U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the quarterly period ended SeptemberJune 30, 20162017

For the transition period from                    to                    

Commission File No. 000-23590

REVOLUTION LIGHTING TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

m

177 BROAD STREET, 12^th FLOOR, STAMFORD, CT 06901

(Address of Principal Executive Offices) (Zip Code)

(203) 504-1111

(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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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  ☒    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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 31, 2016,July 21, 2017, the Registrant had 20,846,11421,069,475 shares of Common Stock, $.001 par value, outstanding.

Revolution Lighting Technologies, Inc.

Index to Form 10-Q

Table of Contents

Item 1. Financial Statements (Unaudited)PART I – FINANCIAL INFORMATION

Revolution Lighting Technologies, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except per share data)

See accompanying notes to unaudited condensed consolidated financial statements.

Revolution Lighting Technologies, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)

See accompanying notes to unaudited condensed consolidated financial statements.statements.

Revolution Lighting Technologies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In thousands)

See accompanying notes to unaudited condensed consolidated financial statements.statements.

Revolution Lighting Technologies, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

See accompanying notes to unaudited condensed consolidated financial statements.statements.

Revolution Lighting Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In millions, except share and per share data, or unless otherwise noted)

1.The Company

Revolution Lighting Technologies, Inc. and, together with its wholly-owned subsidiaries (“Revolution”, “we”, “us” or “our”), is a leader in the designing,designing, manufacturing, marketing, and selling of LEDlight-emitting diode (“LED”) lighting solutions focusing on the industrial, commercial and government markets in the United States, Canada, and internationally. Through advanced LED technologies, we have created an innovative lighting company that offers a comprehensive advanced product platform of high-quality interior and exterior LED lamps and fixtures, including signage and control systems. We are uniquely positioned to act as an expert partner, offering full-service lighting solutions through our operating divisions, including Energy Source, Value Lighting, Tri-State LED, E-Lighting, All-Around Lighting and TNT Energy, to transform lighting into a source of superior energy savings, quality light and well-being. We market and distribute our products through a network of regional and national independent sales representatives and distributors, as well as through energy savings companies and national accounts.

We generate revenue by selling lighting products for use in the commercial, industrial and government markets, which include vertical markets such as military, municipal, commercial office, industrial, warehouse, education, hospitality, institutional, educational,retail, healthcare, multi-family and signagesignage-media-accent markets. We market and distribute our products globally through networks of distributors, independent sales agencies and representatives, electrical supply companies, as well as internal marketing and sales forces.

Our operations consist of one reportable segment for financial reporting purposes: Lighting Products and Solutions (principally LED fixtures and lamps).

During the second quarter of 2016, we purchased all the equity interests of TNT Energy, LLC (“TNT”), a turnkey provider of LED lighting-based energy savings projects within the commercial, industrial, hospitality, retail, educational and municipal sectors (see Note 2).

In the third quarter of 2015, we completed the acquisition of Energy Source, LLC (“Energy Source”), a provider of turnkey comprehensive energy savings projects (principally LED fixtures and lamps) within the commercial, industrial, hospitality, retail, education and municipal sectors (see Note 2).

Basis of presentation

The accompanying condensed consolidated financial statements are unaudited, and have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015.2016. The Condensed Consolidated Balance Sheet as of December 31, 20152016 was derived from our audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP.

In the opinion of management, these accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to fairly state our financial position, results of operations, and cash flows as of and for the dates and periods presented. The unaudited condensed consolidated financial statements include the accounts of Revolution Lighting Technologies, Inc. and its wholly owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to valuation of receivables and inventories, purchase price allocation of acquired businesses, impairment of long-lived assets and goodwill, income taxes and contingencies. Actual results could differ from those estimates.

The results of operations for the three and ninesix months ended SeptemberJune 30, 20162017 are not necessarily indicative of the results that may be expected for the full year ending on December 31, 2016,2017, or for any other future period. Our business exhibits some seasonality, with net sales being affected by the impact of weather and seasonal demand on construction and installation programs, particularly during the winter months. Because of these seasonal factors, we have historically experienced increasing revenue as the year progresses.

Sales Tax Revenue

We record sales tax revenue on a gross basis (included in revenuesboth “Revenue” and costs)“Cost of sales” in the unaudited Condensed Consolidated Statements of Operations). Revenues from sales taxes were $1.5$1.2 million and $1.2$1.3 million for the three months ended SeptemberJune 30, 20162017 and 2015,2016, respectively, and $3.7$1.9 million and $3.0$2.2 million for the ninesix months ended SeptemberJune 30, 2017 and 2016, and 2015, respectively.

