Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 31, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'ENOVA SYSTEMS INC | ' |
Entity Central Index Key | '0000922237 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 44,520,197 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
ASSETS | ' | ' |
Cash and cash equivalents | ($2,000) | $57,000 |
Accounts receivable, net | 136,000 | 208,000 |
Inventories and supplies, net | 1,888,000 | 2,203,000 |
Prepaid expenses and other current assets | 87,000 | 242,000 |
Total current assets | 2,109,000 | 2,710,000 |
Long term accounts receivable | 17,000 | 38,000 |
Property and equipment, net | 95,000 | 307,000 |
Total assets | 2,221,000 | 3,055,000 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Accounts payable | 643,000 | 558,000 |
Loans from employees | 19,000 | ' |
Deferred revenues | 213,000 | 118,000 |
Accrued payroll and related expenses | 162,000 | 98,000 |
Accrued loss for litigation settlement | 2,014,000 | 2,014,000 |
Other accrued liabilities | 220,000 | 255,000 |
Current portion of notes payable | 56,000 | 66,000 |
Total current liabilities | 3,327,000 | 3,109,000 |
Accrued interest payable | 1,380,000 | 1,318,000 |
Notes payable, net of current portion | 1,241,000 | 1,262,000 |
Total liabilities | 5,948,000 | 5,689,000 |
Stockholders' deficit: | ' | ' |
Series A convertible preferred stock - no par value, 30,000,000 shares authorized; 2,642,000 shares issued and outstanding; liquidating preference at $0.60 per share as of September 30, 2013 and December 31, 2012 | 528,000 | 528,000 |
Series B convertible preferred stock - no par value, 5,000,000 shares authorized; 546,000 shares issued and outstanding; liquidating preference at $2 per share as of September 30, 2013 and December 31, 2012 | 1,094,000 | 1,094,000 |
Common Stock - no par value, 750,000,000 shares authorized; 44,520,000 shares issued and outstanding as of September 30, 2013 and December 31, 2012 | 145,512,000 | 145,512,000 |
Additional paid-in capital | 9,585,000 | 9,579,000 |
Accumulated deficit | -160,446,000 | -159,347,000 |
Total stockholders' equity | -3,727,000 | -2,634,000 |
Total liabilities and stockholders' equity | $2,221,000 | $3,055,000 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Stockholders' equity: | ' | ' |
Series A convertible preferred stock , par value | $0 | $0 |
Series A convertible preferred stock , shares authorized | 30,000,000 | 30,000,000 |
Series A convertible preferred stock , shares issued | 2,642,000 | 2,642,000 |
Series A convertible preferred stock , shares outstanding | 2,642,000 | 2,642,000 |
Series A convertible preferred stock liquidating preference | $0.60 | $0.60 |
Series B convertible preferred stock , par value | $0 | $0 |
Series B convertible preferred stock , shares authorized | 5,000,000 | 5,000,000 |
Series B convertible preferred stock , shares issued | 546,000 | 546,000 |
Series B convertible preferred stock , shares outstanding | 546,000 | 546,000 |
Series B convertible preferred stock liquidating preference | $2 | $2 |
Common stock, par value | $0 | $0 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 44,520,000 | 44,520,000 |
Common stock, shares outstanding | 44,520,000 | 44,520,000 |
STATEMENTS_OF_OPERATIONS_Unaud
STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenues | $140,000 | $152,000 | $425,000 | $1,055,000 |
Cost of revenues | 162,000 | 140,000 | 643,000 | 1,722,000 |
Gross loss | -22,000 | 12,000 | -218,000 | -667,000 |
Operating expenses | ' | ' | ' | ' |
Research and development | ' | 1,000 | ' | 805,000 |
Selling, general & administrative | 216,000 | 731,000 | 754,000 | 3,129,000 |
Total operating expenses | 216,000 | 732,000 | 754,000 | 3,934,000 |
Operating loss | -238,000 | -720,000 | -972,000 | -3,881,000 |
Other income and (expense) | ' | ' | ' | ' |
Interest and other income (expense) | -115,000 | -29,000 | -127,000 | -150,000 |
Total other income and (expense) | -115,000 | -29,000 | -127,000 | -150,000 |
Net loss | ($353,000) | ($749,000) | ($1,099,000) | ($4,751,000) |
Basic and diluted loss per share | ($0.01) | ($0.02) | ($0.02) | ($0.11) |
Weighted average number of common shares outstanding | 44,520,000 | 44,520,000 | 44,520,000 | 43,757,000 |
STATEMENTS_OF_CASH_FLOWS_Unaud
STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($1,099,000) | ($4,751,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Reserve for doubtful accounts | -46,000 | 197,000 |
Inventory reserve | 267,000 | 945,000 |
Depreciation and amortization | 114,000 | 351,000 |
Loss on disposal of fixed assets | 4,000 | ' |
Loss on asset impairment | 65,000 | 68,000 |
Stock option expense | 6,000 | 169,000 |
(Increase) decrease in: | ' | ' |
Accounts receivable | 118,000 | 240,000 |
Inventory and supplies | 48,000 | 231,000 |
Prepaid expenses and other current assets | 155,000 | 94,000 |
Long term receivables | 21,000 | 6,000 |
Increase (decrease) in: | ' | ' |
Accounts payable | 85,000 | -121,000 |
Loans from employees | 19,000 | ' |
Deferred revenues | 95,000 | -302,000 |
Accrued payroll and related expense | 64,000 | -163,000 |
Other accrued liabilities | -35,000 | -112,000 |
Accrued interest payable | 62,000 | 61,000 |
Net cash used in operating activities | -57,000 | -3,087,000 |
Cash flows from investing activities: | ' | ' |
Proceeds from the sale of fixed assets | 29,000 | ' |
Purchases of property and equipment | ' | -16,000 |
Net cash provided by (used in) investing activities | 29,000 | -16,000 |
Cash flows from financing activities: | ' | ' |
Payment on notes payable | -31,000 | -17,000 |
Net proceeds from the issuance of common stock | ' | 132,000 |
Net cash provided by (used in) financing activities | -31,000 | 115,000 |
Net (decrease) in cash and cash equivalents | -59,000 | -2,988,000 |
Cash and cash equivalents, beginning of period | 57,000 | 3,096,000 |
Cash and cash equivalents, end of period | -2,000 | 108,000 |
Supplemental disclosure of cash flow information: | ' | ' |
Interest paid | 1,000 | 4,000 |
Supplemental disclosure of non cash investing and financing: | ' | ' |
Shares issued for services | ' | $62,000 |
Description_of_the_Company_and
Description of the Company and its Business | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
Description of the Company and its Business | ' |
Enova Systems, Inc., (“Enova”, “We” or “the Company”), a California corporation, was incorporated in July 1976, and trades on the OTCQB under the trading symbol “ENVS” and on the London Stock Exchange under the symbol “ENV” or “ENVS”. The Company believes it has been a globally recognized leader as a supplier of efficient, environmentally-friendly digital power components and systems products, in conjunction with associated engineering services. The Company’s core competencies are focused on the commercialization of power management and conversion systems for mobile and stationary applications. | |
THE DISCUSSION SET FORTH BELOW AND ELSEWHERE IN THIS 10-Q IS QUALIFIED IN ITS ENTIRETY BY THE FOLLOWING: ENOVA REMAINS INSOLVENT AND OWES IN EXCESS OF $4.5 MILLION IN THE AGGREGATE TO ITS TWO PRINCIPAL CREDITORS, THE CREDIT MANAGERS ASSOCIATION AND ARENS CONTROLS COMPANY, L.L.C. (“ARENS"). WITHOUT IMMEDIATE ADDITIONAL FINANCING OR COLLECTION OF RECEIVABLES, THE COMPANY WILL NEED TO CEASE OPERATIONS. THE COMPANY CURRENTLY HAS NO VISIBILITY AS TO EITHER ADDITIONAL FINANCING OR THE COLLECTION OF RECEIVABLES. SPECIFICALLY, WITHOUT A MUTUALLY ACCEPTABLE SETTLEMENT OF THE ARENS JUDGMENT ARISING OUT OF ARENS CONTROLS COMPANY, L.L.C. v. ENOVA SYSTEMS, INC., CASE NO. 13-1102 (7TH CIRCUIT) IN THE AMOUNT OF $2.0 MILLION, THE COMPANY DOES NOT CURRENTLY BELIEVE IT HAS ANY ALTERNATIVE OTHER THAN TO CEASE OPERATIONS. THE COMPANY CURRENTLY EMPLOYS ONLY TWO PERSONNEL, JOHN MICEK, THE COMPANY'S CEO, CFO AND SECRETARY, AND ONE ADDITIONAL INDIVIDUAL IN THE FINANCE DEPARTMENT. | |
ON SEPTEMBER 24, 2013, THE COMPANY ENTERED INTO A SETTLEMENT AGREEMENT WITH ARENS PROVIDING A PERIOD OF 120 DAYS TO SETTLE THE JUDGMENT FOR THE AMOUNT OF $300,000. THE COMPANY DOES NOT HAVE VISIBILITY FOR ADDITIONAL FINANCING TO MAKE PAYMENT UNDER THE AGREEMENT. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | ||
Sep. 30, 2013 | |||
Notes to Financial Statements | ' | ||
Summary of Significant Accounting Policies | ' | ||
Basis of Presentation — Interim Financial Statements | |||
