Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2012

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates include, but are not limited to, the establishment of reserves for accounts receivable, sales returns, inventory obsolescence and warranty claims; the useful lives for property, equipment, and intangible assets; revenues recognized on a percentage-of-completion basis; and stock-based compensation. In addition, estimates and assumptions associated with the determination of the fair value of financial instruments and evaluation of goodwill and long-lived assets for impairment requires considerable judgment. Actual results could differ from those estimates and such differences could be material.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain prior year amounts have been reclassified within the Condensed Consolidated Financial Statements (“financial statements”), and related notes thereto, to be consistent with the current year presentation.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The financial statements include the accounts of the Company and its subsidiaries, Stones River Companies, LLC (“SRC”) in Nashville, Tennessee, and Crescent Lighting Limited (“CLL”) located in the United Kingdom.  All significant inter-company balances and transactions have been eliminated.

Interim Financial Statements Policy

Interim Financial Statements (unaudited)

Although unaudited, the interim financial statements in this report reflect all adjustments, consisting only of all normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of financial position, results of operations, and cash flows for the interim periods covered and of the financial condition of the Company at the interim balance sheet date.  The results of operations for the interim periods presented are not necessarily indicative of the results expected for the entire year.

The Company’s independent public accounting firm has issued an opinion in connection with its 2011 Annual Report on Form 10-K raising substantial doubt as to its ability to continue as a going concern.  The interim financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business.  The interim financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to our ability to continue as a going concern.

Balance Sheet Policy

Year-end Balance Sheet

The year-end balance sheet information was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles.  These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2011, which are contained in the Company’s 2011 Annual Report on Form 10-K and amendments thereof (“Form 10-K”).

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-04, Fair Value Measurement, amending ASC Topic 820, which eliminates terminology differences between U.S. generally accepted accounting principles (“GAAP”) and International Financial Reporting Standards (“IFRS”) on the measurement of fair value and related fair value disclosures. While largely consistent with existing fair value measurement principles and disclosures, the changes were made as part of the continuing efforts to converge GAAP and IFRS. The adoption of this guidance was effective for interim and annual periods beginning after December 15, 2011, and its adoption did not have a material impact on the financial statements of the Company.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income, amending ASC Topic 220.  Under ASU 2011-05, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  The guidance was issued to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  Its adoption did not have a material impact on the Company’s financial statements.

In July 2012, the FASB issued ASU 2012-02, Intangibles — Goodwill and Other, amending ASC Topic 350.Under the revised guidance, entities testing indefinite-lived intangible assets for impairment have the option of performing a qualitative assessment before calculating fair value.  If entities determine, on the basis of qualitative factors, that it is more likely than not that the fair value of the indefinite-lived intangible is less than the carrying amount, the fair value calculation would be required.  The ASU also requires that the same qualitative factors be considered when determining whether an interim impairment evaluation is necessary.  The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted.  The adoption of this guidance is not expected to have a material effect on our financial statements.

Receivables, Policy [Policy Text Block]

Retainage Receivable

The Company’s solutions-based sales are normally subject to a holdback of a percentage of the sale as retainage.  This holdback is recorded on the Company’s Condensed Consolidated Balance Sheets as “Retainage receivable”.  Retainage is a portion of the total bid price of a project that is held back by the customer until the project is complete and functioning satisfactorily according to the contract terms.  Retainage percentages typically range from 5% to 10% and are collected anywhere from three to eighteen months from the inception of the project.  At September 30, 2012 and December 31, 2011, the Company had a Retainage receivable from its customers totaling $91 thousand and $474 thousand, respectively.

Repurchase Agreements, Collateral, Policy [Policy Text Block]

Collateralized Assets

The Company maintains $1.0 million of cash collateral related to its surety bonding program associated with SRC.  This cash is pledged to the surety carrier until such time as the Company is able to provide sufficient alternative means of collateralization satisfactory to the surety carrier.

Earnings Per Share, Policy [Policy Text Block]

Earnings (Loss) per Share

Basic loss per share is computed by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding for the period.  Diluted loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period.  Dilutive potential common shares consist of incremental shares upon exercise of stock options and warrants, unless the effect would be anti-dilutive.

A reconciliation of basic and diluted loss per share is provided as follows (in thousands, except per share amounts):

	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	)

Options and warrants to purchase approximately 15,283,000 and 5,804,000 shares of common stock, were outstanding at September 30, 2012 and 2011, respectively, but were not included in the calculation of diluted net loss per share because their inclusion would have been anti-dilutive.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

The Company’s stock-based compensation plan is described in detail in its 2011 Form 10-K for the year ended December 31, 2011.  The following table summarizes the Company’s stock-based compensation (in thousands):

	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

Total unearned compensation of $241 thousand related to stock options remains at September 30, 2012 compared to $452 thousand at September 30, 2011.  These costs will be charged to expense and amortized on a straight line basis in future periods through the third quarter of 2016.  The weighted average period over which this unearned compensation is expected to be recognized is approximately 1.1 years.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model.  Estimates utilized in the calculation include the expected life of the option, risk-free interest rate, and expected volatility, and are further comparatively detailed as follows:

	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	%

Option activity under the Company’s stock plans during the nine months ended September 30, 2012 was as follows:

	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

At the 2012 Annual Meeting of Shareholders held on July 25, 2012, the shareholders approved an increase in the total number of shares of common stock that may be awarded under the 2008 Incentive Stock Plan from 3,000,000 shares to 5,000,000 shares.  Additionally, the shareholders approved an increase in the total number of shares of common stock that may be issued under the 1994 Employee Stock Purchase Plan from 400,000 to 600,000.

Standard Product Warranty, Policy [Policy Text Block]

Product Warranties

The Company warrants finished goods against defects in material and workmanship under normal use and service for periods generally between one and five years for products and labor.  Settlement costs consist of actual amounts expensed for warranty services which are largely a result of third-party service calls and the costs of replacement products.  A liability for the estimated future costs under product warranties is maintained for products outstanding under warranty and is included in “Accrued liabilities” in the Condensed Consolidated Balance Sheets.