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. For additional information regarding the restructuring actions taken in the 2017, please refer to Note 3., “Restructuring,” included under Item 8 of our 2017 Annual Report.

During the three months ended March 31, 2018 we recorded net restructuring credits totaling approximately $50 thousand, primarily related to the revision of our initial estimates of the cost for the remaining lease obligation for our former Arlington, Virginia office.

For the three months ended March 31, 2017, we recorded restructuring charges totaling approximately $0.7 million, consisting of approximately $0.6 million in severance and related benefits, $19 thousand in facilities costs related to the termination of the Rochester, Minnesota lease obligation, and $11 thousand in other restructuring costs.

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 expect to incur insignificant 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			Total
Balance at January 1, 2018	$	62		$	340		$	402
Additions	—			—			—
Accretion of lease obligations	—			6			6
Adjustment of lease obligations	—			(56		)	(56		)
Payments	(62		)	(6		)	(68		)
Balance at March 31, 2018	$	—		$	284		$	284

While the substantial doubt about our ability to continue as a going concern continued to exist at March 31, 2018, we had $10.2 million in cash and no debt obligations at the end of the quarter. In addition, the restructuring actions taken in 2017 resulted in a decrease in total operating expenses, including restructuring charges, of approximately $1.9 million in the first quarter of 2018 compared to the first quarter of 2017, and the lowest consumption of cash since the second quarter of 2015. Since the inception of our restructuring actions, we have achieved total operating cost reductions, including restructuring and asset impairment charges, of approximately $10.7 million compared to the same prior year period. 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 2019 and effectively mitigates the substantial doubt about our ability to continue as a going concern.