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10. Subsequent events
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9 Months Ended |
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Sep. 30, 2011
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| Subsequent Events [Text Block] |
10. Subsequent
events
Stock
Issuance
On
October 21, 2011 we issued the 250,000 common shares to a
consultant for contractual services reflected as common stock
issuable at September 30, 2011.
2011
Fall Offering
From
August 30, 2011 through October 15, 2011, the
Company conducted a private offering (the “Fall
2011 Offering”) of up to $1,000,000 aggregate face
amount of its convertible notes (the “Fall 2011
Notes”). A total of $170,720 aggregate face amount of
the Fall 2011 Notes were sold for an aggregate purchase
price of $155,200. While there was no stated
interest rate on the Fall 2011 Notes, the implied effective
interest rate on the Fall 2011 Notes is 10% per annum. The
Fall 2011 Notes mature on the first anniversary of their date
of issuance. The Fall 2011 Notes are convertible, at the
option of the note holder, into 682,880 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 Fall 2011 Offering received, for no
additional consideration, a warrant (the “Fall 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 Fall
2011 Notes are convertible (the “Warrant
Shares”). Each Fall 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 682,880
Warrant Shares are initially issuable to date on exercise of
the Fall 2011 Warrants.
2011
Fall#2 Offering
Since
October 24, 2011 the Company is conducted a private
offering (the “Fall#2 2011 Offering”) of up to
$2,200,000 aggregate face amount of its convertible notes
(the “Fall#2 2011 Notes”). A total of $659,239
aggregate face amount of the Fall#2 2011 Notes have been
sold for an aggregate purchase price of $599,300 as of
November 7, 2011. While there is no stated interest rate on
the Fall#2 2011 Notes, the implied effective interest rate
on the Fall#2 2011 Notes is 10% per annum. The Fall#2 2011
Notes mature on the first anniversary of their date of
issuance. The Fall#2 2011 Notes are convertible, at the
option of the note holder, into 2,636,956 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 Fall#2 2011 Offering will receive,
for no additional consideration, a warrant (the
“Fall#2 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 Fall#2 2011 Notes are
convertible (the “Warrant Shares”). Each Fall#2
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 2,636.956 Warrant Shares
are initially issuable to date on exercise of the Fall#2
2011 Warrants.
AOT
Testing
The
Company together with Temple University of Philadelphia's
physics department, designed and created the AOT device to
reduce the energy required to transport crude oil through
commercial pipelines. This research was co-funded
by the Company and the Pipeline Research Council
International (PRCI).
The
device exposes passing crude oil to a precisely controlled
electric field to reduce the oil viscosity. This is intended
to reduce line-loss (fluid drag) and pressure, without
changing the oil temperature or composition. In a commercial
pipeline operation, the intended results would translate into
reduced pump power required to maintain constant flow rates,
and would thereby deliver energy savings for crude oil
transportation.
The
Rocky Mountain Oilfield Testing Center (RMOTC) conducted a
field test on the Company’s in-line viscosity reduction
device at the Naval Petroleum Reserve No. 3 (NPR-3) located
35 miles north of Casper in Natrona County,
Wyoming. The in-line viscosity reduction device is
designed to reduce the line-loss of crude oil traveling
through a commercial pipeline and thereby reduce the energy
required to transport crude oil through pipelines.
Gains
in pump operation efficiency were observed on the 4.4 mile, 6
inch, schedule 80 buried pipeline test loop. Power
consumption was observed to decrease by 13.55% when the
device was operating at one third its power capacity. After
running for 70 minutes, the device was deactivated, and pump
motor power consumption returned to baseline pre-treatment
numbers within 56 minutes. Power consumption was
observed to decrease by 13.14% when the device was
operating at one fourth its power capacity. After running for
75 minutes, the device was deactivated, and pump motor power
consumption returned to baseline pre-treatment numbers within
15 minutes. Pipeline line-loss and pump motor
power consumption were reduced for a given flow rate during
the observed test.
These
test results indicate that the viscosity reduction device
operated successfully and may hold potential for energy
savings and increased pipeline flow rates for the oil
production and transportation industry.
On
October 27, 2011, the Company granted 2,200,000 stock options
to executives and directors, with an exercise price of $0.30
per share, vesting immediately for 10 years.
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