ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2012 |
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to |
Delaware
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94-3021850
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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32000 Aurora Rd., Solon, OH
(Address of principal executive offices)
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44139
(Zip Code)
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(Registrant’s telephone number, including area code): (440) 715-1300
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None
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(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o (do not check if a smaller reporting company)
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Smaller reporting company þ
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PART I - FINANCIAL INFORMATION
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Page
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Item 1.
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Financial Statements
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3
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a.
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Condensed Consolidated Balance Sheets as of September 30, 2012 (Unaudited) and December 31, 2011
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3
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b.
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Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011 (Unaudited)
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4 | |
c.
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Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2012 and 2011 (Unaudited)
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5 | |
d.
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Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 (Unaudited)
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6 | |
e.
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Notes to Condensed Consolidated Financial Statements (Unaudited)
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7
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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18
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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23
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Item 4.
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Controls and Procedures
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23
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PART II - OTHER INFORMATION
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|||
Item 1A.
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Risk Factors
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24
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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24
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Item 5.
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Other Information
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24
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Item 6.
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Exhibits
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24
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Signatures
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24
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||
Exhibit Index
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25
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September 30,
2012 |
December 31,
2011 |
|||||||
ASSETS
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(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 380 | $ | 2,136 | ||||
Trade accounts receivable less allowances of $321 and $447, respectively
|
4,193 | 2,738 | ||||||
Retainage receivable
|
91 | 474 | ||||||
Inventories, net
|
2,364 | 2,429 | ||||||
Costs in excess of billings
|
45 | 171 | ||||||
Prepaid and other current assets
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1,226 | 881 | ||||||
Total current assets
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8,299 | 8,829 | ||||||
Property and equipment, net
|
1,787 | 2,105 | ||||||