The financial information as of and for the three and nine months ended September 30, 2013 and 2012 is unaudited but includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair statement of its financial position at such dates and the operating results and cash flows for those periods. The year-end balance sheet data was derived from audited financial statements, and 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 SEC rules or regulations; however, the Company believes the disclosures made are adequate to make the information presented not misleading. | |||
The preparation of financial statements in conformity with U.S. 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. Although management believes these estimates and assumptions are adequate, actual results could differ from the estimates and assumptions used. | |||
THE FINANCIAL STATEMENTS AND ACCOMPANYING MANAGEMENTS DISCUSSION FOR THE THREE AND NINE MONTH PERIOD ENDING SEPTEMBER 30, 2013 HAVE NOT BEEN REVIEWED BY THE COMPANY's REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM. OUR REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM HAS NOT BEEN INVOLVED IN THE FILING OF THE SEPTEMBER 30,2013 FORM 10Q. | |||
The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for the year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2012, which are included in the Company’s Annual Report on Form 10-K for the year then ended. | |||
Liquidity and Going Concern | |||
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, historically the Company has experienced significant recurring net losses and operating cash flow deficits. The Company’s ability to continue as a going concern is dependent on many factors, including among others, its ability to raise additional funding, and its ability to successfully restructure operations to lower manufacturing costs and reduce operating expenses. | |||
To date, the Company has incurred recurring net losses and negative cash flows from operations. At September 30, 2013, the Company had an accumulated deficit of approximately $160.4 million, cash and cash equivalents of negative $2,000, working capital of approximately negative $1,218,000 and shareholders’ deficit of approximately $3.7 million. Until the Company can generate significant cash from its operations, the Company expects to continue to fund its operations with existing cash resources, proceeds from one or more private placement agreements, as well as potentially through debt financing or the sale of equity securities. However, the Company may not be successful in obtaining additional funding. In addition, the Company cannot be sure that its existing cash and investment resources will be adequate or that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to the Company or its stockholders. | |||
Our operations will require us to make necessary investments in human and production resources, regulatory compliance, as well as sales and marketing efforts. We do not currently have adequate internal liquidity to meet these objectives in the long term. On June 21, 2012, we reported in a Form 8-K filing that, as part of cost cutting measures in response to our decrease in revenue amid continued delays in industry adoption of EV technology resulting from ongoing battery cost and reliability concerns, in excess of 80% of our workforce left our Company, including the resignation of members of our senior management. We continue to evaluate strategic partnering opportunities and other external sources of liquidity, including the public and private financial markets and strategic partners. As a result of having insufficient funds, the Company has delayed all of its product development. Failure to obtain adequate financing also will adversely affect the Company’s ability to continue in business. If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders would likely result. If the Company raises additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations, as well as covenants and specific financial ratios that may restrict its ability to operate its business. | |||
The Company continues to pursue other options to raise additional capital to fund its operations; however, there can be no assurance that we can successfully raise additional funds through the capital markets. | |||
As of September 30, 2013, the Company had approximately negative $2,000 in cash and cash equivalents and does not anticipate that its anticipated receivables collections will be sufficient to meet its projected operating requirements through December 2013 to continue operations and market trading. | |||
Significant Accounting Policies | |||
The accounting and reporting policies of the Company conform to US GAAP. There have been no significant changes in the Company's significant accounting policies during the three months ended September 30, 2013 compared to what was previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. | |||
Revenue Recognition | |||
The Company manufactures proprietary products and other products based on design specifications provided by its customers. The Company recognizes revenue only when all of the following criteria have been met: | |||
• | Persuasive Evidence of an Arrangement — The Company documents all terms of an arrangement in a written contract signed by the customer prior to recognizing revenue. | ||
• | Delivery Has Occurred or Services Have Been Rendered — The Company performs all services or delivers all products prior to recognizing revenue. Professional consulting and engineering services are considered to be performed when the services are complete. Equipment is considered delivered upon delivery to a customer’s designated location. In certain instances, the customer elects to take title upon shipment. | ||
• | The Fee for the Arrangement is Fixed or Determinable — Prior to recognizing revenue, a customer’s fee is either fixed or determinable under the terms of the written contract. Fees for professional consulting services, engineering services and equipment sales are fixed under the terms of the written contract. The customer’s fee is negotiated at the outset of the arrangement and is not subject to refund or adjustment during the initial term of the arrangement. | ||
• | Collectability is Reasonably Assured — The Company determines that collectability is reasonably assured prior to recognizing revenue. Collectability is assessed on a customer-by-customer basis based on criteria outlined by management. New customers are subject to a credit review process which evaluates the customer’s financial position and ultimately its ability to pay. The Company does not enter into arrangements unless collectability is reasonably assured at the outset. Existing customers are subject to ongoing credit evaluations based on payment history and other factors. If it is determined during the arrangement that collectability is not reasonably assured, revenue is recognized on a cash basis. Amounts received upfront for engineering or development fees under multiple-element arrangements are deferred and recognized over the period of committed services or performance, if such arrangements require the Company to provide on-going services or performance. All amounts received under collaborative research agreements or research and development contracts are nonrefundable, regardless of the success of the underlying research. | ||
The Company recognizes revenue from milestone payments over the remaining minimum period of performance obligations. | |||
The Company also recognizes engineering and construction contract revenues using the percentage-of-completion method, based primarily on contract costs incurred to date compared with total estimated contract costs. Customer-furnished materials, labor, and equipment, and in certain cases subcontractor materials, labor, and equipment, are included in revenues and cost of revenues when management believes that the company is responsible for the ultimate acceptability of the project. Contracts are segmented between types of services, such as engineering and construction, and accordingly, revenue and gross margin related to each activity is recognized as those separate services are rendered. | |||
Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined. Claims against customers are recognized as revenue upon settlement. Revenues recognized in excess of amounts received are classified as current assets. Amounts billed to clients in excess of revenues recognized to date are classified as current liabilities on contracts. | |||