Stock Split

On March 10, 2016, we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation, as amended, to effect a 1-for-10 reverse stock split, as approved by the holder of a majority of the common stock and the Board (the “Split”), that became effective for trading purposes on March 11, 2016. The number of authorized shares and the par value of our common stock remained unchanged following the Split. All references to number of shares and per share data in the consolidated financial statements and applicable disclosures have been adjusted to reflect the reverse stock split, unless otherwise noted (see Note 10).

Liquidity and Capital Resources

On January 26, 2017, we amended the Revolving Credit Facility which enabled us to borrow up to $50.0 million on a revolving basis, based upon specified percentages of eligible receivables and inventory, which matures on January 26, 2020. See Note 7.

Our liquidity as of SeptemberJune 30, 20162017 and December 31, 20152016 was $5.4$4.5 million and $2.8$1.9 million, respectively, which was comprisedconsisted of cash and cash equivalentequivalents of $3.9$0.5 million and $0.2$0.9 million, respectively, and additional borrowing capacity under the Revolving Credit Facility of $1.5$4.0 million and $2.6$1.0 million, respectively.

Historically, our significant shareholder, RVL 1 LLC (“RVL”), and its affiliates have been a significant source of financing, and they continue to support our operations.

In May 2016, we raised $15.2 million from the issuance of common stock, net of expenses. The proceeds were used to fund the cash portion of the TNT acquisition, pay debt under our credit facility, and for general corporate purposes. InAt June 2016, we raised an additional $1.0 million in a private placement of our common stock to one of our distributors.

We have a loan and security agreement with Bank of America to borrow up to $27.0 million on a revolving basis, based upon specified percentages of eligible receivables and inventory (the “Revolving Credit Facility”) which matures in October 2017. At September 30, 2016, the balance outstanding on the Revolving Credit Facility was $25.5 million. As of September 30, 2016, we were in compliance with our covenants.

At September 30, 20162017 and December 31, 2015,2016, we had working capital of $40.8$57.7 million and $25.9$51.3 million, respectively.

We believe we have adequate resources to meet our cash requirements for the foreseeable future.

Contingencies

In the ordinary course of business, we may become a party to various legal proceedings generally involving contractual matters, infringement actions, product liability claims and other matters. Based upon such evaluation, at September 30, 2016, we are not party to any pending legal or administrative proceedings that may have a material adverse effect, either individually or in the aggregate, on our business, financial condition or results of operations. We may be required to make payments under a certain channel distribution agreement if certain revenue targets are achieved. The maximum amount of such payments is $1.0 million, which has been accrued for as of September 30, 2016.

Recent accounting pronouncements

In February 2016,July 2015, the Financial Accounting Standards Board (the “FASB”(“FASB”) issued Accounting Standards Update (“ASU”) 2015-11, “Simplifying the Measurement of Inventory”, which require an entity to measure inventory at the lower of cost and net realizable value. The standard was effective for fiscal years beginning after December 15, 2016. The adoption of this standard did not have a material effect on our financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases, that” which requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. WeThe adoption of this standard is not expected to have not determined thea material effect that this accounting pronouncement will have on our financial statements.results of operations.

In March, April and May 2016, respectively,2014, the FASB issued ASU 2016-08, ASU 2016-10, ASU 2016-11 and ASU 2016-12, all of which relate to, “Revenue2014-09, “Revenue from Contracts with Customers”Customers”, which arewith amendments issued during 2016. This standard is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The provisions of the ASU’sthis ASU are effective with either a full retrospective approach or a modified retrospective approach for periods beginning after December 15, 2017. TheFor revenue recognized from our product sales upon shipment or delivery to customers, we do not believe that the adoption of these ASU’s are not expected tothis standard will have a material effectan impact on our unaudited condensed consolidated financial statements. For revenue recognized using the percentage-of-completion method of accounting, we believe that the adoption of this standard will have an impact on our consolidated financial statements.statements; however we believe the impact will not be material. We are currently updating our processes and controls necessary for implementing this standard, including the increased disclosure requirements, and expect to adopt the new guidance beginning in 2018 using the modified retrospective approach.

