P10 Industries (PIOE) 10-Q 28 Jul 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 23, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	ACTIVE POWER INC
Entity Central Index Key	1,044,435
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		23,107,292

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 10,566	$ 14,824
Restricted cash	539	40
Accounts receivable, net of allowance for doubtful accounts of $262 and $212 at June 30, 2015 and December 31, 2014, respectively	16,016	11,222
Inventories, net	7,423	6,845
Prepaid expenses and other	605	800
Total current assets	35,149	33,731
Property and equipment, net	1,923	2,076
Deposits and other	283	291
Total assets	37,355	36,098
Current liabilities:
Accounts payable	5,487	4,044
Accrued expenses	4,532	4,134
Deferred revenue	3,550	2,771
Revolving line of credit	5,535	5,535
Total current liabilities	19,104	16,484
Long-term liabilities	$ 670	$ 821
Commitments and contingencies
Stockholders' equity:
Preferred stock - $0.001 par value; 2,000 shares authorized	$ 0	$ 0
Common stock - $0.001 par value; 40,000 shares authorized; 23,167 and 23,162 shares issued and 23,107 and 23,094 shares outstanding at June 30, 2015 and December 31, 2014, respectively	23	23
Treasury stock	(237)	(231)
Additional paid-in capital	303,341	302,667
Accumulated deficit	(285,812)	(283,995)
Other accumulated comprehensive income	266	329
Total stockholders' equity	17,581	18,793
Total liabilities and stockholders' equity	$ 37,355	$ 36,098

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Accounts receivable, allowance for doubtful accounts	$ 262	$ 212
Stockholders' equity:
Preferred Stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, shares authorized	2,000,000	2,000,000
Common Stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized	40,000,000	40,000,000
Common Stock, shares issued	23,167,000	23,162,000
Common Stock, shares outstanding	23,107,000	23,094,000

Condensed Consolidated Statemen

Condensed Consolidated Statement of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues:
Product revenue	$ 12,905	$ 7,484	$ 22,453	$ 14,941
Service and other revenue	3,950	2,670	7,531	6,151
Total revenue	16,855	10,154	29,984	21,092
Cost of goods sold:
Cost of product revenue	9,089	6,352	16,060	12,257
Cost of service and other revenue	2,268	1,887	4,119	3,992
Total cost of goods sold	11,357	8,239	20,179	16,249
Gross profit	5,498	1,915	9,805	4,843
Operating expenses:
Research and development	1,430	1,600	2,946	3,680
Selling and marketing	2,715	3,152	5,421	6,040
General and administrative	1,524	1,469	3,082	3,075
Total operating expenses	5,669	6,221	11,449	12,795
Loss from operations	(171)	(4,306)	(1,644)	(7,952)
Interest expense, net	(78)	(106)	(157)	(207)
Other income (expense), net	(9)	(1)	(16)	(128)
Net loss	$ (258)	$ (4,413)	$ (1,817)	$ (8,287)
Net loss per share, basic and diluted (usd per share)	$ (0.01)	$ (0.19)	$ (0.08)	$ (0.38)
Shares used in computing net loss per share, basic and diluted	23,133	23,114	23,131	21,851
Comprehensive loss:
Net loss	$ (258)	$ (4,413)	$ (1,817)	$ (8,287)
Translation gain (loss) on subsidiaries denominated in foreign currencies	97	20	(63)	18
Comprehensive loss	$ (161)	$ (4,393)	$ (1,880)	$ (8,269)

Condensed Consolidated Stateme5

Condensed Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Other Accumulated Comprehensive Income (Loss)
Balance at Dec. 31, 2014	$ 18,793	$ 23	$ (231)	$ 302,667	$ (283,995)	$ 329
Balance (in shares) at Dec. 31, 2014		23,162	56
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Release of Restricted Stock	0
Release of Restricted Stock (in shares)		5
Shares held in treasury	(6)		$ (6)
Shares held in treasury (in shares)			4
Net translation loss on foreign subsidiaries	(63)					(63)
Stock-based compensation	674			674
Net loss	(1,817)				(1,817)
Balance at Jun. 30, 2015	$ 17,581	$ 23	$ (237)	$ 303,341	$ (285,812)	$ 266
Balance (in shares) at Jun. 30, 2015		23,167	60

