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Note 1 - Description of Business and Basis of Presentation
12 Months Ended
Dec. 31, 2012
Business Description and Basis of Presentation [Text Block]
1. Description of Business and Basis of Presentation

Description of Business

Solar Power, Inc. and its subsidiaries (collectively the “Company”) consist of the combination of the legacy reporting entity Solar Power, Inc. and Solar Green Technology S.p.A. (“SGT”) and their respective subsidiaries. Refer to Note 5—Acquisition of Solar Green Technology for further details of the accounting impact of the SGT acquisition.

The Company is a global solar energy facility (“SEF”) developer offering our own brand of high-quality, low-cost distributed generation and utility-scale SEF development services. Primarily, the Company partners with developers around the world who hold large portfolios of SEF projects for whom it serves as co-developer and engineering, procurement and construction (“EPC”) contractor. The Company builds three basic types of SEFs: rooftop systems, ground mounted systems, and parking shade structure systems. The Company’s proprietary SkyMount® commercial rooftop racking system and its custom parking shade structures are procured through contract manufacturers and built to the Company’s design specifications are still being used for current projects under development.

In addition to designing, engineering and constructing large-scale SEFs, the Company also provides long-term operations and maintenance (“O&M”) services through our proprietary O&M program SPIGuardianTM. This service program provides a comprehensive suite of services that engage upon a facility’s commissioning to provide performance monitoring, system reporting, preventative maintenance and full warranty support over the anticipated life of the SEF. While the Company still considers O&M services to be within its core competencies, it is currently exploring third party outsourcing for these services on a going forward basis to assist in the reduction of operating expenses.

On January 5, 2011, the Company entered into a stock purchase agreement with LDK Solar Co., Ltd. (“LDK”), a vertically integrated solar wafer, cell and solar module manufacturer. On March 31, 2011, LDK obtained a controlling interest in Solar Power, Inc. by making a significant investment in our business that provided working capital and broader relationships that allowed us to more aggressively pursue commercial and utility projects globally. With LDK’s investment in Solar Power, Inc., the Company expanded and aggressively engaged in business development activities that have allowed us to grow our global pipeline while accelerating our construction of multiple projects simultaneously. LDK’s modules are used in the majority of the systems the Company produces; however, it maintains relationships with other module manufacturers when circumstances call for an alternative to LDK’s line of modules.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Solar Power, Inc. and its subsidiaries. Intercompany balances, transactions and cash flows have been eliminated.

Basis of Presentation

The Consolidated Financial Statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“U. S. GAAP”) and require management to make certain judgments, estimates and assumptions. These may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They also may affect the reported amounts of revenues and expenses during the reporting period. Key estimates used in the preparation of our financial statements include: contract percentage-of-completion and cost estimates, construction in progress, allowance for doubtful accounts, stock-based compensation, warranty reserve, deferred taxes, valuation of inventory, valuation of assets held for sale and valuation of goodwill and other intangible assets. Actual results could differ from those estimates upon subsequent resolution of identified matters. The financial statements for prior periods have been recast due to the accounting guidelines for a transfer of an entity under common control (refer to Note 5 —Acquisition of Solar Green Technology).

In January 2012, the Company reassessed its reportable segments and determined that the former cable, wire and mechanical assemblies operating segment no longer meets the qualitative and quantitative characteristics that require separate reporting. The basis for the reassessment is the change in management’s business strategy and the resulting decline in revenues related to this former segment. As such, effective January 2012, the Company operates in one reportable segment: photovoltaic installation, integration, and sales, the results of which are reflected in the Consolidated Financial Statements.

The accompanying Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.