In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation,” which is intended to simplify the accounting for share-based payment awards.awards, including accounting for the income tax consequences, the classification of awards as either equity or liabilities and the classification on the statement of cash flows. The standard iswas effective for fiscal years beginning after December 15, 2016. WeThe adoption of this standard did not have not determined thea material effect that this accounting pronouncement will have on our financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments,”(“ASU 2016-15”), which provides guidance on eight specific cash flow issues. The provisions of ASU 2016-15this standard are effective for periods beginning after December 15, 2017. The adoption of ASU 2016-15this standard is not expected to have a material effect on our consolidatedfinancial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business,” which assists entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The provisions of this standard are effective for periods beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on our financial statements.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which simplifies the subsequent measure of goodwill by eliminating the second step from the goodwill impairment test. The provisions of this standard are effective for periods beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on our financial statements.

In May 2017, the FASB issued ASU 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. The provisions of this standard are effective for periods beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on our financial statements.

2. Acquisitions of Businesses and Other Intangibles

TNT Energy, LLC

On May 9, 2016, we completed the acquisition of TNT, a turnkey provider of LED lighting-based energy savings projects within the commercial, industrial, hospitality, retail, education and municipal sectors. TNT’s headquarters is located in Raynham, Massachusetts. The acquisition of TNT is expected to expand our footprint within key lighting retrofit markets in the United States. We believe this is a direct complimentary fit with our division, Energy Source, based in Providence, RI. In addition to its broad existing customer base, TNT is a contract vendor for the Small C&I Business Programs of northeast utility companies, with a defined territory of approximately 120 municipalities throughout Massachusetts. We acquired TNT for its management team, its client base and operational and business development synergies. Final valuations and allocations are subject to additional analyses and may differ from amounts reflected below.

Purchase Price Allocation

We accounted for the acquisition of TNT under Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), which requires recording assets and liabilities at fair value. Under the acquisition method of accounting, each tangible and separately identifiable intangible asset acquired and liabilities assumed were recorded based on their preliminary estimated fair values on the date of the acquisition. The initial valuations were derived from estimated fair value assessments and assumptions used by management, and were preliminary.

Energy Source

On August 5, 2015, we completed the acquisition of Energy Source, a provider of turnkey comprehensive energy savings projects (principally LED fixtures and lamps) within the commercial, industrial, hospitality, retail, education and municipal sectors. We acquired Energy Source for its management team, its client base and operational and business development synergies.

Purchase Price Allocation

Pro forma information

The following unaudited supplemental pro forma information assumes the TNT and Energy Source acquisitions referred to above had been completed as of January 1, 2015 and is not indicative of the results of operations that would have been achieved had the transactions been consummated on such date or of results that might be achieved in the future.

The pro forma results for the nine months ended September 30, 2016 and year ended December 31, 2015 include the amortization of customer backlog, and acquisition, severance and transition costs totaling $3.3 million and $2.6 million respectively. The preponderance of these charges are non-recurring and will not have a continuing impact on the future results of operations.

The revenue and net income of TNT included in our actual results of operations from May 9, 2016 through September 30, 2016 totaled $12.8 million and $2.0 million, respectively.

3. Accounts Receivable, Net of Allowance for Doubtful Accounts

Accounts receivable, net of allowance for doubtful accounts, consisted of the following:

Bad debt expense,Write-offs and other adjustments, which wasare recorded in “Other selling, general and administrative” in the unaudited Condensed Consolidated Statements of Operations, was less than $0.1were $0.4 million and $0.3 million for each of the three months ended SeptemberJune 30, 20162017 and 2015,2016, respectively, and $0.6$0.4 million and $0.1$0.5 million for the ninesix months ended SeptemberJune 30, 20162017 and 2015,2016, respectively.

4. Inventories, Net

Inventories, which are primarily purchased from third parties, consisted of the following:

5. Property and equipment, net

Property and equipment, net of accumulated depreciation, consisted of the following:

Depreciation expense related to property and equipment, which was recorded in “Amortization and depreciation” in the unaudited Condensed Consolidated Statements of Operations, was $0.2 million and $0.1 million for both the three months ended SeptemberJune 30, 2017 and 2016, and 2015,respectively, and $0.3 million and $0.4$0.2 million for the ninesix months ended SeptemberJune 30, 20162017 and 2015,2016, respectively.