Goodwill
|
672 | 672 | ||||||
Intangible assets, net
|
713 | 1,027 | ||||||
Collateralized assets
|
1,000 | 1,000 | ||||||
Other assets
|
86 | 145 | ||||||
Total assets
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$ | 12,557 | $ | 13,778 | ||||
LIABILITIES
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 3,591 | $ | 5,653 | ||||
Accrued liabilities
|
3,045 | 1,995 | ||||||
Deferred revenue
|
539 | 1,373 | ||||||
Billings in excess of costs
|
221 | 154 | ||||||
Credit line borrowings
|
1,330 | 701 | ||||||
Current maturities of long-term debt
|
731 | 855 | ||||||
Total current liabilities
|
9,457 | 10,731 | ||||||
Other liabilities
|
31 | 71 | ||||||
Acquisition-related contingent liabilities
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- | 553 | ||||||
Long-term debt
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307 | 955 | ||||||
Total liabilities
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9,795 | 12,310 | ||||||
SHAREHOLDERS' EQUITY
|
||||||||
Preferred stock, par value $0.0001 per share:
|
||||||||
Authorized: 2,000,000 shares in 2012 and 2011 Issued and outstanding: no shares in 2012 and 2011
|
- | - | ||||||
Common stock, par value $0.0001 per share:
|
||||||||
Authorized: 100,000,000 shares in 2012 and 60,000,000 shares in 2011 Issued and outstanding: 44,542,000 at September 30, 2012 and 24,913,000 at December 31, 2011
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4 | 1 | ||||||
Additional paid-in capital
|
80,911 | 75,962 | ||||||
Accumulated other comprehensive income
|
457 | 420 | ||||||
Accumulated deficit
|
(78,610 | ) | (74,915 | ) | ||||
Total shareholders' equity
|
2,762 | 1,468 | ||||||
Total liabilities and shareholders' equity
|
$ | 12,557 | $ | 13,778 |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net sales
|
$ | 7,904 | $ | 6,046 | $ | 20,878 | $ | 19,699 | ||||||||
Cost of sales
|
5,945 | 4,831 | 16,430 | 15,777 | ||||||||||||
Gross profit
|
1,959 | 1,215 | 4,448 | 3,922 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
102 | (278 | ) | 87 | (144 | ) | ||||||||||
Sales and marketing
|
1,423 | 1,524 | 4,084 | 5,095 | ||||||||||||
General and administrative
|
1,211 | 1,212 | 3,479 | 3,834 | ||||||||||||
Valuation of equity instruments
|
- | - | - | 56 | ||||||||||||
Total operating expenses
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2,736 | 2,458 | 7,650 | 8,841 | ||||||||||||
Loss from operations
|
(777 | ) | (1,243 | ) | (3,202 | ) | (4,919 | ) | ||||||||
Other income (expense):
|
||||||||||||||||
Other (expense) income
|
(26 | ) | (6 | ) | (98 | ) | 65 | |||||||||
Interest income
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- | - | 1 | 3 | ||||||||||||
Interest expense
|
(123 | ) | (206 | ) | (388 | ) | (581 | ) | ||||||||
Loss before income taxes
|
(926 | ) | (1,455 | ) | (3,687 | ) | (5,432 | ) | ||||||||
Provision for income taxes
|
(2 | ) | (4 | ) | (8 | ) | (13 | ) | ||||||||
Net loss
|
$ | (928 | ) | $ | (1,459 | ) | $ | (3,695 | ) | $ | (5,445 | ) | ||||
Net loss per share - basic and diluted
|
$ | (0.02 | ) | $ | (0.06 | ) | $ | (0.09 | ) | $ | (0.22 | ) | ||||
Shares used in computing net loss per share - basic and diluted
|
44,542 | 24,845 | 40,241 | 24,610 |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net loss
|
$ | (928 | ) | $ | (1,459 | ) | $ | (3,695 | ) | $ | (5,445 | ) | ||||
Other comprehensive income:
|
||||||||||||||||
Foreign currency translation adjustments
|
26 | (27 | ) | 37 | 2 | |||||||||||
Comprehensive loss
|
$ | (902 | ) | $ | (1,486 | ) | $ | (3,658 | ) | $ | (5,443 | ) |
Nine months ended
September 30,
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||||||||
2012
|
2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (3,695 | ) | $ | (5,445 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation
|
478 | 463 | ||||||
Stock-based compensation
|
146 | 384 | ||||||
Valuation of equity instruments
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- | 56 | ||||||
Provision for doubtful accounts receivable
|
104 | 45 | ||||||
Amortization of intangible assets
|
314 | 487 | ||||||
Amortization of discounts on long-term borrowings and acquisition related liabilities
|
180 | 375 | ||||||
Deferred revenue
|
(766 | ) | 70 | |||||
Gain on disposal of fixed assets
|
- | (10 | ) | |||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable, inventories, and other assets