Condensed Consolidated Stateme6

Condensed Consolidated Statement of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities
Net loss	$ (1,817)	$ (8,287)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation expense	524	620
Net change to allowance for doubtful accounts	50	(93)
Loss (gain) on disposal of fixed assets	1	(19)
Stock-based compensation	674	552
Changes in operating assets and liabilities:
Restricted cash	(499)	513
Accounts receivable	(4,844)	935
Inventories	(578)	489
Prepaid expenses and other assets	203	209
Accounts payable	1,443	(105)
Accrued expenses	398	(1,321)
Deferred revenue	779	95
Long term liabilities	(151)	(44)
Net cash used in operating activities	(3,817)	(6,456)
Investing activities
Purchases of property and equipment	(392)	(189)
Proceeds from sale of fixed assets	0	19
Net cash used in investing activities	(392)	(170)
Financing activities
Proceeds from public offering of common stock, net of issuance costs	0	10,438
Proceeds from employee stock option exercises	0	108
Taxes paid related to net share settlement of equity awards	(6)	(11)
Net cash (used in) provided by financing activities	(6)	10,535
Effects of exchange rates on cash	(43)	18
Change in cash and cash equivalents	(4,258)	3,927
Cash and cash equivalents, beginning of period	14,824	12,261
Cash and cash equivalents, end of period	$ 10,566	$ 16,188

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation Active Power, Inc. and its subsidiaries (collectively, “we”, “us”, “Active Power” or “Company”) design, manufacture, sell, and service flywheel-based uninterruptible power supply (“UPS”) products that use kinetic energy to provide short-term power as a cleaner alternative to conventional electro-chemical battery-based energy storage. We also design, manufacture, sell, and service modular infrastructure solutions (“MIS”) that integrate critical power components into a pre-packaged, purpose built enclosure that may include our UPS products as a component. Our products and solutions are based on our patented flywheel and power electronics technology and are designed to ensure continuity for data centers and other mission critical operations in the event of power disturbances. Our products and solutions are designed to deliver continuous conditioned power during power disturbances such as voltage sags and surges, and to provide ride-through power in the event of a brief utility failure, supporting operations until utility power is restored or a longer term alternative power source, such as a diesel generator, is started. We sell our products globally through our direct sales force, manufacturer’s representatives, distributors, original equipment manufacturers (“OEM”), and IT partners in the Americas, in Europe, Middle East, and Africa (“EMEA”), and in the Asia Pacific region (“APAC”). We also offer services, including hardware and software maintenance, on all Active Power products, and other professional services such as assessment and implementation, for our customers’ infrastructure projects. We were founded as a Texas Corporation in 1992 and reincorporated in Delaware in 2000. Our headquarters are in Austin, Texas, with international offices in the United Kingdom, Germany, and China. The accompanying condensed consolidated balance sheet as of December 31, 2014 , which has been derived from our audited financial statements, and the unaudited condensed consolidated financial statements as of June 30, 2015 have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting, and include the accounts of the Company and its consolidated subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although we believe the disclosures made are adequate to make the information not misleading. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring items) necessary to present fairly the consolidated financial position of the Company and its consolidated results of operations and cash flows. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2014 .

