Commitments And Contingencies

9 Months Ended

Sep. 30, 2011

Commitments And Contingencies [Abstract]

Commitments And Contingencies

4. Commitments and Contingencies

On February 1, 2006, the Company entered into an agreement with Embry-Riddle Aeronautical University to complete a 3D model and certain modifications to the original Detonation Gas Turbine Engine in exchange for a fixed price amount. The Company has expensed $10,670 related to this agreement which expired on June 30, 2007. On August 31, 2007, the Company extended the original agreement through December 31, 2009 with a total additional amount not to exceed approximately $297,000. The Company incurred approximately $0 and $28,000 in additional costs during the three and nine months ended September 30, 2011, respectively.

Once the Company becomes operational, it will be obligated to pay production royalties to Alpha at the rate of eight percent of net sales of the Detonation Cycle Gas Turbine Engine. The minimum royalty amount is $250,000 per year, and the Company began accruing for the fee in February 2005. The royalty fee will be reduced by production royalties paid. Unpaid royalty fees amounted to $1,239,000 and $1,051,500 as of September 30, 2011 and December 31, 2010, respectively.

The Company entered into a Share Purchase Agreement in May 2010 with Hua Tec Enterprise Co. LTD, an international company incorporated in the Independent State of Samoa. HUA TEC owns all of the issued and outstanding shares of Guandong Kingtec Electrical Co., LTD, a wholly foreign owned enterprise established under the laws of the People's Republic of China. Kingtec is primarily engaged in the business of manufacturing and selling automobile starters, generators and other accessories in the People's Republic of China. The closing of this purchase agreement is contingent upon certain conditions as outlined in the agreement and is currently being negotiated.

The Company (TTE) entered into a Cooperation Agreement (the "Agreement") with Hydrogen Union Energy Co., Ltd. ("HUE") for the purpose of the joint development of the hydrogen generator. Under the terms of the Agreement, HUE will provide hydrogen generators at cost to TTE for demonstration purposes. Once TTE purchases the first H2 generator and pays 90% of the purchase price, TTE will be given first refusal to act as agent for any future business relating to hydrogen generators with HUE's technology in North America. TTE will pay the cost of production of a 200 cubic meter H2 generator at 10,000,000 TWD ($346,000 USD as of September 30, 2011) for up to two machines. Payments are to be made in stages; (a) 50% (5,000,000 TWD) within 15 business days after the execution of the Agreement; (b) 40% (4,000,000 TWD) 30 days after the first payment; (c) 5% (500,000 TWD) 24 hours after the initial installation and testing; and (d) 5% (500,000 TWD) one day after machine is in operation for 30 days. Through the date of this filing, the Company is working to negotiate a payment schedule.

As a September 30, 2011, the above equipment has not been received , as such, no liability has been recorded.

The Company entered into a Cooperative Agreement (the "Agreement") dated April 27, 2010 with Beijing Royal Aerospace Facilities Co., Ltd., a PRC corporation ("Beijing Royal"), for the purpose of providing a framework for the collaboration between the two companies on the development and commercialization of the Detonation Cycle Gas Turbine Engine ("DGCT") specifically for application to heavy duty trucks, with Beijing Royal to be the Company's exclusive development partner with respect to 300 – 600 HP DCGT in the People's Republic of China. The parties have agreed to execute a more detailed joint development contract upon the approval of the DCGT project by PRC regulatory authorities to specify the details of their cooperation on the development of the DCGT.

The Agreement further provides that all documentation provided by the Company to Beijing Royal at this stage shall be solely for the purpose of making a funding application, and that any further use shall be by agreement of the parties. The intellectual properties jointly developed under the Agreement would be owned by both parties equally.

The Company entered into various strategic alliances with foreign companies during 2009. During the nine months ended September 30, 2011, there were no material changes as disclosed in the December 31, 2010 Form 10K which would warrant further disclosure to these financial statements. The agreements with GUOHAO, TIANJIN, and BEIJING ROYAL are based on the company building, testing, and demonstrating a prototype that will meet the efficiencies required to commercialize the engine for their respective products. Once the company has demonstrated that it can produce an engine with the power output and efficiencies required, the time line set in the original agreements for the respective companies to fulfill their agreements and fund the company to bring the engine to full commercialization for that product will start at that time.

Related to certain employment agreements, the Company issued a total of 1,100,000 shares of common stock. The Company entered into new employment agreements effective October 1, 2011 that superseded any outstanding employment contracts making shares of stock fully vested through nine months ended September 30, 2011. The Company accelerated stock compensation expense related to these agreements and recognized approximately $106,000 and $194,000 for the three and nine months ended September 30, 2011, respectively, related to the previous employment agreements.

In October 2011, the Company entered into employment agreements with terms that commence on October 1, 2011 and run through a range of dates with the latest being September 2014. These agreements have a cumulative annual salary of approximately $156,000 annually and cumulative grants of fully vested stock issuances of 850,000 shares of stock. Additionally, the employees covered in these agreements are also granted options allowing holders to convert a cumulative amount of 850,000 shares for a term of five years with a exercise price of $0.25.