|
(1,274 | ) | 2,512 | |||||
Accounts payable and accrued liabilities
|
(1,655 | ) | (1,625 | ) | ||||
Total adjustments
|
(2,473 | ) | 2,757 | |||||
Net cash used in operating activities
|
(6,168 | ) | (2,688 | ) | ||||
Cash flows from investing activities:
|
||||||||
Acquisition of property and equipment
|
(159 | ) | (222 | ) | ||||
Proceeds from the sale of property and equipment
|
- | 9 | ||||||
Net cash used in investing activities
|
(159 | ) | (213 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuances of common stock, net
|
4,805 | 450 | ||||||
Proceeds from other borrowings
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- | 250 | ||||||
Payments on other borrowings
|
(873 | ) | (18 | ) | ||||
Net proceeds on credit line borrowings
|
629 | - | ||||||
Net cash provided by financing activities
|
4,561 | 682 | ||||||
Effect of exchange rate changes on cash
|
10 | 2 | ||||||
Net decrease in cash and cash equivalents
|
(1,756 | ) | (2,217 | ) | ||||
Cash and cash equivalents at beginning of period
|
2,136 | 4,107 | ||||||
Cash and cash equivalents at end of period
|
$ | 380 | $ | 1,890 | ||||
Classification of cash and cash equivalents:
|
||||||||
Cash and cash equivalents
|
$ | 353 | $ | 1,803 | ||||
Restricted cash held
|
27 | 87 | ||||||
Cash and cash equivalents at end of period
|
$ | 380 | $ | 1,890 | ||||
Supplemental Information - Non-cash financing activities
|
||||||||
Cognovit promissory note for past due rent
|
$ | 355 |
|
·
|
solutions-based sales providing turnkey, high-quality, energy-efficient lighting application alternatives primarily to the existing public-sector building market; and
|
|
·
|
product-based sales providing military, general commercial and industrial lighting and pool lighting offerings, each of which markets and sells energy-efficient lighting systems.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Basic and diluted loss per share:
|
||||||||||||||||
Net loss
|
$ | (928 | ) | $ | (1,459 | ) | $ | (3,695 | ) | $ | (5,445 | ) | ||||
Basic and diluted loss per share:
|
||||||||||||||||
Weighted average shares outstanding
|
44,542 | 24,845 | 40,241 | 24,610 | ||||||||||||
Basic and diluted net loss per share
|
$ | (0.02 | ) | $ | (0.06 | ) | $ | (0.09 | ) | $ | (0.22 | ) |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Stock option expense
|
$ | 42 | $ | 75 | $ | 146 | $ | 171 | ||||||||
Executive & Director stock-based compensation
|
- | - | - | 107 | ||||||||||||
Employee incentive stock-based compensation
|
- | - | - | 106 | ||||||||||||
Total stock-based compensation
|
$ | 42 | $ | 75 | $ | 146 | $ | 384 |
Nine months ended
September 30,
|
||||||||
2012
|
2011
|
|||||||
Fair value of options issued
|
$ | 0.15 | $ | 0.45 | ||||
Exercise price
|
$ | 0.27 | $ | 0.83 | ||||
Expected life of option (years)
|
5.6 | 6.1 | ||||||
Risk-free interest rate
|
0.82 | % | 2.14 | % | ||||
Expected volatility
|
59.00 | % | 56.39 | % | ||||
Dividend yield
|
0 | % | 0 | % |
Options
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractural Term (in Years)
|
||||||||||
Outstanding as of December 31, 2011
|
2,318,498 | $ | 2.28 | |||||||||
Granted
|
120,000 | $ | 0.27 | |||||||||
Exercised
|
- | $ | - | |||||||||
Cancelled/forfeited
|
(212,248 | ) | $ | 2.52 | ||||||||
Outstanding as of September 30, 2012
|
2,226,250 | $ | 2.17 | 7.0 | ||||||||
Exercisable as of September 30, 2012
|
1,394,611 | $ | 3.02 | 6.1 |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Balance at the beginning of the period
|
$ | 125 | $ | 100 | $ | 100 | $ | 126 | ||||||||
Accruals for warranties issued
|
52 | 23 | 110 | 45 | ||||||||||||
Settlements made during the period (in cash or in kind)
|
(18 | ) | (23 | ) | (51 | ) | (71 | ) | ||||||||
Balance at the end of the period
|
$ | 159 | $ | 100 | $ | 159 | $ | 100 |
September 30,
2012 |
December 31,
2011 |
|||||||
Raw materials
|
$ | 1,446 | $ | 1,517 | ||||
Finished goods
|
918 | 912 | ||||||
Inventories, net
|
$ | 2,364 | $ | 2,429 |
September 30,
2012 |
December 31,
2011 |
|||||||
Equipment (useful life 3 - 15 years)
|
$ | 5,847 | $ | 5,831 | ||||
Tooling (useful life 2 - 5 years)
|
2,481 | 2,440 | ||||||
Furniture and fixtures (useful life 5 years)
|
132 | 129 | ||||||
Computer software (useful life 3 years)
|
462 | 431 | ||||||
Leasehold improvements (the shorter of useful life or lease life)