Significant Accounting Policies

Significant Accounting Policies and Supplemental Balance Sheet Information	6 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Significant Accounting Policies and Supplemental Balance Sheet Information	Significant Accounting Policies and Supplemental Balance Sheet Information For a complete description of our principal accounting policies see Note 1. “Summary of Significant Accounting Policies,” to our Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 . Shown below are certain of our principal accounting policies. Restricted Cash Our restricted cash balance of $0.5 million as of June 30, 2015 consists of a $6,000 deposit guarantee for our building lease in Germany, which renews every six months through the term of the lease agreement, a $31,000 performance guarantee to a customer that was secured with a letter of credit, which expires in June 2017 , and a $0.5 million performance guarantee to a customer that was secured with a letter of credit, which expires in July 2015. As of December 31, 2014 , our restricted cash balance was $40,000 , which consisted primarily of secured performance and deposit guarantees. Receivables Accounts receivable consist of the following (in thousands): June 30, 2015 December 31, 2014 Trade receivables $ 16,278 $ 11,434 Less: Allowance for doubtful accounts (262 ) (212 ) $ 16,016 $ 11,222 We estimate an allowance for doubtful accounts based on factors related to the credit risk of each customer. Historically, our credit losses have been minimal, primarily because the majority of our revenues were generated from large customers, such as Caterpillar, Inc. (“Caterpillar”) and Hewlett Packard Corporation (“HP”). We perform credit evaluations of new customers and when necessary we require deposits, prepayments or use of bank instruments such as trade letters of credit to mitigate our credit risk. We write off uncollectable trade receivables, and record any recoveries of previous write offs against the allowance. Our standard payment terms are net 30 days; however we have agreements with certain larger customers and certain distributors that allow for more extended terms at or above net 60 days. Inventories, net Inventories, net are stated at the lower of cost or market, using the first-in-first-out method, and consisted of the following (in thousands, net of allowance): June 30, 2015 December 31, 2014 Raw materials $ 5,044 $ 5,440 Work in process 2,012 473 Finished goods 367 932 $ 7,423 $ 6,845 Accrued Expenses Accrued expenses consist of the following (in thousands): June 30, 2015 December 31, 2014 Compensation, severance and benefits $ 2,213 $ 1,296 Warranty liability 570 475 Taxes, other than income 581 1,080 Professional fees 404 463 Other 764 820 $ 4,532 $ 4,134 Warranty Liability Generally, the warranty period for our products is 12 months from the date of commissioning or 18 months from the date of shipment from Active Power, whichever period is shorter. Occasionally, we provide longer warranty periods to certain customers. The warranty period for products sold to our primary OEM customer, Caterpillar, is 12 months from the date of shipment to the end-user, or up to 36 months from shipment from Active Power, whichever period is shorter. This is dependent upon Caterpillar complying with our storage requirements for our products in order to preserve this warranty period beyond the standard 18-month limit. We provide for the estimated cost of product warranties at the time revenue is recognized and this accrual is included in accrued expenses and long-term liabilities on the accompanying consolidated balance sheet. Changes in our warranty liability are as follows (in thousands): Balance at December 31, 2014 $ 527 Warranty expense 449 Payments (353 ) Balance at June 30, 2015 $ 623 Warranty liability included in Accrued expenses $ 570 Warranty liability included in Long-term liabilities 53 Balance at June 30, 2015 $ 623 Revenue Recognition We recognize revenue when four criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured. In general, revenue is recognized when revenue-generating transactions fall into one of the following categories of revenue recognition: • We recognize product revenue at the time of shipment for a significant portion of all products sold directly to customers and through distributors because title and risk of loss typically pass on delivery to the common carrier. Our customers and distributors do not have the right to return products. If title and risk of loss pass at some other point in time, we recognize such revenue for our customers when the product is delivered to the customer and title and risk of loss have passed. • Unless performed under a maintenance contract, we recognize installation, service and maintenance revenue at the time the service is performed. • We recognize revenue associated with maintenance agreements over the life of the contracts using the straight-line method, which approximates the expected timing in which applicable services are performed. Amounts collected in advance of revenue recognition are recorded as a current liability in the deferred revenue line of the consolidated balance sheet or as a long-term liability based on the time from the balance sheet date to the future date of revenue recognition. • We recognize revenue on certain rental programs over the life of the rental agreements using the straight-line method. Amounts collected in advance of revenue recognition are recorded as a current or long-term liability based on the time from the balance sheet date to the future date of revenue recognition. When collectability is not reasonably assured, we defer revenue and will recognize revenue as payments are received. Multiple element arrangements (“MEAs”) are arrangements to sell products to customers that frequently include multiple deliverables. Our most significant MEAs include the sale of one or more of our CleanSource® UPS or CleanSource PowerHouse products, combined with one or more of the following products or services: design services, project management, commissioning and installation services, spare parts or consumables, and maintenance agreements. Delivery of the various products or performance of services within the arrangement may or may not coincide. Certain services related to design and consulting may occur prior to product delivery. Commissioning and installation typically take place within six months of product delivery, depending upon customer requirements. Maintenance agreements, consumables, and repair, maintenance or consulting services are generally delivered over a period of one to five years. In certain arrangements revenue recognized is limited to the amount invoiced or received that is not contingent on the delivery of future products and services. When arrangements include multiple elements, we allocate revenue to each element based on the relative selling price and recognize revenue when the elements have standalone value and the four criteria for revenue recognition have been met. We establish the selling price of each element based on Vendor Specific Objective Evidence (“VSOE”) if available, Third Party Evidence (“TPE”) if VSOE is not available, or best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. We generally determine selling price based on amounts charged separately for the delivered and undelivered elements to similar customers in standalone sales of the specific elements. When arrangements include a maintenance agreement, we recognize revenue related to the maintenance agreement at the stated contractual price on a straight-line basis over the life of the agreement. Any taxes imposed by governmental authorities on our revenue-producing transactions with customers are shown in our consolidated statements of operations on a net-basis; that is, excluded from our reported revenues. Recently issued accounting pronouncements not yet adopted In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, (“ASU 2015-03”), “ Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ”. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public entities, ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is to be applied on a retrospective basis and represents a change in accounting principle. We do not expect the adoption of this standard will have a material effect on our consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, “ Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern ”. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. We do not expect the adoption of this standard will have a material effect on our financial statements. In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers ”, “ Topic 606”. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606 Revenue from Contracts with Customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In April 2015, the FASB issued for public comment a proposed ASU, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date", which would defer the effective date of its new revenue recognition standard by one year. At the June 9, 2015 meeting, the FASB voted to approve this deferral. We will adopt this guidance January 1, 2018. We are evaluating the new guidelines to see if they will have a significant impact on our consolidated results of operation, financial condition or cash flows.