6.Intangible Assets

Intangible assets net of accumulated amortization, consisted of the following:

Amortization expense related to intangible assets, which was recorded in “Amortization and depreciation” on the unaudited Condensed Consolidated Statements of Operations, was $1.0$1.4 million and $1.1$1.3 million for the three months ended SeptemberJune 30, 20162017 and 2015,2016, respectively, and $3.8$2.8 million and $3.0$2.4 million for the ninesix months ended SeptemberJune 30, 2017 and 2016, and 2015, respectively.

7. Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following:

8. Financings

Revolving Credit Facility

We have aOn January 26, 2017, we amended the loan and security agreement with Bank of America to borrow up to $27.0$50.0 million on a revolving basis, based upon specified percentages of eligible receivables and inventory, (“which matures on January 26, 2020 (the “Revolving Credit Facility”). Under the Revolving Credit Facility”) which matures in October 2017. OurFacility, the maximum applicable margin for LIBOR rate loans is 2.75%, and the maximum applicable margin for base rate loans is 1.75%. As of June 30, 2017, our Chairman, Chief Executive Officer and President hashad guaranteed $7$10.0 million of the borrowings under the Revolving Credit Facility; this guarantee enables us to borrow $7 million in addition to the amount available from receivables and inventory, and may be terminated at any time.Facility (see Note 13). At SeptemberJune 30, 20162017 and December 31, 2015,2016, the balance outstanding on the Revolving Credit Facility was $25.5$38.7 million and $22.0$26.0 million, respectively. We recorded interest expense of $0.5 million and $0.2 million for each of the three months ended SeptemberJune 30, 2017 and 2016, respectively, and 2015,$0.9 million and $0.4 million for the six months ended June 30, 2017 and 2016, respectively.

In connection with obtaining the revolving credit facility, we incurred debt issuance costs, which are being amortized through the maturity date. At June 30, 2017 and December 31, 2016, we had $0.7 million and $0.5$0.2 million, respectively, of deferred debt issuance costs, which are recorded in “Other assets, net” in the Consolidated Balance Sheets.” Amortization expense of deferred debt issuance costs was $0.1 million and less than $0.1 million for the ninethree months ended SeptemberJune 30, 2017 and 2016, respectively, and 2015,$0.2 million and $0.1 million for the six months ended June 30, 2017 and 2016, respectively.

Borrowings under the arrangement bear interest at a LIBOR rate or a defined base rate, each plus an applicable margin, depending on the nature of the loan. We are also obligated to pay various fees monthly. Outstanding loans become payable on demand to the extent that such loans exceed the Borrowing Base, and all outstanding amounts must be repaid on October 4, 2017. All obligations under the Revolving Credit Facility are secured by the assets of Revolution, and are guaranteed by Revolution.

The Revolving Credit Facility contains covenants that limit our ability to incur other debt, allow a lien on any property, pay dividends, restrict any wholly owned subsidiary from paying dividends, make investments, dispose of property, make loans or advances or enter into transactions with affiliates, among other things. As of September 30, 2016, we were in compliance with our covenants.

Notes Payable

Notes payable consisted of the following at September 30, 2016:following:

Energy Source Acquisition Notes

In connection with the acquisition of Energy Source in August 2015, we issued $10.0 million in promissory notes bearing interest at 5% per annum due July 20, 2016, which are supported by an irrevocable letter of credit from RVL. In July 2016, the maturity date was extended to January 2017, with an interest rate of 7%. We recorded accrued interest of $0.1 million and $0.2 million at September 30, 2016 and December 31, 2015, respectively. We recorded interest expense of $0.2 million for the three months ended September 30, 2016, and $0.4 million for the nine months ended September 30, 2016 (see Note 2).

		June 30, 2017				December 31, 2016
Value Lighting acquisition note		$	2.3			$	2.4
TNT acquisition notes			2.0				2.0
Energy Source acquisition notes			—				10.0
Total notes payable		$	4.3			$	14.4
Less: Notes payable—current			(2.4	)			(2.4	)
Notes payable—noncurrent		$	1.9			$	12.0

Value Lighting Acquisition Note

In conjunction with the acquisition of Value Lighting, we refinanced $3.7 million of Value Lighting’s trade accounts payable by issuing a note payable to the creditor. The note is payable in monthly installments through October 2019 and a lump sum payment of $1.4 million due on November 22, 2018, which may be settled, at our option, in either cash or an equivalent amount of common shares based upon their then-current market value.

