Significant Accounting Policies and Nature of Operations (Policies)

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Going Concern and Management's Plan

Going Concern and Management’s Plan

The Company reported a net loss of approximately $235,800 and used net cash in operating activities of $139,203 for the six months ended June 30, 2012, has a working capital deficiency of approximately $4.8 million and an accumulated deficit of approximately $66.9 million at June 30, 2012.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recovery of the recorded assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from operations or to obtain equity investment or additional financing to meet obligations on a timely basis and ultimately achieve profitable operations.

During the six months ended June 30, 2012, the Company received proceeds of $32,750 from an equipment financing transaction as well as proceeds from lines of credit totaling roughly $82,000 to help with working capital.  We expect that the Company will continue to rely on loans, including those  from related parties and issuances of shares in private placements to meet its working capital needs for the foreseeable future.

Management plans to focus the Company’s resources in four key areas:

● Thermal Gasifier™ engineering design and deployment

● Maximizing value from the Hutchins, Texas tire processing and storage facility, including the installation and operation of a tire derived fuel (“TDF”) production facility.

● Development of project based opportunities, and Attracting strategic investment

Management considers the Thermal Gasifier ™ and waste-to-energy segment to be our core business. However, significant focus is also being placed on the improvement of the tire processing operation at our Hutchins, TX facility to increase production and reduce operating costs, and expand sales to include TDF to increase revenue and cash flow.  In February 2012, the Company began operation of the shredding equipment for its TDF production line.

We continue to develop our internal resources and implement business development activities to secure waste-to-energy and biomass-to-energy facility opportunities that will utilize our Thermal Gasifier™ technology through build-own-operate agreements or through joint-venture relationships with strategic partners. We are looking to partner with companies that produce large hydrocarbon-based waste streams and are also in need of thermal and/or electrical energy. We are targeting opportunities where there are high disposal fees and energy rates, where we can use the Thermal Gasifier™ with back end power systems to provide significant cost savings to the end user.  We are reviewing the economic viability of a number of opportunities in the northeastern United States and in Colorado and are currently working towards obtaining letters of intent from these entities. Currently, the Company does not have any Thermal Gasifiers in operation.

Management believes that current revenue levels will not be sufficient to meet our operational needs and execute the Company’s complete business plan. The Company is seeking additional funding for the activities described above. The Company is exploring various financing opportunities but does not have final agreements or commitments for funding at the present time.  

Future funding may be through an equity investment, debt or convertible debt. Current market conditions present uncertainty as to the Company’s ability to secure additional funds, as well as its ability to reach full profitability. There can be no assurance that the Company will be able to secure additional financing, or obtain favorable terms on such financing if it is available.  Continued negative cash flow and lack of liquidity create significant uncertainty about the Company’s ability to fully implement its operating plan, and may result in the Company reducing the scope of its planned operations, scale back or discontinue its technology and project development programs, or obtain funds, if available, through strategic alliances that may require the Company to relinquish rights to certain of its technologies or products or to discontinue its operations entirely.

Revenue Recognition

Revenue Recognition

We recognize revenue from our tire fuel processing and storage facility in three ways:

● Disposal fees (“tipping fees”) for waste tires are fully earned when accepted at the facility   Tire Derived Fuel revenues are fully earned when the product is accepted at the purchaser’s facility.  

● Sales of unprocessed whole tires are recognized when delivered to the end user

Revenue from sales of our Thermal Gasifier™ will be recognized upon completion, delivery and customer acceptance, using the completed contract method of accounting.   We have recognized no revenue from the sale of our Thermal Gasifier™ during the six months ended June 30, 2012 and 2011.

Concentration of Credit Risk

Concentration of Credit Risk

Our two largest customers comprised approximately 29% and 17% of revenues for the six months ended June 30, 2012, and 38% and 19% of revenues for the three months ended June 30, 2012, Our two largest customers comprised approximately 25% and 11% of revenues for the six months ended June 30, 2011, and 21% and 8% of revenues for the three months ended June 30, 2011

Use of Estimates

Use of Estimates

U.S. generally accepted accounting principles require us to make certain estimates, judgments and assumptions that we believe are reasonable, based on information available at the time they were made.  These estimates, judgments and assumptions can affect the amounts reported in our condensed consolidated financial statements.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Company has adopted all applicable recently-issued accounting pronouncements.  The adoption of the accounting pronouncements, including any not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.