Net Loss Per Share

Net Loss Per Share	6 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Net Loss Per Share	Net Loss Per Share The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Net loss $ (258 ) $ (4,413 ) $ (1,817 ) $ (8,287 ) Basic and dilutive: Weighted-average shares of common stock outstanding used in computing basic and diluted net loss per share 23,133 23,114 23,131 21,851 Basic and diluted net loss per share $ (0.01 ) $ (0.19 ) $ (0.08 ) $ (0.38 ) The calculation of diluted loss per share excludes 3,177,928 and 2,388,398 shares of common stock issuable upon exercise of employee stock options for the six months ended June 30, 2015 and 2014 , respectively, and non-vested shares of common stock issuable upon exercise of 13,765 and 30,656 restricted stock units for the six months ended June 30, 2015 and 2014 , respectively, because their inclusion would be anti-dilutive.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	6 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Fair Value of Financial Instruments	Fair Value of Financial Instruments Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Significant observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3—One or more significant inputs that are unobservable and supported by little or no market data. Highest priority is given for Level 1 input and lower priority to Level 3 inputs. A financial instrument's level is based on the lowest level of any input that is significant to the fair value measurement. No changes were made to our methodology. Our Level 1 assets consist of cash equivalents, which are primarily invested in money-market funds. These assets are classified as Level 1 because they are valued using quoted prices in active markets and other relevant information generated by market transactions involving identical assets and liabilities. The fair value was $3.1 million as of June 30, 2015 and December 31, 2014 . For cash and cash equivalents, accounts receivable, accounts payable and our revolving line of credit, the carrying amount approximates fair value because of the relative short maturity of those instruments.

Guarantees

Guarantees	6 Months Ended
	Jun. 30, 2015
Guarantees [Abstract]
Guarantees	Guarantees In certain geographical regions, particularly Europe, we are sometimes required to issue performance guarantees to our customers as a condition of sale. These guarantees usually provide financial protection to our customers in the event that we fail to fulfill our delivery or warranty obligations. We secure these guarantees with standby letters of credit through our bank. At June 30, 2015 , we had a $6,000 deposit guarantee outstanding for our building lease in Germany which renews every six months through the term of the lease agreement, a $31,000 performance guarantee to a customer that was secured with a letter of credit, which expires in June 2017 , and a $0.5 million performance guarantee to a customer that was secured with a letter of credit, which expires in July 2015. At December 31, 2014 , our restricted cash balance was $40,000 which consisted primarily of secured performance and deposit guarantees. Our restricted cash, as shown on the balance sheet, is related to these guarantees.