Changes in project performance and conditions, estimated profitability, and final contract settlements may result in future revisions to engineering and development contract costs and revenue. | |||
These accounting policies were applied consistently for all periods presented. Our operating results would be affected if other alternatives were used. Information about the impact on our operating results is included in the footnotes to our financial statements. | |||
Several other factors related to the Company may have a significant impact on our operating results from year to year. For example, the accounting rules governing the timing of revenue recognition related to product contracts are complex and it can be difficult to estimate when we will recognize revenue generated by a given transaction. Factors such as acceptance of services provided, payment terms, creditworthiness of the customer, and timing of delivery or acceptance of our products often cause revenues related to sales generated in one period to be deferred and recognized in later periods. For arrangements in which services revenue is deferred, related direct and incremental costs may also be deferred. | |||
Deferred Revenues | |||
The Company recognizes revenues as earned. Amounts billed in advance of the period in which service is rendered are recorded as a liability under deferred revenues. When the Company enters into production and development contracts with customers, an evaluation is made to ascertain the specific revenue generating activities of each contract and establishes the units of accounting for each activity. Revenue on these units of accounting is not recognized until a) there is persuasive evidence of the existence of a contract, b) the service has been rendered and delivery has occurred, c) there is a fixed and determinable price, and d) collectability is reasonable assured. | |||
Warranty Costs | |||
The Company provides product warranties for specific product lines and accrues for estimated future warranty costs in the period in which revenue is recognized. Our products are generally warranted to be free of defects in materials and workmanship for a period of 12 to 24 months from the date of installation, subject to standard limitations for equipment that has been altered by other than Enova Systems personnel and equipment which has been subject to negligent use. Warranty provisions are based on past experience of product returns, number of units repaired and our historical warranty incidence over the past twenty-four month period. The warranty liability is evaluated on an ongoing basis for adequacy and may be adjusted as additional information regarding expected warranty costs becomes known. | |||
Stock Based Compensation | |||
We measure the compensation cost for stock-based awards classified as equity at their fair value on the date of grant and recognize compensation expense over the service period for awards expected to vest, net of estimated forfeitures. | |||
Accounting Changes and Recent Accounting Pronouncements | |||
Certain accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations and cash flows. |
Inventory
Inventory | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Inventory | ' | ||||||||
Inventory, consisting of materials, labor and manufacturing overhead, is stated at the lower of cost (first-in, first-out) or market and consisted of the following at: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials | $ | 3,144,000 | $ | 3,988,000 | |||||
Work in progress | 222,000 | 2,000 | |||||||
Finished goods | 472,000 | 587,000 | |||||||
Reserve for obsolescence | (1,950,000 | ) | (2,374,000 | ) | |||||
Total | $ | 1,888,000 | $ | 2,203,000 | |||||
In the nine months ended September 30, 2013, the Company exchanged excess inventory with an original book value totaling $830,000 as settlement for vendor payables. Inventory reserve charged to operations amounted to $267,000 and $945,000 for the nine months ended September 30, 2013 and 2012, respectively. Inventory valuation adjustments and other inventory write-offs amounted to $699,000 and $161,000 for the nine months ended September 30, 2013 and 2012, respectively. |
Property_and_Equipment
Property and Equipment | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Property and Equipment | ' | ||||||||
Property and equipment consisted of the following at: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Computers and software | $ | 59,000 | $ | 580,000 | |||||
Machinery and equipment | 251,000 | 535,000 | |||||||
Furniture and office equipment | 86,000 | 87,000 | |||||||
Demonstration vehicles and buses | 423,000 | 675,000 | |||||||
Leasehold improvements | - | 1,327,000 | |||||||
819,000 | 3,204,000 | ||||||||
Less accumulated depreciation and amortization | (724,000 | ) | (2,897,000 | ) | |||||
Total | $ | 95,000 | $ | 307,000 | |||||
Depreciation and amortization expense was $114,000 and $351,000 for the nine months ended September 30, 2013 and 2012, respectively, and within those total expenses, the amortization of leasehold improvements was $22,000 and $196,000 for the nine months ended September 30, 2013 and 2012, respectively. Depreciation and amortization expense was $23,000 and $113,000 for the three months ended September 30, 2013 and 2012, respectively, and within those total expenses, the amortization of leasehold improvements was $0 and $65,000 for the three months ended September 30, 2013 and 2012, respectively. | |||||||||
For the nine months ended September 30, 2013, fixed assets with an original book value of $272,000 were exchanged in settlement of vendor payables, two vehicles were sold and one vehicle was repossessed. In addition, three vehicles were repossessed in October. For the three months ended September 30, 2013, the Company recorded a loss on the impairment of fixed assets of $65,000 for the three vehicles repossessed in October. For the nine months ended September 30, 2013, the Company recorded proceeds from the sale of fixed assets of $29,000, a loss on the impairment of fixed assets of $65,000 and a loss on the disposal of fixed assets of $4,000, and an impairment loss of $68,000 for the three and nine months ended September 30, 2012. In addition, the Company’s headquarters lease expired on January 31, 2013, which resulted in a decrease in gross leasehold improvements in the amount of $1,327,000 and a net book value of zero. |
Other_Accrued_Liabilities
Other Accrued Liabilities | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Other Accrued Liabilities | ' | ||||||||
Other accrued liabilities consisted of the following at: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Accrued inventory received | $ | 10,000 | $ | 14,000 | |||||
Accrued professional services | 89,000 | 45,000 | |||||||
Accrued warranty | 96,000 | 117,000 | |||||||
Other | 25,000 | 79,000 | |||||||
Total | $ | 220,000 | $ | 255,000 | |||||
Accrued warranty consisted of the following activities during the nine months ended September 30: | |||||||||
2013 | 2012 | ||||||||
Balance at beginning of year | $ | 117,000 | $ | 227,000 | |||||
Accruals for warranties issued during the period | 96,000 | 94,000 | |||||||
Warranty claims | (117,000 | ) | (216,000 | ) | |||||
Balance at end of quarter | $ | 96,000 | $ | 105,000 | |||||
Accrued warranty consisted of the following activities during the three months ended September 30: | |||||||||
2013 | 2012 | ||||||||
Balance at beginning of quarter | $ | 111,000 | $ | 140,000 | |||||
Accruals for warranties issued during the period | 39,000 | 14,000 | |||||||
Warranty claims | (54,000 | ) | (49,000 | ) | |||||
Balance at end of quarter | $ | 96,000 | $ | 105,000 |
Notes_Payable_LongTerm_Debt_an
Notes Payable, Long-Term Debt and Other Financing | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Notes Payable, Long-Term Debt and Other Financing | ' | ||||||||
Notes payable consisted of the following at: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Secured note payable to Credit Managers Association of California, bearing interest at prime plus 3% (6.25% as of September 30, 2013), and is adjusted annually in April through maturity. Principal and unpaid interest due in April 2016. A sinking fund escrow may be funded with 10% of future equity financing, as defined in the Agreement | $ | 1,238,000 | $ | 1,238,000 | |||||
