1. Significant Accounting Policies and Nature of Operations

9 Months Ended

Sep. 30, 2013

Notes

1. Significant Accounting Policies and Nature of Operations

1. Significant Accounting Policies and Nature of Operations

Unaudited Interim Financial Statements

The accompanying unaudited interim financial statements, which include the wholly-owned subsidiaries of Vista International Technologies, Inc. (the “Company”, “we”, “our”), have been prepared by the Company in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission. The financial information has not been audited and should not be relied upon to the same extent as audited financial statements. Certain information and footnote disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Accordingly, these unaudited interim financial statements should be read in conjunction with the Company’s financial statements and related notes contained in the Form 10-K for the year ended December 31, 2012. In the opinion of management, the unaudited interim financial statements reflect all adjustments, including normal recurring adjustments, necessary for fair presentation of the interim periods presented. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the results of operations to be expected for the full year.

Description of Business

The Company is in the business of developing, commercializing and operating renewable energy and waste-to-energy (“WTE”) technologies and projects.

The Company is currently conducting its business in the following areas:

Tire processing operation in Hutchins, Texas, and

Renewable energy and WTE projects utilizing the Company’s Thermal Gasifier technology and corporate administration at the Company’s offices in Commerce City, Colorado.

Discrete financial information is not presently maintained for our WTE business as it has generated limited revenues.  In addition, management makes investing and resource allocation decisions based on the combined results of both the processing and WTE business.  Accordingly, we only have one reportable segment.

Going Concern and Management’s Plan

The Company reported a net loss of approximately $651,300 and net cash provided by operating activities of $147,033 for the nine  months ended September 30, 2013, has a working capital deficiency of approximately $4.6 million and an accumulated deficit of approximately $67.7 million at September 30, 2013.  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 nine months ended September 30, 2013, the Company received proceeds of $46,598 ($1,610 in cash and balance as non-cash transaction) from a related party, as well as proceeds from a shareholder loan totaling approximately $15,000 ($9,661 in cash and balance as non-cash transaction) 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 immediate 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.

      Development of project based opportunities

        Attracting strategic investment

1. Significant Accounting Policies and Nature of Operations (Continued) 

Management considers the Thermal Gasifier and waste-to-energy segment to be our core business. However, significant focus continues to be  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 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.    We currently have a pilot project being constructed in the northeastern US to showcase the technology and obtain emissions testing data from our current generation of units. 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 and has a commitment for up to $6 million in funding but does not have a final agreement in place  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

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 and other processed tire 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.   Revenues from other Waste-to-Energy related products or services provided for projects will be recognized when the products are delivered to the end customer, or when services are completed.

During the quarter ended March 31, 2013 the Company began construction of a pilot waste-to-energy project in the northeastern US.  The project is being funded entirely by an outside party.  The Company is receiving payments in advance of services being performed and finished products being delivered to the project site.  As such, these advance payments are being accounted for as deferred revenue in the Company’s financial statements.  When products are purchased or services performed, these transactions will be recorded as deferred expenses in the Company’s financial statements.  For the quarter ended September 30, 2013, the company recorded $208,000 in deferred revenue and $34,970 in deferred expenses for this project.

Concentration of Credit Risk

Our two largest customers comprised approximately 25.4% and 25.1% of revenues for the nine months ended September 30, 2013, and 46% and 12% of revenues for the three months ended September 30, 2013. Our two largest customers comprised approximately 29% and 18% of revenues for the nine months ended September 30, 2012, and 29% and 20% of revenues for the three months ended September 30, 2012

1. Significant Accounting Policies and Nature of Operations (Continued)

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

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.

 Reclassifications

Certain reclassifications to the 2012 statements of operations and cash flows have been made in order to conform it to the 2013 presentation.