Revolving Line of Credit

Revolving Line of Credit	6 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
Revolving Line of Credit	Revolving Line of Credit On July 28, 2014, we entered into a Third Amended and Restated Loan and Security Agreement (“Loan Agreement”) with Silicon Valley Bank (“SVB”). This amended three -year loan facility provides for a secured revolving line of credit in an aggregate amount of up to eighty percent ( 80% ) of the facility amount of $18.8 million , or $15.0 million , and increased our inventory and purchase order availability from $3.5 million to $7.0 million , subject to certain borrowing bases. Purchase orders and eligible inventory are subject to a sublimit of $4.0 million , and accounts receivable in the UK and Germany have a $5.0 million sublimit. If we maintain our Liquidity Ratio of 2.50 :1.00 for the immediately preceding Reconciliation Period, the sublimit will be uncapped. We are currently in compliance with all loan covenants under the Loan Agreement. Further, the Third Amendment extends the maturity date to August 5, 2017 and reduces the finance charge to a per annum rate equal to SVB's prime rate, subject to a minimum prime rate of 4.00% , plus (a) 0.50% for eligible accounts, inventory and purchase orders when we are Borrowing Base Eligible (as defined in the Loan Agreement), or (b) 1.20% for eligible accounts when we are not Borrowing Base Eligible. The loans made to us under the Loan Agreement are secured by a lien on substantially all of our assets, including the assets of Active Power Solutions Limited, our wholly-owned United Kingdom subsidiary, and the assets of Active Power (Germany) GmbH, our indirect wholly-owned German subsidiary. The only direct or indirect subsidiaries of Active Power, Inc. that are not guarantors under the Loan Agreement are Active Power China (Beijing) Co. Ltd. and immaterial subsidiaries that are not operating companies. There are no restrictions on the ability of any of the subsidiary guarantors to transfer funds to Active Power, Inc. in the form of loans, advances or dividends, except as provided by applicable law. The other key terms of the Loan Agreement remain unchanged, including customary affirmative covenants, a minimum liquidity ratio, the borrowing base eligibility (formerly called the “streamline ratio”), reporting requirements, and other terms and conditions. We are currently in compliance with all loan covenants under the loan facility. As of June 30, 2015 , we had outstanding borrowings of $5.5 million under this loan facility and, based on the borrowing base formula, the additional amount available to us was $9.5 million at June 30, 2015. For further information regarding this loan facility, refer to our Annual Report on Form 10-K for the year ended December 31, 2014 , and to our Current Report on Form 8-K filed on July 29, 2014.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies We may be involved, either as plaintiff or defendant, in a variety of ongoing claims, demands, suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. We evaluated all potentially significant litigation, government investigations, claims or assessments in which we are involved and determined there were no contingent losses, either accrued or reasonably possible of loss that could materially affect its results of operations, financial condition, or cash flows. We record an accrual with respect to a claim, suit, investigation or proceeding when it is reasonably probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any recorded liabilities, including any changes to such liabilities for the quarter ended June 30, 2015 , were not material to the Consolidated Financial Statements. The following is a summary of our more significant legal matters. SEC Inquiry By letter dated September 30, 2013, the SEC Division of Enforcement notified us that it is conducting an investigation regarding us, including matters relating to our public statements regarding Digital China Information Services Company Limited (“Digital China”) and our distribution relationships in China. We have been and intend to continue cooperating fully with the SEC. As of the date of this filing, we believe we have provided all requested material to the SEC. Settled Stockholder Litigation Class action complaint On September 10, 2013, a purported class action complaint was filed in the United States District Court for the Western District of Texas against us and certain of our former executives. The case was captioned Don Lee v. Active Power, Inc., et. al. (Civil Action No. 1:13-cv-00797-SS). The complaint alleged that on February 19, 2013, we reported that we had begun working with an unnamed Chinese distributor partner, and that on April 30, 2013, we announced in press releases and conference calls that we had entered into a strategic distribution partnership with Digital China. However, on September 5, 2013, after the close of trading, we disclosed that our partnership was with Qiyuan Network System Limited, which is neither an affiliate nor a subsidiary of Digital China. The amended complaint asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, and sought unspecified damages on behalf of all stockholders who purchased common stock between February 19 and September 5, 2013. On March 7, 2014, we filed a motion to dismiss the class action complaint. Our motion was denied by the Court on July 2, 2014. On August 11, 2014, we filed an answer to the class action complaint, and on September 2, 2014, the Court declined to certify its order of July 2, 2014 for an interlocutory appeal to the United States Court of Appeals for the Fifth Circuit. On September 23, 2014, we reached an agreement in principle and entered into a memorandum of understanding to settle the class action complaint. The parties to the class action signed a definitive settlement agreement on December 2, 2014, which was granted final approval by the Court on May 15, 2015. The settlement resolved for all defendants all of the issues that were pending in the class action complaint. The class action settlement resulted in a payment of $1.5 million to the settlement class, inclusive of fees and expenses. This settlement amount was paid from insurance proceeds. Derivative actions On September 13, 2013 and October 14, 2013, two separate stockholders filed complaints in the District Court of Travis County, Texas, purporting to bring derivative actions on behalf of us against certain current and former officers and directors of the Company. The first derivative action was captioned Okumura v. Almgren, et. al. (Cause No. D-1-GN-13-003230), and the second derivative action was captioned Shaev v. Milner, et. al. (Cause No. D-1-GN-13-003557). The allegations of each derivative complaint mirrored those of the class action complaint, and they asserted claims for breach of fiduciary duty, unjust enrichment, and/or abuse of control and sought damages on our behalf. These derivative actions were stayed by agreement pending resolution of the motion to dismiss the securities class action. The stay was lifted and on August 4, 2014, the parties filed a joint motion to consolidate the two derivative cases. On September 18, 2014, the District Court appointed lead counsel in the consolidated derivative action. On September 23, 2014, we reached an agreement in principle and entered into a memorandum of understanding to settle the consolidated derivative actions. The parties to the consolidated derivative actions signed a definitive settlement agreement on January 30, 2015, which was granted final approval by the Court on May 12, 2015. The settlement resolved for all defendants all of the issues that were pending in the consolidated derivative actions. The settlement fees and expenses were paid from insurance proceeds.

