accompanying condensed consolidated financial statements have been prepared on the assumption that the Company will be able to
realize its assets and discharge its liabilities in the normal course of business. This assumption, that the Company continues
to operate as a going concern, is presently in question and contingent upon the Company's ability to raise additional funds. The
accompanying condensed consolidated financial statements do not reflect any adjustments that might result if the Company is unable
to continue as a going concern. The Company has experienced substantial losses, has a working capital deficiency of approximately
$5.0 million, a stockholders deficit of approximately $7.1 million and is in default on several financial obligations at
September 30, 2012, which raises substantial doubt about the Company's ability to continue as a going concern.
the Companys accounts receivable financing arrangement has been terminated by the lender and an alternative source of financing
receivables has not been obtained. Also, as of October 5, 2012, the Company has delinquent payroll taxes and union benefits arising
in 2012 of approximately $900,000 and $700,000 respectively.
Use of Estimates
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from the estimates.
Cash and Cash Equivalents
financial statement presentation purposes, those short-term, highly liquid investments with original maturities of three months
or less are considered to be cash or cash equivalents.
Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers,
maintaining allowances for potential credit losses which, when realized, have been within management's expectations. The allowance
method is used to account for uncollectible amounts. The evaluation is inherently subjective, as it requires estimates that are
susceptible to significant revision as more information becomes available. Allowance for doubtful accounts and provision for contract
adjustments was $564,972 at September 30, 2012 and $459,104 at December 31, 2011.
financial reporting, profits on construction contracts are recognized by the Company on the percentage-of-completion method, measured
by the percentage of costs incurred to date to estimate total construction costs for each contract. This method is used because
contracts in process include all materials, direct labor and subcontractor costs and those indirect costs related to contract
performance, such as depreciation, motor vehicles, payroll taxes, employee benefits, small tools, insurance, etc. Selling and
administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined. Changes in job performance, job conditions and estimated profitability, including
those arising from contract penalty provisions and final contract settlements may result in revisions to costs and income and
are recognized in the period in which the revisions are determined. An amount equal to contract costs attributable to claims is
included in revenues when realization is probable and the amount can be reasonably estimated. Because of the inherent uncertainties
in estimating costs, it is at least reasonably possible that the Companys estimates of costs and revenues will change.
Property, Plant and Equipment
and equipment are reported at cost less accumulated depreciation. Equipment under capital leases is stated at the present value
of minimum lease payments. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
Lives for property, plant and equipment are as follows: leasehold improvementsLesser of term or useful life; machinery
and equipment5 to 15 years; furniture and fixtures3 to 10 years; computer hardware and software 3 to 7 years. Routine
maintenance costs are expensed as incurred. Expenditures for renewals and betterments are capitalized. The cost and related accumulated
depreciation of assets retired or sold are removed from the accounts and gains or losses are recognized in operations. The Company
recorded $89,537 and $45,603 in depreciation expense for the nine months ended September 30, 2012 and 2011, respectively. The
Company recorded $29,100 and $17,819 in depreciation expense for the three months ended September 30, 2012 and 2011, respectively.
Valuation of Intangibles and Other
Long Lived Assets
recoverability of long-lived assets, including equipment and intangible assets, is reviewed when events or changes in circumstances
occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based
on the ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without
interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment
loss is recognized for the difference between estimated fair value and carrying value. The primary measure of fair value is based
on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived
assets, as well as other fair value determinations.
Stock Based Compensation
based awards are accounted for according to the provisions of FASB ASC 718. Our primary type of share-based compensation consists
of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs for the valuation analysis of the
options include the market value of the Company's common stock, the estimated volatility of the Company's common stock, the exercise
price of the warrants and the risk free interest rate.
tax assets and liabilities are recognized for temporary differences between the financial reporting basis and the tax basis of
our assets and liabilities. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted
tax laws. Allowances are recorded if recovery is uncertain.
Earnings per Common Share
net loss per share is computed using the weighted average number of common shares outstanding during the period. Basic and diluted
earnings per share are the same as outstanding options are anti-dilutive. Dilutive common equivalent shares consist of options
to purchase common stock (only if those options are exercisable and at prices below the average share price for the period) and
shares issuable upon the conversion of the Company's securities.
assets with estimable lives and other long-lived assets are reviewed for impairment annually or whenever events or changes in
circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of intangible
assets with estimable lives and other long-lived assets is measured by a comparison of the carrying amount of an asset or asset
group to future net undiscounted pretax cash flows expected to be generated by the asset or asset group. If these comparisons
indicate that an asset is not recoverable, the impairment loss recognized is the amount by which the carrying amount of the asset
or asset group exceeds the related estimated fair value. Estimated fair value is based on either discounted future pretax operating
cash flows or appraised values, depending on the nature of the asset. Judgment is required to estimate future operating cash flows.