TNT Acquisition Notes

In connection with the acquisition of TNT in May 2016, we issued $2.0 million in promissory notes bearing interest at 5% per annum, of which $1.0 million iswas due on April 21, 2017 and $1.0 million iswas due on November 6, 2017. In February 2017, the maturity date was extended to November 6, 2017 for all of the TNT promissory notes. Our Chairman, Chief Executive Officer, and President has provided irrevocable letters of credit to support the TNT acquisition notes (see Note 2)13). We recorded accrued interest of $0.1 million and less than $0.1 million at June 30, 2017 and December 31, 2016, respectively. We recorded interest expense of less than $0.1 million for both the three and six months ended June 30, 2017.

9. Purchase Price Obligations

Energy Source Acquisition Notes

In connection with the acquisition of Energy Source in August 2015, we issued $10.0 million in promissory notes bearing interest at 5% per annum due July 20, 2016, which were supported by an irrevocable letter of credit from RVL. In July 2016, the maturity date was extended to January 20, 2017, with an interest rate of 7%. On a quarterly basis,January 26, 2017, we reassessrepaid the Energy Source acquisition notes, including interest of $0.4 million, using proceeds from the amended Revolving Credit Facility, and the related guarantee provided by RVL was terminated. We recorded interest expense of less than $0.1 million and $0.2 million for the three months ended June 30, 2017 and 2016, respectively, and less than $0.1 million and $0.3 million for the six months ended June 30, 2017 and 2016, respectively.

Debt Maturities

At June 30, 2017, the scheduled maturities of our current estimates of performance relative to the stated targets, and adjust the liability to fair value. Adjustments are recorded in “Acquisition, severance and transition costs” in the unaudited Condensed Consolidated Statement of Operations.borrowings were as follows:

Changes in the fair value of purchase price obligations during the nine months ended September 30, 2016:were as follows:

The following table presents quantitative information about Level 3 fair value measurements as of SeptemberJune 30, 2016:2017:

10. Stockholders’ Equity

Common Stock

On March 10, 2016, we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation, as amended, to effect the Split, that became effective for trading purposes on March 11, 2016. The number of authorized shares and the par value of our common stock remained unchanged following the Split. All share amounts in these financial statements have been restated to give effect to the Split, as applicable.

The changes in issued and outstanding common stock forduring the ninesix months ended SeptemberJune 30, 20162017 were as follows:

At SeptemberJune 30, 2016,2017, 8,670,386 shares, or 42%,41% of our outstanding shares, were owned by RVL and its affiliates.

Authorized Shares

At the annual shareholder meeting held on May 12, 2016, the shareholders voted to amend the Certificate of Incorporation to decrease the authorized shares of common stock from 200,000,000 to 35,000,000.

Preferred Stock

We are authorized to issue up to 5,000,000 shares of preferred stock. There were no shares of preferred stock outstanding at SeptemberJune 30, 2017.

We file income tax returns in the United States federal jurisdiction, as well as in various state jurisdictions. We did not record any current or deferred U.S. federal income tax provision or benefit during the six months ended June 30, 2017 and 2016 because we have experienced operating losses since inception. We have recognized a full valuation allowance related to our net deferred tax assets, including substantial net operating loss carryforwards. As of June 30, 2017, we had approximately $61.0 million of net operating loss carryforwards and December 31, 2015.amortizable expenses related to acquisitions that can be used to offset our income for federal and state tax purposes.

11. Net income (loss) per Share

The computation of basic and diluted net income (loss)loss per share for the periods indicated is as follows:

In connection with prior acquisitions, we unconditionally agreed to issue additional shares of our common stock during 2016 and 2017. As such, includedIncluded in the computation of basic net income (loss)loss per share were 66,668 potentially dilutive share for each of the three and ninesix months ended SeptemberJune 30, 2017 and 2016 were 26,669 and 492,60080,001 potentially dilutive share for each of the threeshares, respectively.

Additionally, at June 30, 2017 and nine months ended September 30, 2015.

At September 30, 2016, and 2015, we were contingently obligated to pay $5.4$0.2 million and $9.1$4.3 million, respectively, related to prior acquisitions, of which $1.6 million and $6.9 million may be settled, at our option, in either cash or an equivalent amount of common shares based upon their then-current market value, if certain performance criteria had been met. The equivalent amount of common shares have been included inexcluded from the computation of diluted incomenet loss per share for the three and six months ended SeptemberJune 30, 2016; however had been excluded from the nine months ended September 30,2017 and 2016, and both the three and nine months ended September 30, 2015, as they were antidilutive.

