Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 |
Summary of Significant Accounting Policies | ' |
Use of Estimates | ' |
Use of Estimates |
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The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates. |
Concentration of Risk | ' |
Concentration of Risk |
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The Company’s customers are primarily utilities and their small business customers. During 2013, revenue generated under four utility programs represented 75% of the Company’s consolidated revenue, whereas during 2012, three utility programs generated 86% of the Company’s consolidated revenue. |
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The Company purchases its materials from a variety of suppliers and continues to seek out alternate suppliers for critical components so that it can be assured that its sales will not be interrupted by the inability of a single supplier to deliver product. During 2013, two suppliers were responsible for 41% and 12% of the Company’s purchases, respectively, while during 2012 one supplier was responsible for 49% of the Company’s purchases. |
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The Company maintains cash and cash equivalents in accounts with financial institutions in excess of the amount insured by the Federal Deposit Insurance Corporation. The Company monitors the financial stability of these institutions regularly and management does not believe there is significant credit risk associated with deposits in excess of federally insured amounts. |
Allowance for Doubtful Accounts | ' |
Allowance for Doubtful Accounts |
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The Company records an allowance for doubtful accounts based on specifically identified amounts that it believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available to it, the Company believes its allowance for doubtful accounts is adequate. However, actual write-offs might exceed the recorded allowance. |
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The following is a summary of changes to the allowance for doubtful accounts (in thousands): |
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Year ended December 31, | | 2013 | | 2012 | |
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Balance at the beginning of the period | | $ | 960 | | $ | 279 | |
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Additions charged to costs and expenses | | 886 | | 814 | |
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Amounts written-off | | (22 | ) | (133 | ) |
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Balance at the end of the period | | $ | 1,824 | | $ | 960 | |
Inventories | ' |
Inventories |
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Inventories are stated at the lower of cost or market. Cost is determined utilizing the first-in, first-out (FIFO) method. |
Properties & Equipment | ' |
Properties & Equipment |
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Property and equipment are stated at cost. For financial reporting purposes depreciation is computed using the straight-line method over the following estimated useful lives: |
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Buildings | | 39 years | | | | | |
Office equipment | | 3 - 5 years | | | | | |
Furniture | | 5 - 10 years | | | | | |
Transportation equipment | | 3 - 5 years | | | | | |
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Goodwill | ' |
Goodwill |
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Goodwill represents the purchase price in excess of the fair value of assets acquired in business combinations. Accounting Standards Codification (“ASC”) 350, “Goodwill and Other Intangible Assets,” requires the Company to assess goodwill and other indefinite-lived intangible assets for impairment at least annually in the absence of an indicator of possible impairment and immediately upon an indicator of possible impairment. During the fourth quarter of 2013, the Company undertook an assessment of its goodwill for possible impairment and concluded that the fair value of the continuing business, based on the discounted current value of the estimated future cash flows, exceeded the carrying value, indicating that the goodwill was not impaired. As explained further in Note 4, the Company sold its ESCO business on February 28, 2013. Utilizing the sales price of this business as an indicator of its fair market value, it concluded that the goodwill associated with this business was partially impaired. As a result, it reduced the carrying value of the goodwill by $1.4 million, to $5.3 million and recorded a $1.4 million impairment loss during the fourth quarter of 2012. |
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The Company considered various factors in determining the fair value of its business, including discounted cash flows from projected earnings, values for comparable companies and the market price of its common stock. It will continue to monitor for any impairment indicators such as underperformance of projected earnings, net book value compared to market capitalization, declining stock price and significant adverse economic and industry trends. In the event that the business does not achieve projected results, or, as the result of changes in facts of circumstances, the Company could incur an additional goodwill impairment charge in a future period. |
Impairment of Long-Lived Assets | ' |
Impairment of Long-Lived Assets |
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The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those items. The Company’s cash flow estimates are based on historical results adjusted to reflect its best estimate of future market and operating conditions. The net carrying value of assets not recoverable is reduced to fair value. |
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These estimates of fair value represent management’s best estimate based on industry trends and reference to market rates and transactions. During the fourth quarter of 2012, the Company determined that the future cash flows of its Zemel Road generating facility were likely to be less than initially anticipated, due to lower than projected gas flow rates and higher than expected operating costs. As a result, the fair market value was determined to be less than the Company’s current carrying value, indicating an impairment of this asset’s value. |
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On February 28, 2013, the Company sold its ESCO business. The sales price received upon the sale of this business was less than the Company’s carrying value as of December 31, 2012, indicating that the asset was partially impaired. The Company therefore reduced the carrying value of the assets associated with this business during the fourth quarter of 2012, recording a$3.2 million impairment loss in the process. |
Intangible Assets | ' |
Intangible Assets |
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The Company’s finite life intangible assets are comprised of technology and software. Finite life intangible assets are amortized based on the timing of expected economic benefits associated with the asset over their estimated useful lives. The Company estimated that the useful life of its technology and software to be between five to seven years. |
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For all amortizable intangible assets, if any events or changes in circumstances occur that indicate possible impairment, the Company will perform an impairment review based on an undiscounted cash flow analysis. Impairment occurs when the carrying value of the assets exceeds the future undiscounted cash flows. When impairment is indicated, the estimated future cash flows are then discounted to determine the estimated fair value of the asset and an impairment charge is recorded for the difference between the carrying value and the net present value of estimated future cash flows. The Company also evaluates the remaining useful life during each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. |