|
632 | 630 | ||||||
Construction in progress
|
110 | 27 | ||||||
Property and equipment at cost
|
9,664 | 9,488 | ||||||
Less: accumulated depreciation
|
(7,877 | ) | (7,383 | ) | ||||
Property and equipment, net
|
$ | 1,787 | $ | 2,105 |
Amortization
Life (in years)
|
September 30,
2012
|
December 31,
2011
|
||||||||||
Goodwill
|
n/a | $ | 672 | $ | 672 | |||||||
Definite-lived intangible assets:
|
||||||||||||
Tradenames
|
10 | 363 | 400 | |||||||||
Customer relationships
|
5 | 350 | 627 | |||||||||
Total definite-lived intangible assets
|
713 | 1,027 | ||||||||||
Total intangible assets, net
|
$ | 1,385 | $ | 1,699 |
Year ending December 31,
|
Amount
|
|||
2012 October through December
|
$ | 105 | ||
2013
|
253 | |||
2014
|
105 | |||
2015
|
50 | |||
2016
|
50 | |||
2017 and thereafter
|
150 | |||
Total amortization expense
|
$ | 713 |
September 30,
2012 |
December 31,
2011 |
|||||||
Costs incurred on uncompleted contracts
|
$ | 3,922 | $ | 3,193 | ||||
Estimated earnings
|
1,064 | 855 | ||||||
Total revenues
|
4,986 | 4,048 | ||||||
Less: billings to date
|
5,162 | 4,031 | ||||||
Total
|
$ | (176 | ) | $ | 17 | |||
Balance sheet classification:
|
||||||||
Costs in excess of billings on uncompleted contracts
|
$ | 45 | $ | 171 | ||||
Billings in excess of costs on uncompleted contracts
|
(221 | ) | (154 | ) | ||||
Total
|
$ | (176 | ) | $ | 17 |
September 30,
2012 |
December 31,
2011 |
|||||||
Letter of Credit Agreement - Mark Plush
|
$ | 250 | $ | 250 | ||||
Cognovit Note - Keystone Ruby, LLC
|
289 | 325 | ||||||
Secured Subordinated Promissory Note - EF Energy Partners LLC
|
- | 287 | ||||||
Convertible Promissory Note - TLC Investments LLC
|
500 | 500 | ||||||
Letter of Credit Agreement - John Davenport
|
- | 250 | ||||||
Letter of Credit Agreement - Quercus Trust
|
- | 300 | ||||||
Unsecured Promissory Note - Quercus Trust
|
70 | 70 | ||||||
Discounts on long-term borrowings
|
(71 | ) | (172 | ) | ||||
Subtotal
|
1,038 | 1,810 | ||||||
Less: Current maturies of long-term debt
|
(731 | ) | (855 | ) | ||||
Long-term debt
|
$ | 307 | $ | 955 |
Year ending December 31,
|
Long-Term
Debt |
|||
2012 October through December
|
$ | 13 | ||
2013
|
804 | |||
2014
|
59 | |||
2015
|
65 | |||
2016
|
72 | |||
2017 and thereafter
|
96 | |||
Gross long-term borrowings
|
1,109 | |||
Less: discounts on long-term borrowings
|
(71 | ) | ||
Total commitment, net
|
1,038 | |||
Less: portion classified as current
|
(731 | ) | ||
Long-term borrowings, net
|
$ | 307 |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Solutions:
|
||||||||||||||||
Net sales
|
$ | 2,066 | $ | 2,014 | $ | 5,811 | $ | 7,960 | ||||||||
Cost of sales
|
1,672 | 1,686 | 4,912 | 6,686 | ||||||||||||
Gross profit
|
394 | 328 | 899 | 1,274 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Sales and marketing
|
320 | 311 | 1,004 | 1,032 | ||||||||||||
General and administrative
|
244 | 231 | 558 | 706 | ||||||||||||
Total operating expenses
|
564 | 542 | 1,562 | 1,738 | ||||||||||||
Segment loss
|
$ | (170 | ) | $ | (214 | ) | $ | (663 | ) | $ | (464 | ) | ||||
Products:
|
||||||||||||||||
Net sales
|
$ | 5,838 | $ | 4,032 | $ | 15,067 | $ | 11,739 | ||||||||
Cost of sales
|
4,273 | 3,145 | 11,518 | 9,091 | ||||||||||||
Gross profit
|
1,565 | 887 | 3,549 | 2,648 | ||||||||||||
Operating expenses (income):
|
||||||||||||||||
Research and development
|
102 | (278 | ) | 87 | (144 | ) | ||||||||||
Sales and marketing
|
957 | 1,140 | 2,708 | 3,872 | ||||||||||||
General and administrative
|
119 | 85 | 261 | 257 | ||||||||||||
Total operating expenses
|
1,178 | 947 | 3,056 | 3,985 | ||||||||||||
Segment income (loss)
|
$ | 387 | $ | (60 | ) | $ | 493 | $ | (1,337 | ) | ||||||
Reconciliation of segment income (loss) to net loss:
|
||||||||||||||||
Segment income (loss):
|
||||||||||||||||
Solutions
|
$ | (170 | ) | $ | (214 | ) | $ | (663 | ) | $ | (464 | ) | ||||
Products
|
387 | (60 | ) | 493 | (1,337 | ) | ||||||||||
Total segment income (loss)
|
217 | (274 | ) | (170 | ) | (1,801 | ) | |||||||||
Operating expenses:
|
||||||||||||||||
Sales and marketing
|
146 | 73 | 372 | 191 | ||||||||||||
General and administrative
|
848 | 896 | 2,660 | 2,871 | ||||||||||||
Valuation of equity instruments
|
- | - | - | 56 | ||||||||||||
Total operating expenses
|
994 | 969 | 3,032 | 3,118 | ||||||||||||
Other expense
|