At SeptemberJune 30, 2017 and 2016, 24,928 and 2015, 27,828 outstanding options, outstandingrespectively, with an average exercise price of $44.76$44.45 and 31,483 options outstanding with an average exercise price of $43.64,$43.34, respectively, were not recognized in the diluted earnings per share calculation as they were antidilutive.

12. Income Taxes

We file income tax returns in the United States federal jurisdiction, as well as in various state jurisdictions. We did not record any current or deferred U.S. federal income tax provision or benefit related during the three and nine months ended September 30, 2016 and 2015 because we have experienced operating losses since inception. We have recognized a full valuation allowance related to our net deferred tax assets, including substantial net operating loss carryforwards. As of September 30, 2016, we had approximately $65.0 million of net operating loss carryforwards and amortizable expenses related to acquisitions that can be used to offset our income for federal and state tax purposes.

13. Stock-Based Compensation

The 2003 Plan

During the nine months ended September 30, 2016, no options were issued or exercised, and no options vested. Options outstanding at September 30, 2016 had no intrinsic value. The following table presents a summary of activity for the ninesix months ended SeptemberJune 30, 2016:2017:

During the six months ended June 30, 2017, no options were issued. We issue new shares upon the exercise of options. Options outstanding at June 30, 2017 had no intrinsic value. At June 30, 2017, unrecognized compensation expense related to options was less than $0.1 million, which is expected to be recognized over a weighted-average period of one year.

The 2013 Plan

UnderOn May 2, 2017, our stockholders voted on a fourth amendment to the 2013 Stock Incentive Plan as amended (the “2013 Plan”), an aggregate to increase the number of 1,100,000 shares (which includes an additional 500,000 shares approved by the shareholders on May 12, 2016) of our common stockthat may be issued to officers, employees, non-employee directors and consultants of Revolution and its affiliates. Awardsaffiliates under the 2013 Plan may be in the form of stock options, which may constitute incentive stock options, or non-qualified stock options, restricted shares, restricted stock units, performance awards, stock bonus awards, share appreciation rights and other stock-based awards. Stock options will be issued at an exercise price not less than 100% of the market value at the date of grant and expire no later than ten years after the date of grant. Stock awards typically vest over three years but vesting periods for non-employees may be longer or based on the achievement of performance goals.to 1,600,000.

Restricted Shares

During the nine months ended September 30, 2016, we granted restricted shares to Aston Capital, LLC (see Note 14) and eligible directors who serve on the Board of Directors, which vest ratably over a three-year period. These awards are classified as liability awards, and are remeasured to fair value at each reporting date and upon vesting.

The following table presents a summary of activity for the ninesix months ended SeptemberJune 30, 2016:2017:

At June 30, 2017, there was $1.5 million of unrecognized compensation expense related to nonvested restricted shares, which is expected to be recognized over a weighted-average period of 2.8 years. The total fair value of restricted shares that vested during the six months ended June 30, 2016 was $1.1 million.

Restricted Share Units

During the ninesix months ended SeptemberJune 30, 2016,2017, we granted restricted share units to employees which vest ratably over a three-year period. These awards are classified as equity awards, and are accounted for using the fair value established at the grant date.

The following table presents a summary of activity for the nine monthssix years ended SeptemberJune 30, 2016:2017:

At SeptemberJune 30, 2016,2017, there was $0.6$1.1 million of unrecognized compensation expense related to nonvested restricted share units, which is expected to be recognized over a weighted-average period of 2.71.8 years. The total fair value of restricted shares that vested during the six months ended June 30, 2017 was $0.4 million.

14.

13.	Related Party Transactions

Chairman, Chief Executive Officer and President

Financings

In April 2015,As of June 30, 2017, our Chairman, Chief Executive Officer, and President has guaranteed $5.0$10.0 million of borrowings under our Revolving Credit Facility, increasing our Borrowing Base by that amount.Facility. In April 2016,addition, our Chairman, Chief Executive Officer, and President guaranteed an additionalhas provided irrevocable letters of credit to support $2.0 million of borrowings under our Revolving Credit Facility, increasing our Borrowing Base by that amount (seethe TNT acquisition notes. See Note 8).7.

