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10. Subsequent events
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6 Months Ended | ||
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Jun. 30, 2011
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| Subsequent Events [Text Block] |
Stock
Issuance
From
July 1, 2011 through July 29, 2011, the Company issued
1,186,384 additional shares of common stock in exchange for
the conversion of $296,596 Convertible Notes. The
outstanding balance of Convertible Notes at July 29, 2011 is
$531,168.
2011
Summer Offering
Since
June 24, 2011, the Company has been conducting a private
offering (the “Summer 2011 Offering”) of up
to $500,000 aggregate face amount of its
convertible notes (the “Summer 2011
Notes”). The Summer 2011 Offering closed
on July 31, 2011. As of July 31, 2011, a total
of $487,783 aggregate face amount of the Summer
2011 Notes have been sold for an aggregate purchase
price of $443,438. While there is no stated
interest rate on the Summer 2011 Notes, the implied effective
interest rate on the Summer 2011 Notes is 10% per annum. The
Summer 2011 Notes mature on the first anniversary of their
date of issuance. The Summer 2011 Notes are convertible, at
the option of the note holder,
into 1,951,132 shares of common stock of the
Company (the “Conversion Shares”) at an initial
conversion price of $0.25 per share (the “Conversion
Price”).
Each
of the investors in the Summer 2011 Offering will receive,
for no additional consideration, a warrant (the “Summer
2011 Warrants”), entitling the holder to purchase a
number of shares of the Company’s common stock equal to
100% of the number of shares of common stock into which the
Summer 2011 Notes are convertible (the “Warrant
Shares”). Each Summer 2011 Warrant is exercisable
on a cash basis only at an initial price of $0.30 per share,
and is exercisable immediately upon issuance and for a period
of two (2) years from the date of issuance. Up to 1,951,132
Warrant Shares are initially issuable to date on exercise of
the Summer 2011 Warrants.
We
obtained three licenses (the “Licenses”) from
Temple University for their patent-pending uniform electric
field technology, which provide the intellectual property
foundations upon which the AOT and ELEKTRA products are
based. The AOT technology consists of passing
crude oil through an array of dynamically-controlled
electrical fields to reduce the viscosity of the oil, making
it easier to pump through oil pipelines. The
ELEKTRA technology consists of passing fuel through a
dynamically-controlled electrical field to assist in the
atomization of fuel via fuel injectors. ELEKTRA
introduces a uniform electrical field into the fuel flow to
reduce the viscosity of diesel fuel, enabling smaller
droplets to be released into the combustion chamber of a
diesel engine. At December 31, 2010, the Company
owed to Temple University a total of $721,785 for the License
Agreement, Maintenance Fees, R&D Agreement and penalties
and we were in default in those payments. On March
28, 2011, we completed our final adjusted payment to Temple
University for all outstanding obligations on the License
Agreements and the R&D Agreement.
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