(149 | ) | (212 | ) | (485 | ) | (513 | ) | ||||||||
Loss before income taxes
|
(926 | ) | (1,455 | ) | (3,687 | ) | (5,432 | ) | ||||||||
Provision for income taxes
|
(2 | ) | (4 | ) | (8 | ) | (13 | ) | ||||||||
Net loss
|
$ | (928 | ) | $ | (1,459 | ) | $ | (3,695 | ) | $ | (5,445 | ) |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Products segment net sales:
|
||||||||||||||||
Pool and commercial products
|
$ | 4,159 | $ | 3,127 | $ | 11,354 | $ | 9,149 | ||||||||
Government products/R&D services
|
1,679 | 905 | 3,713 | 2,590 | ||||||||||||
Total products segment net sales
|
5,838 | 4,032 | 15,067 | 11,739 | ||||||||||||
Products segment cost of sales:
|
||||||||||||||||
Pool and commercial products
|
2,892 | 2,229 | 8,077 | 6,593 | ||||||||||||
Government products/R&D services
|
1,381 | 916 | 3,441 | 2,498 | ||||||||||||
Total products segment cost of sales
|
4,273 | 3,145 | 11,518 | 9,091 | ||||||||||||
Products segment gross profit (loss):
|
||||||||||||||||
Pool and commercial products
|
1,267 | 898 | 3,277 | 2,556 | ||||||||||||
Government products/R&D services
|
298 | (11 | ) | 272 | 92 | |||||||||||
Total products segment gross profit
|
$ | 1,565 | $ | 887 | $ | 3,549 | $ | 2,648 |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
United States
|
$ | 6,976 | $ | 4,966 | $ | 18,700 | $ | 16,479 | ||||||||
International
|
928 | 1,080 | 2,178 | 3,220 | ||||||||||||
Net sales
|
$ | 7,904 | $ | 6,046 | $ | 20,878 | $ | 19,699 |
September 30,
2012 |
December 31,
2011 |
|||||||
United States
|
$ | 3,123 | $ | 3,747 | ||||
International
|
49 | 57 | ||||||
Long-lived assets, net
|
$ | 3,172 | $ | 3,804 |
|
·
|
solutions-based sales providing turnkey, high-quality, energy-efficient lighting application alternatives primarily to the existing public-sector building market; and
|
|
·
|
product-based sales providing military, general commercial and industrial lighting, and pool lighting offerings, each of which markets and sells energy-efficient lighting systems.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of sales
|
75.2 | 79.9 | 78.7 | 80.1 | ||||||||||||
Gross profit
|
24.8 | 20.1 | 21.3 | 19.9 | ||||||||||||
Operating expenses (income):
|
||||||||||||||||
Research and development
|
1.3 | (4.6 | ) | 0.4 | (0.7 | ) | ||||||||||
Sales and marketing
|
18.0 | 25.2 | 19.5 | 25.8 | ||||||||||||
General and administrative
|
15.3 | 20.0 | 16.7 | 19.4 | ||||||||||||
Valuation of equity instruments
|
- | - | - | 0.3 | ||||||||||||
Total operating expenses
|
34.6 | 40.6 | 36.6 | 44.8 | ||||||||||||
Loss from operations
|
(9.8 | ) | (20.5 | ) | (15.3 | ) | (24.9 | ) | ||||||||
Other income (expense):
|
||||||||||||||||
Other (expense) income
|
(0.3 | ) | (0.1 | ) | (0.5 | ) | 0.3 | |||||||||
Interest expense, net
|
(1.6 | ) | (3.4 | ) | (1.9 | ) | (2.9 | ) | ||||||||
Loss before income taxes
|
(11.7 | ) | (24.0 | ) | (17.7 | ) | (27.5 | ) | ||||||||
Provision for income taxes
|
(0.0 | ) | (0.1 | ) | (0.0 | ) | (0.1 | ) | ||||||||
Net loss
|
(11.7 | ) % | (24.1 | ) % | (17.7 | ) % | (27.6 | ) % |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Solutions:
|
||||||||||||||||
Net sales - solutions
|
$ | 2,066 | $ | 2,014 | $ | 5,811 | $ | 7,960 | ||||||||
Products:
|
||||||||||||||||
Net sales - pool and commercial
|
4,159 | 3,127 | 11,354 | 9,149 | ||||||||||||
Net sales - government products/R&D services
|
1,679 | 905 | 3,713 | 2,590 | ||||||||||||
Total net sales - product segment
|
5,838 | 4,032 | 15,067 | 11,739 | ||||||||||||
Total net sales
|
$ | 7,904 | $ | 6,046 | $ | 20,878 | $ | 19,699 |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
Net Research & Development Expense
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Total gross research and development expenses
|
$ | 621 | $ | 1,035 | $ | 2,509 | $ | 3,086 | ||||||||
Cost recovery through cost of sales
|
(398 | ) | (1,160 | ) | (1,792 | ) | (2,263 | ) | ||||||||
Cost recovery and other credits
|
(121 | ) | (153 | ) | (630 | ) | (967 | ) | ||||||||
Net research and development expense
|
$ | 102 | $ | (278 | ) | $ | 87 | $ | (144 | ) |
|
·
|
obtain financing from traditional and non-traditional investment capital organizations or individuals,
|
|
·
|
potential sale or divestiture of one or more operating units, and
|
|
·
|
obtain funding from the sale of common stock or other equity or debt instruments.