Secured note payable to a Coca Cola Enterprises in the original amount of $40,000, bearing interest at 10% per annum. Principal and unpaid interest due on demand | 40,000 | 40,000 | |||||||
Secured note payable to a financial institution in the original amount of $38,000, bearing interest at 8.25% per annum, payable in 60 equal monthly installments of principal and interest through February 19, 2014 | 5,000 | 11,000 | |||||||
Secured note payable to a financial institution in the original amount of $19,000, bearing interest at 10.50% per annum, payable in 60 equal monthly installments of principal and interest through August 25, 2014 | 5,000 | 8,000 | |||||||
Secured note payable to a financial institution in the original amount of $26,000, bearing interest at 7.91% per annum, payable in 60 equal monthly installments of principal and interest through April 9, 2015 | 9,000 | 14,000 | |||||||
Secured note payable to a financial institution in the original amount of $25,000, bearing interest at 7.24% per annum, payable in 60 equal monthly installments of principal and interest through March 10, 2016 | - | 17,000 | |||||||
1,297,000 | 1,328,000 | ||||||||
Less current portion of notes payable | (56,000 | ) | (66,000 | ) | |||||
Notes payable, net of current portion | $ | 1,241,000 | $ | 1,262,000 | |||||
As of September 30, 2013 and December 31, 2012, the balance of long term interest payable amounted to $1,380,000 and $1,318,000, respectively, of which the Credit Managers Association of California note amounted to $1,344,000 and $1,286,000, respectively. Interest expense on notes payable amounted to $64,000 and $65,000 during the nine months ended September 30, 2013 and 2012, respectively. Interest expense on notes payable amounted to $21,000 and $24,000 during the three months ended September 30, 2013 and 20112, respectively. In June 2013, the vehicle that secured the note payable due March 10, 2016 was repossessed by the secured lender. The Company was invoiced by the lender for $8,000 for final settlement. | |||||||||
Deferred_Revenues
Deferred Revenues | 9 Months Ended |
Sep. 30, 2013 | |
Deferred Revenue Disclosure [Abstract] | ' |
Deferred Revenues | ' |
The Company had deferred $213,000 and $118,000 in revenue related to production and development contracts at September 30, 2013 and December 31, 2012, respectively. The Company anticipates that the September 30, 2013 deferred revenue balance will be recognized by the first quarter of 2014. |
Stockholders_Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2013 | |
Equity [Abstract] | ' |
Stockholders' Equity | ' |
On April 23, 2012, the Company entered into a $6,600,000 purchase agreement with Lincoln Park Capital Fund pursuant to which the Company has the right to sell to Lincoln Park up to $6,600,000 in shares of the Company’s common stock, and on April 24, 2012, the Company entered into another purchase agreement with Lincoln Park Capital Fund pursuant to which the Company has the right to sell to Lincoln Park up to $3,400,000 in shares of the Company’s common stock, subject to certain limitations. We received proceeds of $132,000, net of financing costs of $152,000, under the $3,400,000 Purchase Agreement and issued a total of 1,754,974 shares of common stock in the second quarter of 2012. As consideration for its commitment to purchase common stock under the $3,400,000 Purchase Agreement, the Company issued to Lincoln Park 281,030 shares of common stock. Access to funding under the facility is dependent upon our shares being listed on a national exchange, and as our shares were delisted from the NYSE Amex exchange on October 31, 2012, the Company can no longer raise funds from the facility. |
Stock_Options
Stock Options | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Stock Options | ' | ||||||||||||||||
Stock Option Program Description | |||||||||||||||||
As of September 30, 2013, the Company had two equity compensation plans, the 1996 Stock Option Plan (the “1996 Plan”) and the 2006 equity compensation plan (the “2006 Plan”). The 1996 Plan has expired for the purposes of issuing new grants. However, the 1996 Plan will continue to govern awards previously granted under that plan. The 2006 Plan has been approved by the Company’s shareholders. Equity compensation grants are designed to reward employees and executives for their long term contributions to the Company and to provide incentives for them to remain with the Company. The number and frequency of equity compensation grants are based on competitive practices, operating results of the company, and government regulations. | |||||||||||||||||
The maximum number of shares issuable over the term of the 1996 Plan was limited to 65 million shares (without giving effect to subsequent stock splits). Options granted under the 1996 Plan typically have an exercise price of 100% of the fair market value of the underlying stock on the grant date and expire no later than ten years from the grant date. On August 27, 2013, the Board of Directors of Enova Systems approved amendments to Enova's 2006 Equity Compensation Plan (a) to increase the number of shares authorized for issuance from 3,000,000 shares to 9,000,000 shares and (b) to increase the number of shares of common stock that may be issued to an individual in any calendar year from 500,000 shares to 5,000,000 shares. Of the 9,000,000 shares reserved for issuance under the amended 2006 Plan, of which 4,400,000 and 270,000 were granted in the nine months ended September 30, 2013 and 2012, respectively, and 3,711,000 shares were available for grant as of September 30, 2013. Options granted under the 2006 Plan have terms of between three and ten years and generally vest and become fully exercisable from one to three years from the date of grant or vest according to the price performance of our shares. | |||||||||||||||||
Stock-based compensation expense related to stock options was $6,000 and $166,000 for the nine months ended September 30, 2013 and 2012, respectively. As of September 30, 2013, the total compensation cost related to non-vested awards not yet recognized is $48,000. The remaining period over which the future compensation cost is expected to be recognized is 32 months. | |||||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at September 30, 2013: | |||||||||||||||||
Number of Share | Weighted Average | Weighted Average | Aggregate | ||||||||||||||
Options | Exercise Price | Remaining | Intrinsic Value(1) | ||||||||||||||
Contractual Term in Years | |||||||||||||||||
Outstanding at December 31, 2012 | 810,000 | $ | 0.64 | 4.06 | $ | — | |||||||||||
Granted | 4,400,000 | $ | 0.02 | 2.91 | $ | — | |||||||||||
Exercised | — | $ | — | — | $ | — | |||||||||||
Forfeited or Cancelled | — | $ | — | — | $ | — | |||||||||||
Outstanding at September 30, 2013 | 5,210,000 | $ | 0.12 | 2.97 | $ | — | |||||||||||
Exercisable at September 30, 2013 | 650,000 | $ | 0.78 | 3.54 | $ | — | |||||||||||
Vested and expected to vest (2) | 5,210,000 | $ | 0.12 | 2.97 | $ | — | |||||||||||
-1 | Aggregate intrinsic value represents the value of the closing price per share of our common stock on the last trading day of the fiscal period in excess of the exercise price multiplied by the number of options outstanding or exercisable, except for the “Exercised” line, which uses the closing price on the date exercised. | ||||||||||||||||
-2 | Number of shares includes options vested and those expected to vest net of estimated forfeitures. | ||||||||||||||||
The exercise prices of the options outstanding at September 30, 2013 ranged from $0.07 to $4.35. The weighted average grant-date fair value of options granted during the nine months ended September 30, 2013 and 2012 was $0.02 and $0.05, respectively. The Company’s policy is to issue shares from its authorized shares upon the exercise of stock options. | |||||||||||||||||
Unvested share activity for the nine months ended September 30, 2013 is summarized below: | |||||||||||||||||
Unvested | Weighted | ||||||||||||||||
Number of | Average | ||||||||||||||||
Options | Grant Date Fair | ||||||||||||||||
Value | |||||||||||||||||
Unvested balance at December 31, 2012 | 236,000 | $ | 0.04 | ||||||||||||||
Granted | 4,400,000 | $ | 0.02 | ||||||||||||||
Vested | (76,000 | ) | $ | 0.11 | |||||||||||||
Forfeited | — | $ | — | ||||||||||||||
Unvested balance at September 30, 2013 | 4,560,000 | $ | 0.02 | ||||||||||||||