Significant Accounting Polici14

Significant Accounting Policies and Supplemental Balance Sheet Information - Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Restricted Cash	Restricted Cash Our restricted cash balance of $0.5 million as of June 30, 2015 consists of a $6,000 deposit guarantee for our building lease in Germany, which renews every six months through the term of the lease agreement, a $31,000 performance guarantee to a customer that was secured with a letter of credit, which expires in June 2017 , and a $0.5 million performance guarantee to a customer that was secured with a letter of credit, which expires in July 2015. As of December 31, 2014 , our restricted cash balance was $40,000 , which consisted primarily of secured performance and deposit guarantees.
Receivables	We estimate an allowance for doubtful accounts based on factors related to the credit risk of each customer. Historically, our credit losses have been minimal, primarily because the majority of our revenues were generated from large customers, such as Caterpillar, Inc. (“Caterpillar”) and Hewlett Packard Corporation (“HP”). We perform credit evaluations of new customers and when necessary we require deposits, prepayments or use of bank instruments such as trade letters of credit to mitigate our credit risk. We write off uncollectable trade receivables, and record any recoveries of previous write offs against the allowance. Our standard payment terms are net 30 days; however we have agreements with certain larger customers and certain distributors that allow for more extended terms at or above net 60 days.
Inventories, net	Inventories, net Inventories, net are stated at the lower of cost or market, using the first-in-first-out method
Warranty Liability	Warranty Liability Generally, the warranty period for our products is 12 months from the date of commissioning or 18 months from the date of shipment from Active Power, whichever period is shorter. Occasionally, we provide longer warranty periods to certain customers. The warranty period for products sold to our primary OEM customer, Caterpillar, is 12 months from the date of shipment to the end-user, or up to 36 months from shipment from Active Power, whichever period is shorter. This is dependent upon Caterpillar complying with our storage requirements for our products in order to preserve this warranty period beyond the standard 18-month limit. We provide for the estimated cost of product warranties at the time revenue is recognized and this accrual is included in accrued expenses and long-term liabilities on the accompanying consolidated balance sheet.
Revenue Recognition	Revenue Recognition We recognize revenue when four criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured. In general, revenue is recognized when revenue-generating transactions fall into one of the following categories of revenue recognition: • We recognize product revenue at the time of shipment for a significant portion of all products sold directly to customers and through distributors because title and risk of loss typically pass on delivery to the common carrier. Our customers and distributors do not have the right to return products. If title and risk of loss pass at some other point in time, we recognize such revenue for our customers when the product is delivered to the customer and title and risk of loss have passed. • Unless performed under a maintenance contract, we recognize installation, service and maintenance revenue at the time the service is performed. • We recognize revenue associated with maintenance agreements over the life of the contracts using the straight-line method, which approximates the expected timing in which applicable services are performed. Amounts collected in advance of revenue recognition are recorded as a current liability in the deferred revenue line of the consolidated balance sheet or as a long-term liability based on the time from the balance sheet date to the future date of revenue recognition. • We recognize revenue on certain rental programs over the life of the rental agreements using the straight-line method. Amounts collected in advance of revenue recognition are recorded as a current or long-term liability based on the time from the balance sheet date to the future date of revenue recognition. When collectability is not reasonably assured, we defer revenue and will recognize revenue as payments are received. Multiple element arrangements (“MEAs”) are arrangements to sell products to customers that frequently include multiple deliverables. Our most significant MEAs include the sale of one or more of our CleanSource® UPS or CleanSource PowerHouse products, combined with one or more of the following products or services: design services, project management, commissioning and installation services, spare parts or consumables, and maintenance agreements. Delivery of the various products or performance of services within the arrangement may or may not coincide. Certain services related to design and consulting may occur prior to product delivery. Commissioning and installation typically take place within six months of product delivery, depending upon customer requirements. Maintenance agreements, consumables, and repair, maintenance or consulting services are generally delivered over a period of one to five years. In certain arrangements revenue recognized is limited to the amount invoiced or received that is not contingent on the delivery of future products and services. When arrangements include multiple elements, we allocate revenue to each element based on the relative selling price and recognize revenue when the elements have standalone value and the four criteria for revenue recognition have been met. We establish the selling price of each element based on Vendor Specific Objective Evidence (“VSOE”) if available, Third Party Evidence (“TPE”) if VSOE is not available, or best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. We generally determine selling price based on amounts charged separately for the delivered and undelivered elements to similar customers in standalone sales of the specific elements. When arrangements include a maintenance agreement, we recognize revenue related to the maintenance agreement at the stated contractual price on a straight-line basis over the life of the agreement. Any taxes imposed by governmental authorities on our revenue-producing transactions with customers are shown in our consolidated statements of operations on a net-basis; that is, excluded from our reported revenues.
Recently issued accounting pronouncements not yet adopted	Recently issued accounting pronouncements not yet adopted In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, (“ASU 2015-03”), “ Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ”. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public entities, ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is to be applied on a retrospective basis and represents a change in accounting principle. We do not expect the adoption of this standard will have a material effect on our consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, “ Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern ”. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. We do not expect the adoption of this standard will have a material effect on our financial statements. In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers ”, “ Topic 606”. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606 Revenue from Contracts with Customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In April 2015, the FASB issued for public comment a proposed ASU, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date", which would defer the effective date of its new revenue recognition standard by one year. At the June 9, 2015 meeting, the FASB voted to approve this deferral. We will adopt this guidance January 1, 2018. We are evaluating the new guidelines to see if they will have a significant impact on our consolidated results of operation, financial condition or cash flows.

