Management's Plan of Operations

6 Months Ended

Jun. 30, 2011

Management's Plan of Operations [Abstract]

MANAGEMENT'S PLAN OF OPERATIONS

NOTE 2 — MANAGEMENT’S PLAN OF OPERATIONS

     As reflected in the consolidated financial statements, the Company incurred a net loss of approximately $784,000 for the six months ended June 30, 2011, and as of June 30, 2011 has an accumulated deficit of approximately $101.1 million and a working capital deficiency of approximately $3.3 million. During 2010, the Company discontinued the operations at its Woodbridge facility, acquired a license to treat Industrial Waste Water and acquired the TerraSphere business. In addition, the Company currently has manufacturing capabilities at its Gonzales facility as a means to generate revenues and cash. Although the Gonzales facility is currently cash flow positive, the anticipated costs associated with corporate overhead and for the operations of TerraSphere will cause the Company to have negative cash flow in 2011. In addition, the Company feels that it will require cash, either through financing or equity transactions, in order to build out the IWR and TerraSphere projects planned for 2011. The Company believes that if it achieves planned sales from its Gonzales facility, establishes additional operational Industrial Wastewater sites, and completes the construction of a TerraSphere facility, then the Company will become cash flow positive in the future.

     Presently, the Company’s liquidity is limited to its cash on hand at June 30, 2011. In addition, on February 28, 2011 the Company received shareholder approval to permit an investor to exercise certain of its warrants, which could provide the Company with an additional $4.9 million. However, since receiving shareholder approval the Company’s stock price has closed at both above and below the exercise price of these warrants, and it is not likely that any warrants would be exercised unless the price of its stock was greater than the exercise price of the warrants. There is no assurance that the investor will exercise the warrants in the near term, and as such, the Company may not receive these necessary funds.

     If the Company does not receive additional funds, whether as a result of the exercise of the warrants issued in its December 2010 financing, or otherwise, the Company will not have sufficient cash to be able to continue its operations. Even in the event that the Company does receive additional funds, there is no guarantee that such funds will be sufficient to continue operations. At this time the Company does not have any commitments for additional financing, and there is no assurance that capital in any form will be available to the Company on terms and conditions that are acceptable or at all. On July 1, 2011, the Company initiated certain overhead and salary reductions and projects net cash out flows to be approximately $350,000 per month, and therefore based on the current cash on hand the Company believes that it has sufficient cash to operate until the end of 2011, however, that would not allow the Company to expend cash on IWR, TerraSphere or Gonzales facility capital projects.