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On February 28, 2013, the Company sold its ESCO business. The sales price received upon the sale of this business was less than the Company’s carrying value as of December 31, 2012, indicating that the asset was partially impaired. As part of the adjustment to reduce the carrying value of the assets of this business to the implied fair value, it wrote off all of the intangibles assets associated with the business in the fourth quarter of 2012. |
Revenue Recognition | ' |
Revenue Recognition |
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The Company recognizes revenue when all four of the following criteria are met: (i) persuasive evidence has been received that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectibility is reasonably assured. In addition, the Company follows the provisions of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104, Revenue Recognition, which sets forth guidelines in the timing of revenue recognition based upon factors such as passage of title, installation, payments and customer acceptance. Any amounts billed prior to satisfying the Company’s revenue recognition criteria is recorded as “Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts” (“Billings in Excess”) in the accompanying consolidated balance sheets. Billings in Excess totaled $1.7 million and $1.5 million as of December 31, 2013 and 2012, respectively. |
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The Company utilizes the percentage of completion method to recognize revenue in conjunction with the cost-to-cost method of measuring the extent of progress toward completion, consistent with ASC 605-35, “Construction Type and Production Type Contracts” and the AICPA’s Statement of Position 81-1 (SOP 81-1). Any anticipated losses on contracts are charged to operations as soon as they are determinable. |
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | ' |
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts |
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As of December 31, 2013, the Company had customer projects underway for which it had recognized revenue but not yet invoiced the customer. The Company records this unbilled revenue as a current asset titled “Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts.” The Company had Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts of $6.6 million and $3.3 million at December 31, 2013 and 2012, respectively. |
Other Liabilities | ' |
Other Liabilities |
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In December 2012, one of the Company’s major suppliers agreed to allow it to pay for approximately $5.3 million worth of purchases over a 23 month period. The balance of this liability was $3.2 million and $5.3 million as of December 31, 2013 and 2012, respectively and has been included in other current liabilities and other long-term liabilities in the accompanying consolidated financial statements. |
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Advertising, Marketing and Promotional Costs | ' |
Advertising, Marketing and Promotional Costs |
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Expenditures on advertising, marketing and promotions are charged to operations in the period incurred and totaled $152,000 and $212,000 for the periods ended December 31, 2013 and 2012, respectively. |
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Income Taxes | ' |
Income Taxes |
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Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for the tax consequences in future years of the differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable earnings. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. |
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Net Loss Per Share | ' |
Net Loss Per Share |
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The Company computes loss per share under ASC 260-10, “Earnings Per Share.” This statement requires presentation of two amounts; basic and diluted loss per share. Basic loss per share is computed by dividing the loss available to common stockholders by the weighted average common shares outstanding. Diluted earnings per share would include all common stock equivalents unless anti-dilutive. For periods when such inclusion would not be anti-dilutive, the Company uses the treasury method to calculate the diluted earnings per share. The treasury stock method assumes that the Company uses the proceeds from the exercise of in-the-money options and warrants to repurchase common stock at the average market price for the period. Options and warrants are only dilutive when the average market price of the underlying common stock exceeds the exercise price of the options or warrants. |
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The Company has not included the outstanding options, warrants, preferred stock or convertible debt as common stock equivalents when calculating the diluted loss per share for the years ended December 31, 2013 or 2012, because the effect would be anti-dilutive. |
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The following table sets forth the weighted average shares issuable upon exercise of outstanding options and warrants and convertible debt that is not included in the basic and diluted loss per share available to common stockholders: |
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December 31, | | 2013 | | 2012 | | | |
Weighted average shares issuable upon exercise of outstanding options | | 469,625 | | 624,588 | | | |
Weighted average shares issuable upon exercise of outstanding warrants | | 767,643 | | 145,695 | | | |
Weighted average shares issuable upon conversion of convertible preferred | | 655,599 | | — | | | |
Weighted average shares issuable upon conversion of convertible debt | | 897,041 | | 211,217 | | | |
Total | | 2,789,908 | | 981,500 | | | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments |
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The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these amounts. |
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Share-based Compensation | ' |
Share-based Compensation |
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The Company has a stock incentive plan that provides for stock-based employee compensation, including the granting of stock options and shares of restricted stock, to certain key employees. The Company follows the guidance of ASC 718, “Compensation — Stock Compensation,” which requires companies to record stock compensation expense for equity-based awards granted, including stock options and restricted stock unit grants, over the service period of the equity-based award based on the fair value of the award at the date of grant. |
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The following are the components of the Company’s stock compensation expense during the years ended December 31, 2013 and 2012, respectively: |
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| | 2013 | | 2012 | |
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Stock Options | | $ | 698 | | $ | 1,322 | |
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Restricted Stock | | 169 | | 481 | |
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Employee Stock Purchase Plan (1) | | — | | (19 | ) |
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Total Stock Compensation Expense | | $ | 867 | | $ | 1,784 | |
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(1) The Employee Stock Purchase Plan was terminated before its planned expiration during 2012 due to the Company’s inability to maintain a current registration statement for the shares. Upon the termination of the Plan, the Company reversed previously recorded compensation expense associated with employee’s rights to purchase shares under the Plan. |
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Please refer to Notes 23, 24 and 25 for additional information regarding share-based compensation expense. |
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Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements |
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The Company does not believe any recently issued, but not yet effective, accounting standards will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows. |