|
|
·
|
loans or other debt instruments may have terms and/or conditions, such as interest rate, restrictive covenants, and control or revocation provisions, which are not acceptable to management or the Board of Directors,
|
|
·
|
the current environment in capital markets combined with our capital constraints may prevent us from being able to obtain any debt financing,
|
|
·
|
financing may not be available for parties interested in pursuing the acquisition of one or more of our operating units, and
|
|
·
|
additional equity financing may not be available in the current capital environment and could lead to further dilution of shareholder value for current shareholders of record.
|
ENERGY FOCUS, INC.
|
||||
Date: November 14, 2012
|
By:
|
/s/ Joseph G. Kaveski
|
||
Joseph G. Kaveski
|
||||
Chief Executive Officer
|
By:
|
/s/ Mark J. Plush
|
|||
Mark J. Plush
|
||||
Chief Financial Officer
|
Exhibit
Number
|
Description of Documents
|
3.1
|
Form of Certificate of Incorporation of the Registrant.
|
10.1 | Energy Focus, Inc. 1994 Employee Stock Purchase Plan, as amended (1) |
10.2 | Energy Focus, Inc. 2008 Incentive Stock Plan, as amended (2) |
31.1
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Vice President of Finance and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer and Vice President of Finance and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
*101
|
The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2012 and 2011, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, (vi) the Notes to Condensed Consolidated Financial Statements. (3)
|
/s/ Joseph G. Kaveski
|
|
Joseph G. Kaveski
Incorporator
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Energy Focus, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
/s/ Joseph G. Kaveski | |||
Joseph G. Kaveski
|
|||
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Energy Focus, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
/s/ Mark J. Plush | |||
Mark J. Plush
|
|||
Vice President of Finance and Chief Financial Officer
|
(i)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Joseph G. Kaveski
|
||
Joseph G. Kaveski
Chief Executive Officer
|
||
November 14, 2012
|
||
/s/ Mark J. Plush
|
||
Mark J. Plush
Vice President of Finance and Chief Financial Officer
|
||
November 14, 2012
|
Note 6 - Contracts in Progress (Detail) - Summary of Costs and Estimated Earnings on Contracts in Progress (USD $)
In Thousands, unless otherwise specified |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Costs incurred on uncompleted contracts | $ 3,922 | $ 3,193 |
Estimated earnings | 1,064 | 855 |
Total revenues | 4,986 | 4,048 |
Less: billings to date | 5,162 | 4,031 |
Total | (176) | 17 |
Balance sheet classification: | ||
Costs in excess of billings on uncompleted contracts | 45 | 171 |
Billings in excess of costs on uncompleted contracts | (221) | (154) |
Total | $ (176) | $ 17 |
Note 11 - Related Party Transactions (Detail) (USD $)
|
3 Months Ended | 9 Months Ended | 33 Months Ended | 36 Months Ended | 27 Months Ended | 42 Months Ended | 36 Months Ended | 60 Months Ended | 27 Months Ended | 36 Months Ended | 42 Months Ended | 60 Months Ended | 33 Months Ended | 60 Months Ended | 42 Months Ended | 3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Jun. 30, 2013
|
Dec. 31, 2011
|
Jun. 30, 2013
Not to Exceed Share Price [Member]
|
Jun. 30, 2013
Number of Days Stock Price Must Trade Above Ceiling to Trigger Additional Fee [Member]
|
Mar. 31, 2012
John Davenport [Member]
|
Mar. 31, 2012
Mark Plush [Member]