The fair values of all stock options granted during the nine months ended September 30, 2013 and 2012 were estimated on the date of grant using the Black-Scholes option-pricing model with the following range of assumptions: | |||||||||||||||||
For the nine months ended | |||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Expected life (in years) | 2 | 6.5 | |||||||||||||||
Average risk-free interest rate | 1.66 | % | 1.66 | % | |||||||||||||
Expected volatility | 111 | % | 108 | % | |||||||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||||||
Forfeiture rate | 3 | % | 3 | % | |||||||||||||
The estimated fair value of grants of stock options to nonemployees of the Company is charged to expense in the financial statements. These options vest in the same manner as the employee options granted under each of the option plans as described above. |
Warrants
Warrants | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||
Warrants | ' | ||||||||||||
In December 2011, the Company completed a private equity placement of 11,250,000 shares of common stock for $1,245,000 together with warrants to purchase up to 11,250,000 shares of common stock to a group of 17 shareholders (the “Low-Beer Managed Accounts”). The warrants are exercisable for a period of five years and exercisable at a price of $0.22 per share. The warrants further provide that if, for a twenty consecutive trading day period, the average of the closing price quoted on the OTCQB market is greater than or equal to $0.44 per share, with at least an average of 10,000 shares traded per day, then, on the 10th calendar day following written notice from the Company, any outstanding warrants will be deemed automatically exercised pursuant to the cashless/net exercise provisions under the warrants. | |||||||||||||
The following is a summary of changes to outstanding warrants for the nine months ended September 30, 2013: | |||||||||||||
Weighted | |||||||||||||
Weighted | Average | ||||||||||||
Number of | Average | Remaining | |||||||||||
Share | Exercise | Contractual | |||||||||||
Options | Price | Life | |||||||||||
Outstanding at December 31, 2012 | 11,250,000 | $ | 0.22 | 4 | |||||||||
Granted | — | $ | — | — | |||||||||
Exercised | — | $ | — | — | |||||||||
Forfeited or Cancelled | — | $ | — | — | |||||||||
Outstanding at September 30, 2013 | 11,250,000 | $ | 0.22 | 3.25 | |||||||||
Exercisable at September 30, 2013 | — | $ | — | —. | |||||||||
Concentrations
Concentrations | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
Concentrations | ' |
The Company's trade receivables are concentrated with a few customers. The Company performs credit evaluations on its customers’ financial condition and generally requires no collateral from its customers. Concentrations of credit risk, with respect to accounts receivable, exist to the extent of amounts presented in the financial statements. Two customers represented 62% and 38%, respectively, of gross accounts receivable at September 30, 2013, and two customers represented 61% and 39%, respectively, of gross accounts receivable at December 31, 2012. | |
The Company's revenues are concentrated with few customers. For the three and nine months ended September 30, 2013, two customers represented 63% and 32% of gross revenues and two customers represented 76% and 19% of gross revenues, respectively. For the three and nine months ended September 30, 2012, two customers represented 65% and 31% of gross revenues and two customers represented 66% and 21% of gross revenues, respectively. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Summary Of Significant Accounting Policies Policies | ' | ||
Description of the Company and its Business | ' | ||
Enova Systems, Inc., (“Enova”, “We” or “the Company”), a California corporation, was incorporated in July 1976, and trades on the OTCQB under the trading symbol “ENVS” and on the London Stock Exchange under the symbol “ENV” or “ENVS”. The Company believes it has been a globally recognized leader as a supplier of efficient, environmentally-friendly digital power components and systems products, in conjunction with associated engineering services. The Company’s core competencies are focused on the commercialization of power management and conversion systems for mobile and stationary applications. | |||
THE DISCUSSION SET FORTH BELOW AND ELSEWHERE IN THIS 10-Q IS QUALIFIED IN ITS ENTIRETY BY THE FOLLOWING: ENOVA REMAINS INSOLVENT AND OWES IN EXCESS OF $4.5 MILLION IN THE AGGREGATE TO ITS TWO PRINCIPAL CREDITORS, THE CREDIT MANAGERS ASSOCIATION AND ARENS CONTROLS COMPANY, L.L.C. (“ARENS"). WITHOUT IMMEDIATE ADDITIONAL FINANCING OR COLLECTION OF RECEIVABLES, THE COMPANY WILL NEED TO CEASE OPERATIONS. THE COMPANY CURRENTLY HAS NO VISIBILITY AS TO EITHER ADDITIONAL FINANCING OR THE COLLECTION OF RECEIVABLES. SPECIFICALLY, WITHOUT A MUTUALLY ACCEPTABLE SETTLEMENT OF THE ARENS JUDGMENT ARISING OUT OF ARENS CONTROLS COMPANY, L.L.C. v. ENOVA SYSTEMS, INC., CASE NO. 13-1102 (7TH CIRCUIT) IN THE AMOUNT OF $2.0 MILLION, THE COMPANY DOES NOT CURRENTLY BELIEVE IT HAS ANY ALTERNATIVE OTHER THAN TO CEASE OPERATIONS. THE COMPANY CURRENTLY EMPLOYS ONLY TWO PERSONNEL, JOHN MICEK, THE COMPANY'S CEO, CFO AND SECRETARY, AND ONE ADDITIONAL INDIVIDUAL IN THE FINANCE DEPARTMENT. | |||
ON SEPTEMBER 24, 2013, THE COMPANY ENTERED INTO A SETTLEMENT AGREEMENT WITH ARENS PROVIDING A PERIOD OF 120 DAYS TO SETTLE THE JUDGMENT FOR THE AMOUNT OF $300,000. THE COMPANY DOES NOT HAVE VISIBILITY FOR ADDITIONAL FINANCING TO MAKE PAYMENT UNDER THE AGREEMENT. | |||
Basis of Presentation Interim Financial Statements | ' | ||
The financial information as of and for the three and nine months ended September 30, 2013 and 2012 is unaudited but includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair statement of its financial position at such dates and the operating results and cash flows for those periods. The year-end balance sheet data was derived from audited financial statements, and 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 SEC rules or regulations; however, the Company believes the disclosures made are adequate to make the information presented not misleading. | |||
The preparation of financial statements in conformity with U.S. 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. Although management believes these estimates and assumptions are adequate, actual results could differ from the estimates and assumptions used. | |||
The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for the year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2012, which are included in the Company’s Annual Report on Form 10-K for the year then ended. | |||
Liquidity and Going Concern | ' | ||
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, historically the Company has experienced significant recurring net losses and operating cash flow deficits. The Company’s ability to continue as a going concern is dependent on many factors, including among others, its ability to raise additional funding, and its ability to successfully restructure operations to lower manufacturing costs and reduce operating expenses. | |||
To date, the Company has incurred recurring net losses and negative cash flows from operations. At September 30, 2013, the Company had an accumulated deficit of approximately $160.4 million, cash and cash equivalents of negative $2,000, working capital of approximately negative $1,218,000 and shareholders’ deficit of approximately $3.7 million. Until the Company can generate significant cash from its operations, the Company expects to continue to fund its operations with existing cash resources, proceeds from one or more private placement agreements, as well as potentially through debt financing or the sale of equity securities. However, the Company may not be successful in obtaining additional funding. In addition, the Company cannot be sure that its existing cash and investment resources will be adequate or that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to the Company or its stockholders. | |||
