchange Agreement [Member] | Riverside Debt [Member] | Hercules Term Loan [Member]
Debt principal amount			$ 1,000	1,000
Warrant to purchase shares of common stock			8,333
Debt additional principal			$ 1,000	$ 1,000
Warrant exercise price per share			$ 0.14
Common stock closing price per share			$ 0.14	$ 0.17
Debt beneficial conversion feature				$ 412
North Stadium Investments, LLC [Member]
Debt principal amount	$ 2,500
Percentage of loan bear interest rate	10.00%
Debt maturity date	Jul. 28, 2018
Warrant to purchase shares of common stock	55,000
Sale of stock price per share	$ 5.04
Warrant term	5 years
Fair value of warrants	$ 200
Hercules Technology Capital, Inc. [Member] | Loan and Security Agreement [Member]
Debt principal amount							$ 20,000
Debt maturity date							Jan. 01, 2018
Hercules Term Loan [Member] | Riverside Merchant Partners, LLC [Member]
Debt principal amount								$ 3,000

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Debt - Schedule of Assumptions used in Fair Value of Warrants (Details)	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
Weighted-average risk-free interest rate	1.80%
Weighted-average expected life (in years)	4 years 9 months 18 days
Expected dividend yield	0.00%
Weighted-average expected volatility	122.00%

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Debt - Schedule of Outstanding Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Current portion, outstanding principal	$ (4,877)	$ (7,421)
Current portion, unamortized discount and debt issuance costs	263	409
Current portion, net carrying amount	(4,614)	(7,012)
Long-term debt, outstanding principal
Long-term debt, unamortized discount and debt issuance costs
Long-term debt
Hercules Term Loan [Member]
Debt Instrument [Line Items]
Total debt, outstanding principal	2,377	7,421
Total debt, unamortized discount and debt issuance costs	(58)	(409)
Total debt, net carrying amount	2,319	7,012
North Stadium Term Loan [Member]
Debt Instrument [Line Items]
Total debt, outstanding principal	2,500
Total debt, unamortized discount and debt issuance costs	(205)
Total debt, net carrying amount	$ 2,295

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Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2017	Feb. 24, 2017
Warrant exercise price per share	$ 0.05
Proceeds from issuance of equity	$ 3,800
Underwriting expenses	$ 732
Secondary Offering [Member] | Underwriter [Member]
Number of warrant to purchase shares of common stock		30,000
Secondary Offering [Member] | Common Stock [Member]
Number of shares of common stock sold	741,667
Price per unit	$ 0.04
Secondary Offering [Member] | Warrants [Member]
Number of warrant to purchase shares of common stock	333,750
Warrant exercise price per share	$ 0.45

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Stock-Based Compensation - Summary of Stock Option Activity (Details)	9 Months Ended
	Sep. 30, 2017 USD ($) $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options, Outstanding at beginning of period | shares	11,446
Options, Granted | shares
Options, Exercised | shares
Options, Forfeited | shares
Options, Expired | shares	(47)
Options, Outstanding at end of period | shares	11,399
Options, Exercisable at end of period | shares	11,025
Options, Expected to vest at end of period | shares	11,399
Weighted Average Exercise Price, Outstanding at beginning of period | $ / shares	$ 2.55
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Forfeited | $ / shares
Weighted Average Exercise Price, Expired | $ / shares	63.78
Weighted Average Exercise Price, Outstanding at end of period | $ / shares	2.30
Weighted Average Exercise Price, Exercisable at end of period | $ / shares	2.82
Weighted Average Exercise Price, Expected to vest at end of period | $ / shares	$ 2.30
Weighted Average Remaining Contractual Terms (Years), Outstanding	8 years 2 months 12 days
Weighted Average Remaining Contractual Terms (Years), Outstanding	7 years 3 months 19 days
Weighted Average Remaining Contractual Terms (Years), Exercisable	7 years 3 months 19 days
Weighted Average Remaining Contractual Terms (years), Expected to vest	7 years 3 months 19 days
Intrinsic Value, Outstanding at beginning of period | $
Intrinsic Value, Outstanding at end of period | $
Intrinsic Value, Exercisable at end of period | $
Intrinsic Value, Expected to vest at end of period | $

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Stock-Based Compensation - Schedule of Black-Scholes-Merton Option Pricing Model (Details) - Employee Stock Option [Member]	9 Months Ended
	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average risk-free interest rate	1.60%
Weighted-average expected life (in years)	6 years 3 months 19 days
Expected dividend yield	0.00%
Weighted-average expected volatility	65.00%

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Stock-Based Compensation - Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (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]
Total stock-based compensation expense	$ 54	$ 56	$ 173	$ 211
Cost of Revenue [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense		6	10	13
Research and Development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	11	18	61	71
General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	23	20	69	95
Selling and Marketing [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	20	1	33	18
Capitalized into Inventory [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense		$ 11		$ 14

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Stock-Based Compensation - Schedule of Unrecognized Compensation Cost, Nonvested Awards (Details) - Employee Stock Option [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock-based compensation	$ 88
Weighted average remaining period of recognition (in years)	7 months 24 days