Aston Capital LLC (“Aston”) advanced

On April 1, 2016, we entered into a $2.6 million for general corporate purposes in four separate transactions during Mayamended and June 2014. As of July 31, 2014, the Audit Committee ratified these advances, and approved a newrestated promissory note in respect of such amount,with Aston, which bears interest at 9% annually and matures on JanuaryApril 1, 2018, and2019, which can be prepaid at our option (the “July Note”). We recordedoption. In May 2017, we amended the promissory note with Aston to include an additional $7.0 million of borrowings. At June 30, 2017 and December 31, 2016, we had accrued interest of $0.2$0.5 million and $0.4$0.2 million, at September 30, 2016 and December 31, 2015, respectively. We recorded interest expense related to financing agreements with Aston of $0.2 million and less than $0.1 million for both the ninethree months ended SeptemberJune 30, 2017 and 2016, respectively, and 2015,$0.2 million and $0.1 million for the six months ended June 30, 2017 and 2016, respectively.

Aston Capital, LLC

On April 9, 2013,January 5, 2017, we ratified a management services agreement with Aston (the “Management Agreement”) to memorialize certain management services that Aston has been providing to us since RVL acquired majority control of our voting securities in September 2012. Pursuant to the Management Agreement, Aston provides consulting services in connection with financing matters, budgeting, strategic planning and business development, including, without limitation, assisting us in (i) analyzing the operations and historical performance of target companies; (ii) analyzing and evaluating the transactions with such target companies; (iii) conducting financial, business and operational due diligence, and (iv) evaluating related structuring and other matters. In addition, two of the Aston members hold executive positions in Revolution, and receive no compensation. In consideration of the services provided by Aston under the Management Agreement and the two members who serve as executives with no compensation, we issued 50,000 shares of restricted common stock to Aston to vest in three equal annual increments, with the first such vesting date being September 25, 2013. On April 21, 2014, we granted an additional 30,000 shares of restricted stock to Aston, which vest in three annual installments with the vesting dates being September 25, 2014, 2015 and 2016. Aston did not receive an award of restricted stock in 2015. On May 12, 2016, we granted an additional 250,000 shares of restricted stock to Aston, which vest in three annual installments on May 12, 2017, 2018, and 2019. The Audit Committee of the Board will consider from time to time (at a minimum at such times when the Compensation Committee of the Board evaluates director compensation) whether additional compensation to Aston is appropriate given the nature of the services provided.

In March 2017, Aston provided a $1.5 million advance that bears interest annually at 9%, which is included in “Related party notes payable” on the unaudited Condensed Consolidated Balance Sheets at June 30, 2017. On November 30, 2016, Aston provided a $1.5 million advance that bore interest annually at 9%, which is included in “Related party notes payable” on the unaudited Condensed Consolidated Balance Sheets at December 31, 2016, and was repaid on January 26, 2017 using proceeds from the amended Revolving Credit Facility.

Our corporate headquarters utilizes space in Stamford, Connecticut, which is also occupied by affiliates of our Chairman and Chief Executive Officer. During the nine months ended September 30, 2016, we paid Aston $0.2 million, representing ourOur proportionate share of the space under the underlying lease.lease, which we paid to Aston, was $0.1 million and $0.1 million during the three months ended June 30, 2017 and 2016, respectively, and $0.2 million and $0.2 million during the six months ended June 30, 2017 and 2016, respectively.

TNT Energy, LLC

On May 6, 2016, we completed the acquisition of TNT, a turnkey provider of LED lighting-based energy savings projects within the commercial, industrial, hospitality, retail, education and municipal sectors. TNT’s headquarters is located in Raynham, Massachusetts. The acquisition of TNT is expected to expand our footprint within key lighting retrofit markets in the United States. We believe this is a direct complementary fit with our division, Energy Source, based in Providence, RI. In addition to its broad existing customer base, TNT is a contract vendor for the Small C&I Business Programs of northeast utility companies, with a defined territory of approximately 120 municipalities throughout Massachusetts. We acquired TNT for its management team, its client base and operational and business development synergies.

We accounted for the acquisition of TNT under ASC 805,Business Combinations (“ASC 805”), which requires recording assets and liabilities at fair value. Under the acquisition method of accounting, each tangible and separately identifiable intangible asset acquired and liabilities assumed were recorded based on their estimated fair values on the date of the acquisition.