Significant Accounting Polici15

Significant Accounting Policies and Supplemental Balance Sheet Information (Tables)	6 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accounts receivables	Accounts receivable consist of the following (in thousands): June 30, 2015 December 31, 2014 Trade receivables $ 16,278 $ 11,434 Less: Allowance for doubtful accounts (262 ) (212 ) $ 16,016 $ 11,222
Schedule of inventory	Inventories, net are stated at the lower of cost or market, using the first-in-first-out method, and consisted of the following (in thousands, net of allowance): June 30, 2015 December 31, 2014 Raw materials $ 5,044 $ 5,440 Work in process 2,012 473 Finished goods 367 932 $ 7,423 $ 6,845
Accrued Expenses	Accrued expenses consist of the following (in thousands): June 30, 2015 December 31, 2014 Compensation, severance and benefits $ 2,213 $ 1,296 Warranty liability 570 475 Taxes, other than income 581 1,080 Professional fees 404 463 Other 764 820 $ 4,532 $ 4,134
Changes in warranty liability	Changes in our warranty liability are as follows (in thousands): Balance at December 31, 2014 $ 527 Warranty expense 449 Payments (353 ) Balance at June 30, 2015 $ 623 Warranty liability included in Accrued expenses $ 570 Warranty liability included in Long-term liabilities 53 Balance at June 30, 2015 $ 623

Net Loss Per Share (Tables)

Net Loss Per Share (Tables)	6 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Computation of basic and diluted net loss per share	The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Net loss $ (258 ) $ (4,413 ) $ (1,817 ) $ (8,287 ) Basic and dilutive: Weighted-average shares of common stock outstanding used in computing basic and diluted net loss per share 23,133 23,114 23,131 21,851 Basic and diluted net loss per share $ (0.01 ) $ (0.19 ) $ (0.08 ) $ (0.38 )