Our operations will require us to make necessary investments in human and production resources, regulatory compliance, as well as sales and marketing efforts. We do not currently have adequate internal liquidity to meet these objectives in the long term. On June 21, 2012, we reported in a Form 8-K filing that, as part of cost cutting measures in response to our decrease in revenue amid continued delays in industry adoption of EV technology resulting from ongoing battery cost and reliability concerns, in excess of 80% of our workforce left our Company, including the resignation of members of our senior management. We continue to evaluate strategic partnering opportunities and other external sources of liquidity, including the public and private financial markets and strategic partners. As a result of having insufficient funds, the Company has delayed all of its product development. Failure to obtain adequate financing also will adversely affect the Company’s ability to continue in business. If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders would likely result. If the Company raises additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations, as well as covenants and specific financial ratios that may restrict its ability to operate its business. | |||
The Company continues to pursue other options to raise additional capital to fund its operations; however, there can be no assurance that we can successfully raise additional funds through the capital markets. | |||
As of September 30, 2013, the Company had approximately negative $2,000 in cash and cash equivalents and does not anticipate that its anticipated receivables collections will be sufficient to meet its projected operating requirements through December 2013 to continue operations and market trading. | |||
Significant Accounting Policies | ' | ||
The accounting and reporting policies of the Company conform to US GAAP. There have been no significant changes in the Company's significant accounting policies during the three months ended September 30, 2013 compared to what was previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. | |||
Revenue Recognition | ' | ||
The Company manufactures proprietary products and other products based on design specifications provided by its customers. The Company recognizes revenue only when all of the following criteria have been met: | |||
• | Persuasive Evidence of an Arrangement — The Company documents all terms of an arrangement in a written contract signed by the customer prior to recognizing revenue. | ||
• | Delivery Has Occurred or Services Have Been Rendered — The Company performs all services or delivers all products prior to recognizing revenue. Professional consulting and engineering services are considered to be performed when the services are complete. Equipment is considered delivered upon delivery to a customer’s designated location. In certain instances, the customer elects to take title upon shipment. | ||
• | The Fee for the Arrangement is Fixed or Determinable — Prior to recognizing revenue, a customer’s fee is either fixed or determinable under the terms of the written contract. Fees for professional consulting services, engineering services and equipment sales are fixed under the terms of the written contract. The customer’s fee is negotiated at the outset of the arrangement and is not subject to refund or adjustment during the initial term of the arrangement. | ||
• | Collectability is Reasonably Assured — The Company determines that collectability is reasonably assured prior to recognizing revenue. Collectability is assessed on a customer-by-customer basis based on criteria outlined by management. New customers are subject to a credit review process which evaluates the customer’s financial position and ultimately its ability to pay. The Company does not enter into arrangements unless collectability is reasonably assured at the outset. Existing customers are subject to ongoing credit evaluations based on payment history and other factors. If it is determined during the arrangement that collectability is not reasonably assured, revenue is recognized on a cash basis. Amounts received upfront for engineering or development fees under multiple-element arrangements are deferred and recognized over the period of committed services or performance, if such arrangements require the Company to provide on-going services or performance. All amounts received under collaborative research agreements or research and development contracts are nonrefundable, regardless of the success of the underlying research. | ||
The Company recognizes revenue from milestone payments over the remaining minimum period of performance obligations. | |||
The Company also recognizes engineering and construction contract revenues using the percentage-of-completion method, based primarily on contract costs incurred to date compared with total estimated contract costs. Customer-furnished materials, labor, and equipment, and in certain cases subcontractor materials, labor, and equipment, are included in revenues and cost of revenues when management believes that the company is responsible for the ultimate acceptability of the project. Contracts are segmented between types of services, such as engineering and construction, and accordingly, revenue and gross margin related to each activity is recognized as those separate services are rendered. | |||
Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined. Claims against customers are recognized as revenue upon settlement. Revenues recognized in excess of amounts received are classified as current assets. Amounts billed to clients in excess of revenues recognized to date are classified as current liabilities on contracts. | |||
Changes in project performance and conditions, estimated profitability, and final contract settlements may result in future revisions to engineering and development contract costs and revenue. | |||
These accounting policies were applied consistently for all periods presented. Our operating results would be affected if other alternatives were used. Information about the impact on our operating results is included in the footnotes to our financial statements. | |||
Several other factors related to the Company may have a significant impact on our operating results from year to year. For example, the accounting rules governing the timing of revenue recognition related to product contracts are complex and it can be difficult to estimate when we will recognize revenue generated by a given transaction. Factors such as acceptance of services provided, payment terms, creditworthiness of the customer, and timing of delivery or acceptance of our products often cause revenues related to sales generated in one period to be deferred and recognized in later periods. For arrangements in which services revenue is deferred, related direct and incremental costs may also be deferred. | |||
Deferred Revenue | ' | ||
The Company recognizes revenues as earned. Amounts billed in advance of the period in which service is rendered are recorded as a liability under deferred revenues. When the Company enters into production and development contracts with customers, an evaluation is made to ascertain the specific revenue generating activities of each contract and establishes the units of accounting for each activity. Revenue on these units of accounting is not recognized until a) there is persuasive evidence of the existence of a contract, b) the service has been rendered and delivery has occurred, c) there is a fixed and determinable price, and d) collectability is reasonable assured. | |||
Warranty Costs | ' | ||
The Company provides product warranties for specific product lines and accrues for estimated future warranty costs in the period in which revenue is recognized. Our products are generally warranted to be free of defects in materials and workmanship for a period of 12 to 24 months from the date of installation, subject to standard limitations for equipment that has been altered by other than Enova Systems personnel and equipment which has been subject to negligent use. Warranty provisions are based on past experience of product returns, number of units repaired and our historical warranty incidence over the past twenty-four month period. The warranty liability is evaluated on an ongoing basis for adequacy and may be adjusted as additional information regarding expected warranty costs becomes known. | |||
Stock Based Compensation | ' | ||
We measure the compensation cost for stock-based awards classified as equity at their fair value on the date of grant and recognize compensation expense over the service period for awards expected to vest, net of estimated forfeitures. | |||
Accounting Changes and Recent Accounting Pronouncements | ' | ||
