|
1. Organization and basis of presentation
|
9 Months Ended |
|---|---|
|
Sep. 30, 2011
|
|
| Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
1. Organization
and basis of presentation
Description
of business
Save
the World Air, Inc. (“STWA”, the Company)
designs, licenses and develops products to reduce operational
costs for oil pipelines, and improve fuel economy and reduce
emissions from diesel-powered internal combustion
engines. The Company is a green technology company
that leverages a suite of patented, patent-pending and
licensed intellectual properties related to the treatment of
fuels. Technologies patented by or licensed to us utilize
either magnetic or uniform electrical fields to alter
physical characteristics of fuels and are designed to create
cleaner combustion. Cleaner combustion has been shown to
improve performance, enhance fuel economy and/or reduce
harmful emissions in laboratory testing.
The
Company was incorporated on February 18, 1998, as a
Nevada corporation, under the name Mandalay Capital
Corporation. The Company changed its name to Save the World
Air, Inc. on February 11, 1999, following the
acquisition of marketing and manufacturing rights of the ZEFS
technologies. Our executive offices are at 735 State Street,
Suite 500, Santa Barbara, California 93101. The
telephone number is (805)-845-3561. Our research and
development facility is at 235 Tennant Avenue, Morgan Hill,
California 95037. The telephone number is (408)
778-0101. The corporate website is www.stwa.com. The
common stock is quoted under the symbol “ZERO” on
the Over-the-Counter Bulletin Board
The
Company’s technology has two commercial applications;
AOT™ (Applied Oil Technology) and ELEKTRA™ and
legacy technologies of ZEFS and MK IV. AOT™
and ELEKTRA™ are nearing the end of the product
development cycle, which will culminate at the U.S.
Department of Energy’s Rocky Mountain Oilfield Testing
Center (RMOTC). We believe the testing of
AOT™ at the RMOTC will determine the value of savings
the product presents at full scale operation on an active
pipeline. (See “Note 10. Subsequent
events”).
The
AOT™ and ELEKTRA™ are technologies which use
electric fields to alter some physical properties of
petrochemical fluids to reduce viscosity of the
fluids. The Company differentiates AOT™ and
ELEKTRA™ products based on their differing attributes
and marketing focus. AOT™ products are
primarily designed to reduce operation costs for oil
pipelines, and ELEKTRA™ products are primarily designed
to improve fuel economy and reduce emissions from
diesel-powered internal combustion engines. Our
AOT™ products are intended to reduce the viscosity of
crude oil, thereby making it less restrictive to pipeline
transport. Our AOT™ products will be
marketed primarily to pipeline operators as well as to pilot
and government mandated delivery programs. Our
ELEKTRA™ products are intended to increase fuel
efficiency and reduce emissions. ELEKTRA™
will be marketed primarily to specialty consumer accessories
market for many types of diesel-fueled vehicles, including
but not limited to trucks, trains, maritime, military and
aviation.
Basis
of presentation
The
accompanying unaudited condensed consolidated financial
statements of Save the World Air, Inc. have been prepared in
accordance with accounting principles generally accepted in
the United States of America for interim financial
information and pursuant to the requirements for reporting on
Form 10-Q and Regulation S-K for scaled disclosures for
smaller reporting companies. Accordingly, they do not include
all the information and footnotes required by accounting
principles generally accepted in United States of America for
complete financial statements. However, such information
reflects all adjustments (consisting solely of normal
recurring adjustments), which are, in the opinion of
management, necessary for the fair presentation of the
consolidated financial position and the consolidated results
of operations. Results shown for interim periods are not
necessarily indicative of the results to be obtained for a
full fiscal year.
The
condensed consolidated balance sheet information as of
December 31, 2010 was derived from the audited consolidated
financial statements included in the Company's Annual Report
on Form 10-K filed with the SEC. These interim financial
statements should be read in conjunction with that
report.
Going
concern
Since
its inception, the Company has been primarily engaged in
organizational and pre-operating activities. The Company has
generated insignificant revenues and has incurred accumulated
losses of $65,943,935 from February 18, 1998 (Inception)
through September 30, 2011. As reflected in the accompanying
condensed consolidated financial statements, the Company had
a net loss of $7,511,015 and a negative cash flow from
operations of $3,822,791 for the nine months ended September
30, 2011, and had a working capital deficiency (excluding
derivative liabilities) of $2,103,342 and a stockholders'
deficiency of $2,951,012 at September 30, 2011. As
a result, the Company’s independent registered public
accounting firm, in their report on the Company’s 2010
consolidated financial statements, raised substantial doubt
about the Company’s ability to continue as a going
concern. The financial statements do not include any
adjustments that might be necessary if the Company is unable
to continue as a going concern.
The
ability of the Company to continue as a going concern is
dependent upon the Company’s ability to raise
additional funds and implement its business
plan. The Company’s operations from
inception, February 18, 1998 to September 30, 2011 have been
funded through issuances of its common stock
and convertible notes. During this period,
the Company raised an aggregate of $25,852,482 of which
$15,036,408 was from the sale of convertible notes. As
of September 30, 2011, the outstanding balance of convertible
notes was $310,077, of which $284,764 represented the 2011
Winter and Spring Offerings which closed February 28, 2011
and May 31, 2011 respectively (see “Note 4. Convertible
Debentures”). The Company expects substantially all of
the outstanding notes will be converted into shares of common
stock of the Company.
On
September 30, 2011, the Company had cash on hand in the
amount of $4,594. In addition to the funds on hand, the
Company will require additional funds to continue
to operate our business. (From October 1, 2011
through November 7, 2011, the Company has received $714,500
from 2011 Fall Offerings, which will close on November 30,
2011, See “Note 10. Subsequent events”).
This includes expenses we will incur in connection with
license agreements; product development and commercialization
of the AOT and ELEKTRA technologies; costs to manufacture and
ship our products; costs to design and implement an effective
system of internal controls and disclosure controls and
procedures; costs of maintaining our status as a public
company by filing periodic reports with the SEC and costs
required to protect our intellectual property. In addition,
the Company has contractual commitments for salaries to its
executive officers pursuant to employment agreements,
consulting fees and Licensing Fees commitment to Temple
University, during 2011 and beyond. In light of
the Company’s financial commitments over the next
several months and its liquidity constraints, we have
implemented cost reduction measures in all areas of
operations. The Company intends to review these measures
on an ongoing basis and make additional decisions as may be
required.
|