Significant Accounting Polici17

Significant Accounting Policies and Supplemental Balance Sheet Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2015USD ($)	Jun. 30, 2015USD ($)ProductCriteria	Dec. 31, 2014USD ($)
Restricted Cash [Abstract]
Restricted cash		$ 539	$ 40
Receivables [Abstract]
Trade receivables		16,278	11,434
Less: Allowance for doubtful accounts		(262)	(212)
Accounts receivable, net		16,016	11,222
Inventory [Abstract]
Raw materials		5,044	5,440
Work in process		2,012	473
Finished goods		367	932
Inventories, net		7,423	6,845
Accrued Expenses [Abstract]
Compensation, severance and benefits		2,213	1,296
Warranty liability		570	475
Taxes, other than income		581	1,080
Professional fees		404	463
Other		764	820
Accrued expenses		4,532	4,134
Warranty Liability [Abstract]
Standard power quality products warranty period from date of commissioning	12 months
Standard power quality products warranty period from date of shipment	18 months
Standard products warranty period for primary OEM customer	12 months
Extended products warranty period from date of shipment to primary OEM customer, Maximum	36 months
Changes in warranty liability [Roll Forward]
Balance at December 31, 2014	$ 527
Warranty expense	449
Payments	(353)
Balance at June 30, 2015	623
Warranty liability		570	475
Long-term warranty liability		53
Balance at June 30, 2015	$ 527	$ 623	$ 527
Revenue Recognition [Abstract]
Number of criteria to be met for revenue recognition | Criteria		4
Minimum number of CleanSource UPS or PowerHouse products included in significant MEAs | Product		1
Minimum number of second tier products included in significant MEAs | Product		1
Commissioning and installation period	6 months
EMAs, consumables, repair, maintenance and consulting services general deliverable period, minimum	1 year
EMAs, consumables, repair, maintenance and consulting services general deliverable period, maximum	5 years
Performance Guarantee
Restricted Cash [Abstract]
Deposit guarantees outstanding for building lease		$ 6
Performance Guarantee | Expires June 2017
Restricted Cash [Abstract]
Performance guarantee outstanding deposit for building lease		31
Performance Guarantee | Expires July 2015
Restricted Cash [Abstract]
Performance guarantee outstanding deposit for building lease		$ 500

Net Loss Per Share (Details)

Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Net loss	$ (258)	$ (4,413)	$ (1,817)	$ (8,287)
Basic and dilutive: [Abstract]
Weighted-average shares of common stock outstanding (in shares)	23,133,000	23,114,000	23,131,000	21,851,000
Basic and diluted net loss per share (usd per share)	$ (0.01)	$ (0.19)	$ (0.08)	$ (0.38)
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock equivalents excluded from calculation because effect would have been anti-dilutive (in shares)			3,177,928	2,388,398
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock equivalents excluded from calculation because effect would have been anti-dilutive (in shares)			13,765	30,656

Fair Value of Financial Instr19

Fair Value of Financial Instruments (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Fair Value Disclosures [Abstract]
Money-market funds for which the fair value was determined	$ 3.1	$ 3.1

Guarantees (Details)

Guarantees (Details) - Performance Guarantee - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Guarantor Obligations [Line Items]
Deposit guarantees outstanding for building lease	$ 6
Performance guarantees outstanding to customers		$ 40
Expires June 2017
Guarantor Obligations [Line Items]
Performance guarantee outstanding deposit for fixed asset	31
Expires July 2015
Guarantor Obligations [Line Items]
Performance guarantee outstanding deposit for fixed asset	$ 500

Revolving Line of Credit (Detai

Revolving Line of Credit (Details) - Revolving Line of Credit - USD ($)	Jul. 28, 2014	Jun. 30, 2015	Jul. 27, 2014
Line of Credit Facility [Abstract]
Extension of loan facility term	3 years
Percentage of borrowing capacity	80.00%
Maximum borrowing capacity			$ 18,750,000
Current borrowing capacity	$ 15,000,000
Inventory and purchase order availability	7,000,000		$ 3,500,000
Purchase orders and eligible inventory sublimit	$ 4,000,000
Liquidity Ratio for immediate reconciliation period	2.50
Outstanding loan facility borrowings		$ 5,500,000
Additional borrowing base		$ 9,500,000
Silicon Valley Bank | Prime Rate
Line of Credit Facility [Abstract]
Minimum prime rate	4.00%
Silicon Valley Bank | Minimum | Prime Rate
Line of Credit Facility [Abstract]
Basis spread on prime rate	0.50%
Silicon Valley Bank | Maximum | Prime Rate
Line of Credit Facility [Abstract]
Basis spread on prime rate	1.20%
U.K. and Germany
Line of Credit Facility [Abstract]
Accounts receivable sublimit	$ 5,000,000

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions	6 Months Ended
	Jun. 30, 2015USD ($)
Commitments and Contingencies Disclosure [Abstract]
Cash settlement inclusive of fees and expenses	$ 1.5