Certain accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations and cash flows. |
Inventory_Tables
Inventory (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Tables | ' | ||||||||
Inventory | ' | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials | $ | 3,144,000 | $ | 3,988,000 | |||||
Work in progress | 222,000 | 2,000 | |||||||
Finished goods | 472,000 | 587,000 | |||||||
Reserve for obsolescence | (1,950,000 | ) | (2,374,000 | ) | |||||
Total | $ | 1,888,000 | $ | 2,203,000 | |||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Property And Equipment Tables | ' | ||||||||
Property and equipment | ' | ||||||||
Property and equipment consisted of the following at: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Computers and software | $ | 59,000 | $ | 580,000 | |||||
Machinery and equipment | 251,000 | 535,000 | |||||||
Furniture and office equipment | 86,000 | 87,000 | |||||||
Demonstration vehicles and buses | 423,000 | 675,000 | |||||||
Leasehold improvements | - | 1,327,000 | |||||||
819,000 | 3,204,000 | ||||||||
Less accumulated depreciation and amortization | (724,000 | ) | (2,897,000 | ) | |||||
Total | $ | 95,000 | $ | 307,000 | |||||
Other_Accrued_Liabilities_Tabl
Other Accrued Liabilities (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Other Accrued Liabilities Tables | ' | ||||||||
Other accrued liabilities | ' | ||||||||
Other accrued liabilities consisted of the following at: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Accrued inventory received | $ | 10,000 | $ | 14,000 | |||||
Accrued professional services | 89,000 | 45,000 | |||||||
Accrued warranty | 96,000 | 117,000 | |||||||
Other | 25,000 | 79,000 | |||||||
Total | $ | 220,000 | $ | 255,000 | |||||
Accrued warranty | ' | ||||||||
Accrued warranty consisted of the following activities during the nine months ended September 30: | |||||||||
2013 | 2012 | ||||||||
Balance at beginning of year | $ | 117,000 | $ | 227,000 | |||||
Accruals for warranties issued during the period | 96,000 | 94,000 | |||||||
Warranty claims | (117,000 | ) | (216,000 | ) | |||||
Balance at end of quarter | $ | 96,000 | $ | 105,000 | |||||
Accrued warranty consisted of the following activities during the three months ended September 30: | |||||||||
2013 | 2012 | ||||||||
Balance at beginning of quarter | $ | 111,000 | $ | 140,000 | |||||
Accruals for warranties issued during the period | 39,000 | 14,000 | |||||||
Warranty claims | (54,000 | ) | (49,000 | ) | |||||
Balance at end of quarter | $ | 96,000 | $ | 105,000 |
Notes_Payable_LongTerm_Debt_an1
Notes Payable, Long-Term Debt and Other Financing (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes Payable Long-Term Debt And Other Financing Tables | ' | ||||||||
Notes payable | ' | ||||||||
Notes payable consisted of the following at: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Secured note payable to Credit Managers Association of California, bearing interest at prime plus 3% (6.25% as of September 30, 2013), and is adjusted annually in April through maturity. Principal and unpaid interest due in April 2016. A sinking fund escrow may be funded with 10% of future equity financing, as defined in the Agreement | $ | 1,238,000 | $ | 1,238,000 | |||||
Secured note payable to a Coca Cola Enterprises in the original amount of $40,000, bearing interest at 10% per annum. Principal and unpaid interest due on demand | 40,000 | 40,000 | |||||||
Secured note payable to a financial institution in the original amount of $38,000, bearing interest at 8.25% per annum, payable in 60 equal monthly installments of principal and interest through February 19, 2014 | 5,000 | 11,000 | |||||||
Secured note payable to a financial institution in the original amount of $19,000, bearing interest at 10.50% per annum, payable in 60 equal monthly installments of principal and interest through August 25, 2014 | 5,000 | 8,000 | |||||||
Secured note payable to a financial institution in the original amount of $26,000, bearing interest at 7.91% per annum, payable in 60 equal monthly installments of principal and interest through April 9, 2015 | 9,000 | 14,000 | |||||||
Secured note payable to a financial institution in the original amount of $25,000, bearing interest at 7.24% per annum, payable in 60 equal monthly installments of principal and interest through March 10, 2016 | - | 17,000 | |||||||
1,297,000 | 1,328,000 | ||||||||
Less current portion of notes payable | (56,000 | ) | (66,000 | ) | |||||
Notes payable, net of current portion | $ | 1,241,000 | $ | 1,262,000 | |||||
Stock_Options_Tables
Stock Options (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Stock Options Tables | ' | ||||||||||||||||
Stock options outstanding and exercisable | ' | ||||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at September 30, 2013: | |||||||||||||||||
Number of Share | Weighted Average | Weighted Average | Aggregate | ||||||||||||||
Options | Exercise Price | Remaining | Intrinsic Value(1) | ||||||||||||||
Contractual Term in Years | |||||||||||||||||
Outstanding at December 31, 2012 | 810,000 | $ | 0.64 | 4.06 | $ | — | |||||||||||
Granted | 4,400,000 | $ | 0.02 | 2.91 | $ | — | |||||||||||
Exercised | — | $ | — | — | $ | — | |||||||||||
Forfeited or Cancelled | — | $ | — | — | $ | — | |||||||||||
Outstanding at September 30, 2013 | 5,210,000 | $ | 0.12 | 2.97 | $ | — | |||||||||||
Exercisable at September 30, 2013 | 650,000 | $ | 0.78 | 3.54 | $ | — | |||||||||||
Vested and expected to vest (2) | 5,210,000 | $ | 0.12 | 2.97 | $ | — | |||||||||||
-1 | Aggregate intrinsic value represents the value of the closing price per share of our common stock on the last trading day of the fiscal period in excess of the exercise price multiplied by the number of options outstanding or exercisable, except for the “Exercised” line, which uses the closing price on the date exercised. | ||||||||||||||||
-2 | Number of shares includes options vested and those expected to vest net of estimated forfeitures. | ||||||||||||||||
Unvested share activity | ' | ||||||||||||||||
Unvested | Weighted | ||||||||||||||||
Number of | Average | ||||||||||||||||
Options | Grant Date Fair | ||||||||||||||||
Value | |||||||||||||||||
Unvested balance at December 31, 2012 | 236,000 | $ | 0.04 | ||||||||||||||
Granted | 4,400,000 | $ | 0.02 | ||||||||||||||
Vested | (76,000 | ) | $ | 0.11 | |||||||||||||
Forfeited | — | $ | — | ||||||||||||||
Unvested balance at September 30, 2013 | 4,560,000 | $ | 0.02 | ||||||||||||||
Fair Value of Stock options | ' | ||||||||||||||||
For the nine months ended | |||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Expected life (in years) | 2 | 6.5 | |||||||||||||||
Average risk-free interest rate | 1.66 | % | 1.66 | % | |||||||||||||
Expected volatility | 111 | % | 108 | % | |||||||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||||||
Forfeiture rate | 3 | % | 3 | % |
Warrants_Tables
Warrants (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||
Outstanding warrants | ' | ||||||||||||
Weighted | |||||||||||||
Weighted | Average | ||||||||||||
Number of | Average | Remaining | |||||||||||
Share | Exercise | Contractual | |||||||||||
Options | Price | Life | |||||||||||
Outstanding at December 31, 2012 | 11,250,000 | $ | 0.22 | 4 | |||||||||
Granted | — | $ | — | — | |||||||||
Exercised | — | $ | — | — | |||||||||
Forfeited or Cancelled | — | $ | — | — | |||||||||
Outstanding at September 30, 2013 | 11,250,000 | $ | 0.22 | 3.25 | |||||||||
Exercisable at September 30, 2013 | — | $ | — | —. | |||||||||
Description_of_the_Comany_and_
Description of the Comany and its Business (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Description Of Comany And Its Business Details Narrative | ' |
Debt owed to principal creditors | $4,500,000 |
Judgement | 2,000,000 |
Settlement | $300,000 |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 |
Summary Of Significant Accounting Policies Details Narrative | ' | ' | ' | ' |
Shareholders equity | ($3,700,000) | ' | ' | ' |
Accumulated deficit | -160,446,000 | -159,347,000 | ' | ' |
Working capital | -1,218,000 | ' | ' | ' |
Cash and cash equivalents | ($2,000) | $57,000 | $108,000 | $3,096,000 |
Inventory_Details
Inventory (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Inventory | ' | ' |
Raw Materials | $3,144,000 | $3,988,000 |
Work In Progress | 222,000 | 2,000 |
Finished Goods | 472,000 | 587,000 |