|
Jun. 30, 2013
TLC Investments LLC [Member]
|
Jun. 30, 2013
Wall Street Prime Rate Plus 2 Percent [Member]
|
Jun. 30, 2013
Shares of Common Stock [Member]
|
Dec. 31, 2014
Woodstone [Member]
|
Mar. 31, 2012
Share Price, Initial [Member]
|
Dec. 31, 2014
Share Price, Adjusted [Member]
|
Jun. 30, 2013
Minimum [Member]
|
Dec. 31, 2014
First Tranch [Member]
|
Dec. 31, 2014
Second Tranch [Member]
|
Sep. 30, 2012
Guaranteed Profit on Prior Existing Contracts, Percentage [Member]
|
Dec. 31, 2014
First Tranch [Member]
|
Dec. 31, 2014
Second Tranch [Member]
|
Jun. 30, 2013
Management Fee, Percentage [Member]
|
Sep. 30, 2011
Management Fee [Member]
|
|
Proceeds from (Repayments of) Related Party Debt (in Dollars) | $ 300,000 | ||||||||||||||||||||||
Notes Payable, Related Parties (in Dollars) | 300,000 | 500,000 | |||||||||||||||||||||
Revenue from Related Parties (in Dollars) | 424,000 | 1,400,000 | |||||||||||||||||||||
Accounts Receivable, Related Parties (in Dollars) | 400,000 | ||||||||||||||||||||||
Related Party Costs (in Dollars) | 1,200,000 | 5,000,000 | |||||||||||||||||||||
Accounts Payable, Related Parties (in Dollars) | 1,200,000 | ||||||||||||||||||||||
Related Party Transaction, Description of Transaction | 400,000 | $2.00 | twenty | 2% | 500,000 | 600,000 | $0.65 | $0.49 | $10.0 | $10.0 | $5.0 | 25% | 400,000 | 200,000 | 8% | ||||||||
Due to Other Related Parties (in Dollars) | 500,000 | ||||||||||||||||||||||
Related Party Transaction, Expenses from Transactions with Related Party (in Dollars) | $ 343,000 | $ 75,000 |
Note 8 - Segments and Geographic Information (Detail) - Summary of Geographic Long-Lived Assets (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Long-lived assets, net | $ 3,172 | $ 3,804 |
United States [Member]
|
||
Long-lived assets, net | 3,123 | 3,747 |
International [Member]
|
||
Long-lived assets, net | $ 49 | $ 57 |
Note 2 - Summary of Significant Accounting Policies (Detail) - Warranty Activity (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Balance at the beginning of the period | $ 125 | $ 100 | $ 100 | $ 126 |
Accruals for warranties issued | 52 | 23 | 110 | 45 |
Settlements made during the period (in cash or in kind) | (18) | (23) | (51) | (71) |
Balance at the end of the period | $ 159 | $ 100 | $ 159 | $ 100 |
Note 7 - Debt (Tables)
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt [Table Text Block] |
|
Note 7 - Debt (Detail) - Future Maturities of Remaining Borrowings (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
2012 October through December | $ 13 | |
2013 | 804 | |
2014 | 59 | |
2015 | 65 | |
2016 | 72 | |
2017 and thereafter | 96 | |
Gross long-term borrowings | 1,109 | |
Less: discounts on long-term borrowings | (71) | (172) |
Total commitment, net | 1,038 | 1,810 |
Less: portion classified as current | (731) | (855) |
Long-term borrowings, net | $ 307 | $ 955 |
Note 5 - Goodwill and Intangible Assets (Detail) - Summary of Net Carrying Value of Intangible Assets (USD $)
In Thousands, unless otherwise specified |
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Goodwill | $ 672 | $ 672 |
Goodwill | 672 | 672 |
Definite-Lived Intangible Assets | 713 | 1,027 |
Total intangible assets, net | 1,385 | 1,699 |
Trade Names [Member]
|
||
Amortization Life (in years) | 10 years | |
Definite-Lived Intangible Assets | 363 | 400 |
Customer Relationships [Member]
|
||
Amortization Life (in years) | 5 years | |
Definite-Lived Intangible Assets | $ 350 | $ 627 |
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