Reserve for Obsolescence | -1,950,000 | -2,374,000 |
Total | $1,888,000 | $2,203,000 |
Inventory_Details_Narrative
Inventory (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | |
Inventory Details | ' | ' | ' |
Inventory exchange book value | $830,000 | ' | ' |
Inventory reserve | ' | 267,000 | 945,000 |
Inventory valuation adjustments | ' | $699,000 | $161,000 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Property and Equipment | ' | ' |
Computers and software | $59,000 | $580,000 |
Machinery and equipment | 251,000 | 535,000 |
Furniture and office equipment | 86,000 | 87,000 |
Demonstration vehicles and buses | 423,000 | 675,000 |
Leasehold improvements | ' | 1,327,000 |
Plant And Property Gross | 819,000 | 3,204,000 |
Less accumulated depreciation and amortization | -724,000 | -2,897,000 |
Total | $95,000 | $307,000 |
Property_and_Equipment_Details1
Property and Equipment (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Property and Equipment | ' | ' | ' | ' |
Depreciation and amortization expense | $23,000 | $113,000 | $114,000 | $351,000 |
Amortization of leasehold improvements | 0 | 65,000 | 22,000 | 196,000 |
Assets exchanged in settlement of vendor payables | ' | ' | 272,000 | ' |
Loss on disposal of fixed asset | ' | ' | -40,000 | ' |
Proceeds from sale of fixed assets | ' | ' | 29,000 | ' |
Loss on impairment of fixed assets | -65,000 | -68,000 | -65,000 | -68,000 |
Decrease in leashold improvements | ' | ' | $1,327,000 | ' |
Other_Accrued_Liabilities_Deta
Other Accrued Liabilities (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Other accrued liabilities | ' | ' |
Accrued inventory received | $10,000 | $14,000 |
Accrued professional services | 89,000 | 45,000 |
Accrued warranty | 96,000 | 117,000 |
Other | 25,000 | 79,000 |
Total | $220,000 | $255,000 |
Other_Accrued_Liabilities_Deta1
Other Accrued Liabilities (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Accrued warranty | ' | ' | ' | ' |
Balance at beginning of period | $111,000 | $140,000 | $117,000 | $227,000 |
Accruals for warranties issued during the period | 39,000 | 14,000 | 96,000 | 94,000 |
Warranty claims | -54,000 | -49,000 | -117,000 | -216,000 |
Balance at end of period | $96,000 | $105,000 | $96,000 | $105,000 |
Notes_Payable_LongTerm_Debt_an2
Notes Payable, Long-Term Debt and Other Financing (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Debt Instrument [Line Items] | ' | ' |
Notes payable, Gross | $1,297,000 | $1,328,000 |
Less current portion of notes payable | -56,000 | -66,000 |
Notes payable, net of current portion | 1,241,000 | 1,262,000 |
PrimePlusThreePercentNoteMember | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable, Gross | 1,238,000 | 1,238,000 |
TenPercentNoteMember | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable, Gross | 40,000 | 40,000 |
EightPointTwoFivePercentNoteMember | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable, Gross | 5,000 | 11,000 |
TenPointFiveZeroPercentNoteMember | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable, Gross | 5,000 | 8,000 |
SevenPointNineOnePercentNoteMember | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable, Gross | 9,000 | 14,000 |
SevenPointTwoFourPercentNoteMember | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable, Gross | ' | $17,000 |
Notes_Payable_LongTerm_Debt_an3
Notes Payable, Long-Term Debt and Other Financing (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Long term interest payable | $1,380,000 | ' | $1,380,000 | ' | $1,318,000 |
Interest expense on notes payable | 21,000 | 24,000 | 64,000 | 65,000 | ' |
Accrued liability | 8,000 | ' | 8,000 | ' | ' |
CreditManagersAssociationofCaliforniaMember | ' | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Long term interest payable | $1,344,000 | ' | $1,344,000 | ' | $1,286,000 |
Deferred_Revenues_Details_Narr
Deferred Revenues (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Deferred Revenue Disclosure [Abstract] | ' | ' |
Deferred revenue | $213,000 | $118,000 |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Lincoln [Member] | ' |
Purchase agreement | $6,600,000 |
Lincoln 2 [Member] | ' |
Purchase agreement | 3,400,000 |
Proceeds | 132,000 |
Financing costs | $152,000 |
Shares of common stock issued | 1,754,974 |
Shares issued in consideration | 281,030 |
Stock_Options_Details
Stock Options (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Stock Options Details | ' | ' |
Outstanding at December 31, 2012 | 810,000 | ' |
Granted | 4,400,000 | ' |
Exercised | ' | ' |
Forfeited or Cancelled | ' | ' |
Outstanding at September 30, 2013 | 5,210,000 | ' |
Exercisable at September 30, 2013 | 650,000 | ' |
Vested and expected to vest | 5,210,000 | ' |
Outstanding at December 31, 2012 | $0.64 | ' |
Granted | $0.02 | ' |
Exercised | ' | ' |
Forfeited or Cancelled | ' | ' |
Outstanding at September 30, 2013 | $0.12 | ' |
Exercisable at September 30, 2013 | $0.78 | ' |
Vested and expected to vest | $0.12 | ' |
Outstanding at December 31, 2012 | '4 years 0 months 22 days | ' |
Granted | '2 years 10 months 28 days | ' |
Exercised | '0 years | ' |
Forfeited or Cancelled | '0 years | ' |
Outstanding at September 30, 2013 | '2 years 11 months 19 days | ' |
Exercisable at September 30, 2013 | '3 years 6 months 20 days | ' |
Vested and expected to vest | '2 years 11 months 19 days | ' |
Outstanding at December 31, 2012 | ' | ' |
Granted | ' | $0.05 |
Exercised | ' | ' |
Forfeited or Cancelled | ' | ' |
Outstanding at September 30, 2013 | ' | ' |
Exercisable at September 30, 2013 | ' | ' |
Vested and expected to vest | ' | ' |
Stock_Options_Details_1
Stock Options (Details 1) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Stock Options Details 1 | ' |
Unvested balance at December 31, 2012 | 236,000 |
Granted | 44,000,000 |
Vested | -76,000 |
Forfeited | ' |
Unvested balance at March 31, 2013 | 4,560,000 |
Unvested balance at December 31, 2012 | $0.04 |
Granted | $0.02 |
Vested | $0.11 |
Forfeited | ' |
Unvested balance at March 31, 2013 | $0.02 |
Stock_Options_Details_2
Stock Options (Details 2) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Stock Options Details 2 | ' | ' |
Expected life (in years) | '2 years | '6 years 6 months |
Average risk-free interest rate | 1.66% | 1.66% |
Expected volatility Minimum | 111.00% | 108.00% |
Expected dividend yield | 0.00% | 0.00% |
Forfeiture rate | 3.00% | 3.00% |
Stock_Options_Details_Narrativ
Stock Options (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Notes to Financial Statements | ' | ' |
Maximum shares issuable pursuant to plan | 65,000,000 | ' |
Shares reserved for issuance | 9,000,000 | ' |
Authorized amount of shares issuable to any individual per calendar year | 5,000,000 | ' |
Granted shares | 4,400,000 | 270,000 |
Shares available for grant | 3,711,000 | ' |
Stock based compensation expense | $6,000 | $166,000 |
Total compensation cost related to non-vested awards not yet recognized | $48,000 | ' |
Future compensation cost is expected to be recognized | '32 months | ' |
Exercise prices of the options outstanding Minimum | $0.07 | ' |
Exercise prices of the options outstanding Maximum | $4.35 | ' |
Weighted average grant-date fair value of options | ' | $0.05 |
Concentrations_Details_Textual
Concentrations (Details Textuals) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CustomerOneMember | CustomerOneMember | CustomerTwoMember | CustomerTwoMember | Customer 1 [Member] | Customer 1 [Member] | Customer 1 [Member] | Customer 1 [Member] | Customer 2 [Member] | Customer 2 [Member] | Customer 2 [Member] | Customer 2 [Member] | |
Customer accounted for accounts receivable | 71.00% | 61.00% | 28.00% | 39.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Customer accounted for sales and revenue | ' | ' | ' | ' | 88.00% | 52.00% | 11.00% | 40.00% | 83.00% | 66.00% | 11.00% | 24.00% |
Warrants_Details
Warrants (Details) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Warrants Details | ' |
Outstanding at December 31, 2012 | 11,250,000 |
Granted | ' |
Exercised | ' |
Forfeited or Cancelled | ' |
Outstanding at September 30, 2013 | 11,250,000 |
Exercisable at September 30, 2013 | 11,250,000 |
Outstanding at December 31, 2012 | $0.22 |
Granted | ' |
Exercised | ' |
Forfeited or Cancelled | ' |
Outstanding at September 30, 2013 | $0.22 |
Exercisable at September 30, 2013 | ' |
Outstanding at December 31, 2012 | '4 years |
Outstanding at September 30, 2013 | '3 years 3 months |